SAN JOSE: Dell needs its week-long Enterprise Forum shindig to instil a sense of confidence in a firm that looks to be facing a three-pronged attack from consumers, competing enterprises and shareholders.
Dell has, for most of its lifetime, been synonymous with low-cost hardware, which has served it well. The problem for the firm is that it hasn't migrated from offering low-cost desktops and laptops into new markets, a challenge that has cost the firm and its board dearly.
Dell's decision to hold its Enterprise Forum in San Jose on the same week as Computex in Taipei, one of the largest IT tradeshows, and Microsoft TechEd in New Orleans is to say the least a perplexing choice. While Dell is trying to reposition itself as an enterprise IT vendor and Computex is a computer hardware show, it must have known that analysts, journalists and investors are looking to Taipei and not San Jose for future market trends, especially as Intel has chosen to release its latest Haswell processors at the show, while Microsoft grabs the scraps of what's left with interest in Windows 8.1.
Even before it has started, Dell's Enterprise Forum is on the back foot trying to generate attention when all of the new products and hardware components are being shown off 10,000 miles away, while 3,000 miles away Microsoft is holding its TechEd conference. Dell's poorly timed Enterprise Forum highlights a general trend by the firm of being out of step with the wider market.
Dell's decision to move into the enterprise IT market is not a bad one, and Gartner's recent server revenue figures suggest the firm is doing well so far. However for some inexpliciable reason Dell seemed to forget that its primary role as a firm was to supply systems that help buyers consume and generate user content, whether they be desktops, laptops or any other devices.
Dell might have missed the emergence of smartphones and tablets but it continues to ignore a market that many of its competitors are saying is ripe for what Dell is known for, cheap devices for the masses.
But remember, Dell is supposed to be turning into an enterprise IT equipment vendor. Except just about every IT administrator will tell you that consumer devices are infiltrating big businesses via bring your own device, meaning that enterprise IT provisioning no longer starts and ends with desktops and laptops owned by corporate IT.
Of course Dell, and any other enterprise IT vendor, could argue that selling servers to enterprises is one way to tackle employees bringing their own devices as they would still need to access services on the network. Except that argument is somewhat tenuous when you consider how smartphones and tablets make use of cloud-based services, with or without the blessing of the firm's IT policy manager, and large cloud service providers are likely to build and perhaps design their own servers instead of buying tens of thousands of machines from Dell, HP or IBM.
Dell has another problem with enterprise services. It recently ditched its public cloud service and doesn't really have a storage business like IBM and HP, and it doesn't take Mystic Meg to realise that storage needs will grow in the future as firms generate and more importantly have to retain greater amounts of data. And while some industry insiders are talking about Cisco taking a closer look at NetApp, Dell cannot afford to make such a purchase.
These are just a few of the reasons why Dell is facing something of a shareholder revolt. Michael Dell's offer to buy back the firm he co-founded came with the claim that by removing the pressure of reporting quarterly results, he could turn the company around into the enterprise IT vendor Dell's board has been dreaming about for the past five years.
The problem is that major shareholders such as Southeastern Asset Management and perhaps more importantly influential investor Carl Icahn have talked about not only rejecting Michael Dell's offer but getting rid of him. Icahn's history positions him as little more than a corporate raider, an investor that buys up companies on the cheap and dismantles them, selling their assets to make a profit.
However in this case it's easier to see why Icahn might want to get rid of Michael Dell and the rest of Dell's management. After all, Dell's management is the very same crew that has done so little in getting the firm into growth markets, so why should Icahn and other investors trust that the board can do it once the firm has been bought out?
Dell's tag line for its Enterprise Forum is "Optimise the Enterprise", but it will need to show much more than servers if it is to calm investors' fears and perhaps save Michael Dell's bacon.
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