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Dell promises to innovate on next-gen Windows 10 PCs

Like a captain on a sinking ship, Dell remains committed to the PC market, and looks to hardware innovations and Windows 10 as the bailing buckets.

IT pros should not look at the acquisition of EMC and VMware as a sign that Dell will abandon the PC market for other faster growing avenues.

During Dell World in Austin last week, executives were asked if the company remains committed to the PC business, despite moving into different areas through the EMC acquisition. Dell executives were adamant that it has not wavered from its stance in the PC market, and emphatically promised to continue to innovate PCs.

"We're fully committed to the PC business and the hardware business," said Jeff Clarke, Dell vice chairman of operations and president of client solutions. "There shouldn't be any confusion of that."

Dell's hardware business plays a pivotal role in its strategy, Clarke said. As the Internet of Things (IoT) becomes more relevant, the company foresees billions of devices connected to each other to transfer information. Dell will have an opportunity to provide those connected products through its hardware business and support IoT with products such as storage.

Despite increased use of mobile devices and a slumping PC market, laptops will remain an important part of the business world. The combined assets of EMC and Dell, as well as what each company brings to the table, puts Dell in a unique position, Clarke said, and it starts with connected hardware, including laptops.

"[Laptops] haven't been replaced by phones, as far as I can tell," he said. "The world of a display, a keyboard and a microprocessor to do work is here. It doesn't go anywhere."

To illustrate Dell's commitment to the PC market further, Clarke cited unique features of the company's latest laptops. Dell's XPS 13 and 15 feature HD infinity displays, with bezels that are just 5.2 mm thin, making them the smallest 13-inch and 15-inch laptops in the world, according to Dell.

Despite their smaller size, there is no compromise in performance, Clarke said, as the Windows 10 laptops pack up to 18 hours of battery life and feature Intel's new Skylake processor.

"I think we've not seen the end of PC innovation; we're seeing the beginning of it," he said.

Dell's commitment to the PC space is not surprising, as the company came up as a PC maker, said Stephen Monteros, vice president of business development and strategic initiatives at SIGMAnet, Inc., an IT consultant based in Ontario, Calif.

"PCs will always be in its blood," he said. "But Dell sees itself as a much bigger player [after the EMC deal], and that's not a bad thing."

Last summer, Dell executives expressed a similar sentiment about its commitment to PCs, because it needs hardware to cross-sell its software and services. The message last year came shortly after Dell launched its Inspiron 2-in-1 PCs.

"Most people have more devices than ever," Monteros said. "We're doing more on smartphones and larger formats are taking over. I still refresh my laptop, but I still do a lot of work on other devices."

Windows 10's impact on the PC market

The overall PC market declined by almost 11% in the third quarter of this year from the same period last year, as 71 million PCs were sold compared to 79.5 million in the same quarter last year, according to IDC, a research firm in Framingham, Mass.

The commercial market is less affected by the influx of tablets and mobile devices, said Loren Loverde, an industry analyst at IDC. Within the PC space, Dell will continue to gain share as a market leader, and by being private, it has flexibility and can focus on specific areas to strengthen.

Through the EMC acquisition, Dell greatly improves in areas such as storage, and gains mobility management, cloud and virtualization through VMware and AirWatch. Other organizations that EMC owns also bring advancements to Dell's portfolio, including RSA in security; however, it is important to note that the plans for these companies and where they fit in as part of this deal has yet to be clearly articulated by Dell. The EMC deal is expected to close sometime in mid-2016.

Despite the massive decline in the market, Dell increased its share by 1.2%, and sold over 10.1 million PCs in the quarter, according to IDC. Its 2.9% decline in PC sales (305,000 devices) compared to the same quarter last year was not nearly as steep as the rest of the market.

The PC market still continues to decline, and we haven't seen Windows 10 change that yet.
Loren Loverdeindustry analyst at IDC

"The PC market still continues to decline, and we haven't seen Windows 10 change that yet," Loverde said. "Free upgrades of Windows 10 are undermining sales of new PCs, are enabling 2-in-1s, and provide longer battery life and general user appeal of Windows 10 over Windows 8."

Microsoft entered the laptop market with the Surface Book this month, which Dell insists it doesn't compete with. Dell's XPS 13 laptop starts at $799, while the Surface Book starts at $1,499. Both companies believe the new laptops will spread Windows 10 adoption, which will ultimately be good for the overall PC market.

"The Surface Book is beneficial all around," Loverde said. "What Microsoft succeeds in doing is creating appeal for new types of Windows devices. They've succeeded in setting a reference point for what a Windows system can be."

The biggest challenge is getting people to buy PCs and not as much to compete with other PC vendors, Loverde said. That is why Dell, Microsoft, Intel, Lenovo and HP have teamed up in a commercial campaign to try and draw interest into Windows 10 PCs.

Businesses will replace their machines once hardware lifecycles are up, but with Windows 10, Microsoft and other OEMs are introducing new form factors and are enabling 2-in-1 devices.

IDC forecasts a slight decline in the PC market for the remainder of this year and into 2016, with flat growth after that.

"For the most part, Microsoft's play in the market drives interest in the products," Loverde said. "What we're seeing right now is Windows 10 upgrades are contributing to the slower PC replacements short term, but it's possible newer devices could provide upside for the market in the long run."

Ramin Edmond is a news writer with TechTarget's End User Computing media group. Contact him at Redmond@techtarget.com

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Will your company buy new Windows 10 PCs within the next year?
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We plan to purchase few PCs but not Windows 10. Windows ones we buy will operate on Windows 7.
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If we were to buy them today, they would be Windows 7 machines. But a few months out, when the bigger problems have been resolved, kinks controlled, bugs fixed and updates quiet(er), we'd look toward 10. We like the OS, but the rollout has been a bit too rocky for a business environment. 
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We’re not early adopters, and still run primarily Windows 7 machines, although there are some newer Windows versions here and there. Still, I do not see us purchasing a significant number of Windows 10 machines anytime in the next year.
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MS is using windows 10 to keep interest going in its o/s because when replacement units are required it doesn't want win 10 to be a "new" consideration for customers.

Legacy apps are likely to keep windows around but if companies revise applications they are surely going to look to coming away from platform dependence.
A browser app can run anywhere.

Not an overnight change though.
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I’m not quite sure how you can promise to innovate unless you already have something innovative waiting in the wings.
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