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Dell PCs to live on as vector for software, services

Dell shops needn't worry about the future of PCs; the company needs its computer hardware to cross-sell software and services, including its EMM platform.

IT shops that continue to use Dell PCs needn't worry about the longevity of Dell's computer hardware business.

At a recent Dell analyst meeting, the private company communicated its continued focus on PCs and other hardware. Turns out, the company needs hardware to boost its software and services sales.

For IT professionals, Dell's continued focus on PC hardware is welcome news.

"With any hardware vendor, I want to have confidence [they are] reliable," said JD Young, a technology systems engineer at the Tahoma School District in Maple Valley, Washington. The district uses a mixture of Dell and Lenovo hardware.

Young likes that Dell remains committed to hardware, adding that as long as the quality is good, it does not necessarily need to be cutting-edge.

Some analysts said they believe Dell's statements are a sign that the company is coming into its own as a private entity.

With any hardware vendor, I want to have confidence [they are] reliable.

JD Young,
technology systems engineer, Tahoma School District

"The commercial PC business is beginning to turn around," said Bob O'Donnell, founder and chief analyst at TECHnalysis Research LLC in Foster City, California. "That's given them some wind in their sales, and it has spread throughout the company. They continue to do a lot of work on integrating software companies. [When Dell] went private, they knew it would take a while to see results."

Dell showed a number of hardware technologies earlier this month at CompuTex in Taiwan, including the new Inspiron 11 3000 Series of 2-in-1 computers. The devices will go head to head with others from industry titans such as Lenovo, Hewlett-Packard, Asus and Microsoft.

IDC expects total worldwide PC unit shipments to reach 296.3 million units in 2014, boosted by recent migrations off of Windows XP to newer computers. The market outlook, however, continues to be subdued as newer touch-based tablets and the transition to mobile and cloud computing affect the traditional PC market, IDC said.

"PC growth now is nice," O'Donnell said. "Some [organizations] held off on buying PCs, [but] people are realizing they need to update the [computers]."

The 2-in-1 market has recently gained some traction as well, with IT organizations consolidating the number of devices workers carry.

"Generally, the 2-in-1s are now becoming more acceptable and popular in the enterprise," said Jack Gold, principal and founder of J. Gold Associates, an IT consulting organization based in Northboro, Massachusetts. "They are looking for something that would provide them the ability to have PC performance with the weight and size and sex appeal of a tablet."

Indeed, having PC performance combined with the mobility of a tablet in a single device seems to be the evolving trend for the computing industry.

Ninety percent of the time, people use a 2-in-1 as a PC and the other 10% as a tablet, said O'Donnell.

What about Dell software?

While Dell's renewed commitment to PCs brings the company back to its roots, it's also drumming up interest for its enterprise mobility management (EMM) suite. Managing mobile devices and applications has become much more competitive as large industry players including IBM, Microsoft, VMware and others attempt to gain a foothold in this emerging market.

Dell unveiled its broad EMM strategy in December 2013 at Dell World and made it generally available in March. The company is in the midst of technically integrating disparate products from all its acquisitions as part of its EMM platform.

The first phase focused on the management and security of the environment, and the next stage will focus on remote access and identity access management, according to Neal Foster, executive director for Dell Software.

The company has been working on integrating its SonicWall gateway into the EMM platform, with general availability expected soon. Full integration of identity access in the EMM platform will happen in the next few months, Foster said.

As Dell Software doubles its efforts to encourage business adoption for EMM and other services, the company must contend with internal frustrations that naturally come with integrating a vast empire of acquisitions. Questions about Dell Software and whether it can offset the thin margins from selling hardware in the long run will pester the private organization, sources said.

Dell is not de-emphasizing software and services but rather reiterating the company still makes devices, Foster said. The goal is to cross-sell software and hardware to both new and existing customers.

If an existing customer buys hardware, it is easy to ramp up the discussion on mobility, he noted. If the customer is in security or in networking, Dell Software leverages that to emphasize the EMM aspect too, Foster added.

To date, Dell Software has yet to publicize which customers use its EMM suite. Even Dell's other business units treat Dell Software as an IT supplier. The product needs to go through the same rigors as any supplier before another division of Dell decides to make a purchasing decision.

There is a fair amount of viability across the portfolio now, said Michael Coté, research director for infrastructure software at 451 Research in New York. Dell will be around for a while, and it will focus on its core offering like PCs, he said. The bigger question is whether Dell's strategy will work to grow its software and services business, Coté added.

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