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The Upside of Microsoft Part-Owning Dell
News is breaking that Microsoft may toss in as much as $3 billion to help Dell go private. Over the past week it’s now clear that Michael Dell has been wooing private equity investors to buy his company and maybe even his stake in the company and take the company out of the stock market.
Over the past couple of years, Dell’s CEO has told anyone who’ll listen that the company is morphing into a services firm to compete more with IBM, rather than take on Lenovo and its hardware. This would be a major de-emphasis on the PC. Dell PCs would still be sold, but not headlined. Nobody wanted to listen to this and all the reports still refer to the company as “PC-maker Dell.” Even HP isn’t stuck with this epithet.
When you combine what Dell is doing with the other meme going around—that the PC is dead, as I have written about more than a few times—you end up with a simple equation: “PC-maker Dell” + “PC is dead” = “Dell is dead.”
Somewhere along the way Dell decided that this death knell could not be fixed. I would hope that he fired a few PR people along the way, although I doubt it.
My readers know my thesis about the future of Microsoft and that future is hardware. The Surface tablet is only the beginning. Microsoft sees the Dell deal as an opportunity to build bigger equipment. Dell has large factories in China which would be ideal for manufacturing Microsoft-branded gear. As a part owner of Dell, the company would not have to worry about Dell getting irked by the channel conflict. It’s a dream come true for both companies.
The biggest beneficiary will be the buyers of the machines. Microsoft knows that the public is at the end of its rope regarding Windows and the near impossibility of keeping a system running trouble-free. Third-party machines running Windows allow anything and everything to be installed, much of which causes conflicts. Apple has a different approach with its control over the software and hardware.
With a Microsoft-branded PC or laptop you’d at least get the sense of a reference standard Windows machine. Microsoft could actually receive a small premium if it marketed these products correctly.
This is all part of the Microsoft grand strategy of rolling out retail operations across the world to sell branded Microsoft products in much the same way as Apple Stores.
Curiously, the original computer store was an operation called “Computer Kits” run by MITS, the seller of the first successful personal computer, the Altair, and was dedicated to sales of the Altair. This soon morphed into emporium-like stores culminating in Computerland and CompUSA. These emporiums had no focus and ended up like the stereo stores of the 1970s and 1980s: unfocused and riddled with misleading information.
Those days are over. In the future you’ll be shopping at the Apple Store and the Microsoft Store and that will be that. At least until a better idea comes along.
By John C. Dvorak, PCMag