Dell driven upmarket as PCs become commodities

The current downturn in the IT market could herald a sea change in the technology sector that could see the disappearance of the...

The current downturn in the IT market could herald a sea change in the technology sector that could see the disappearance of the desktop PC altogether.

This is not a new view but when it is propounded by a senior figure from the world's number one PC manufacturer, it is certainly cause for thought.

Paul Bell, president of Dell's European operation, told CW360.com that the desktop PC had been turned into a simple commodity, and may soon evolve out of existence.

"Five years from now the low-end desktop that has been a big part of Dell's history may be gone. It might be replaced by something that is unrecognisable as a desktop, but it will be a computer system and we think the market will continue to be there, going through various cycles of low and high demand along the way."

Dell moved into server production as the PC became commoditised and Bell said the company would be driven further upmarket to maintain profit margins.

"We are convinced that what we are seeing being played out in this [server] space is very similar to what we have already lived through with desktops, notebooks and workstations, which is the commoditisation process," said Bell. "We can see the cost points beginning to really transform the industry."

The hardware vendor is now pumping the lion's share of its investment capital into developing new strands of the business, outside its PC base.

"At a time when we are actually reducing head count to drive productivity, the place where we are adding [staff] at very aggressive rates is in this whole area. We have head count growth of up to 200% in some areas," said Bell.

Bell added that Dell's performance over the last five years had convinced the company that it was capable of transforming itself and moving upmarket.

"We are already thinking about where we will be two, three, four years from now. It is hard to predict at what point the cycle will turn, but the way we see it is that we are participating in the computer systems and services market. We want to keep the whole Dell strategy and model upstream."

Stuart Finlayson

Read more on Data centre hardware

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