Original URL: http://www.theregister.co.uk/2011/09/19/michael_dell_we_will_keep_making_computers/

Dell: HP's PC exit is an opportunity, not a death knell

Without hardware, there can be no software or services

By Anna Leach

Posted in Financial News, 19th September 2011 14:22 GMT

It doesn't want to buy out Hewlett Packard's PC business, but Dell is going to keep making and selling computers – Michael Dell told FT.com yesterday. Dell sees HP's surprise exit from the field as an opportunity for Dell rather than a harbinger of doom for the industry.

The Dell CEO maintained that hardware still matters and that his company is well-placed to take advantage of the new gap in the market:

Think about the scale economies in our business. As a company spins off its PC business, it goes from one of the top buyers in the world of disk drives and processors and memory chips to not being one of the top five. And that raises the cost of making servers and storage products. Ultimately we believe that presents an enormous opportunity for us and you can be sure we are going to seize it.

Nonetheless it looks as though Dell is covering all bets. His company has just spent $1bn on cloud computing infrastructure and is putting a much greater focus on business contracts and enterprise solutions, positioning its hardware division as an asset in creating the business solutions rather than a major revenue stream in its own right.

As the Dell CEO told the Irish Times during a recent trip to Dublin:

Hardware still matters. It’s the frontline of how you access the IT. Software’s great, we like software. Services are great, we’re doing lots of software and services. But infrastructure and hardware still matters and we’re very happy to be in the PC business. It’s not the only business we are in.

With HP out of the playing field*, Dell is now set to become the world's second largest PC manufacturer, behind Chinese giant Lenovo.

"Let's remember there are 1.5 billion PCs in the world today and Gartner says there will be two billion in 2014. We don't think PCs are going away," Dell told CRN.

"We think it is evolving - we believe in a three-device world. If you followed the Microsoft Build conference yesterday you heard about Windows tablets and Windows 8 and we think there will be a lot of very interesting form factors [to come out]." ®

Bootnote

Since the time of publication, HP has made moves to clarify its position in the hardware manufacturing market.