ROUND ROCK, TX - Dell’s workstation division seems to be enjoying a surge of support within the company –so much so that they had their 1st workstation-only press event, flying in media folk from all over the world to tour their HQ near Austin, Texas. Over two days we heard how their computers and workstations were superior and loved by their customers. For those who attended only to be able to get into the enormously popular South by Southwest(1)..well, they just had to wait until Dell was done.
Andy Rhodes of Dell introduces Dell's $1200 mobile workstation, the M2800.
We were treated to the world’s fastest workstation (though results have not been made public), their new "budget"mobile workstation, the M28800, super cool 4K monitors, an industrial design department that thinks outside of the Dell black box and the opening of a “Center of Excellence,” which ironically, offers a non-workstation alternative.
But first a bit of background. Dell has been through a rough patch. Stung by the recent surge in mobile devices (as were all computer vendors), it has gone through the throes of falling out of favor with investors in a market where cool and a hip takes precedence over performance and value, the company went from public to private and is now back under the leadership of founder Michael Dell. It was under Michael that Dell enjoyed its heyday with an undisputed solid #1 position as PC manufacturer, unseating the very companies that invented the personal computer (IBM and Apple) -- and it is under Michael Dell that the company hopes to bring back those glory days.
It is a multimillion dollar gamble -- $25 billion(2) to be exact. A hundred thousand jobs rest in the balance -- 14,000 of them in Round Rock. In this part of Texas, Michael is viewed as a celebrity, philanthrope, a savior -- if not a god, his Olympus being a nearby Austin hill on which he has built a 22,000 square foot residence. He may not have been there during the press events, but his presence was continually invoked (as in "Michael and Jeff(3) think...").
It's clear from from here on, Dell's fortunes (the company and the man) depend a large part on workstations, not on PCs. It was in another era when PCs were a hot item, but now they are just commodity items bought on price alone with margins so low that no company can make any money. Remember how Big Auto almost died trying to compete in the car market against foreign competition? Then they discovered the SUV. A happy accident, bolting a luxurious body onto a truck chassis filled a need nobody knew they had. A base model sedan may have been costing Detroit money to produce but a SUV could generate as much as $18,000(4) of profit. No one else had them and Detroit could charge what they wanted.
Indeed, the consumer market for Dell is only generating 15 to 20 pct of Dell's business.
1. Dell paid for travel expenses plus SXSW admission.
2. "Michael Dell Buys Back PC Company He Founded in $24.8 Billion Deal," The Guardian, Sep 12, 2013
3. Jeffrey W. Clarke, Dell Vice Chairman, Operations
4. from Wikipedia Sport Utility Vehicle, though with increased competition the profit margins are probably much lower