Dell's name rings from the desktop to the data center. The world's #3 supplier of PCs (behind #1 Lenovo and #2 HP) Dell provides a broad range of technology products for the consumer, education, enterprise, and government sectors. In addition to its line of desktop and notebook PCs, Dell offers network servers, data storage systems, printers, Ethernet switches, and peripherals, such as displays and projectors. It also markets third-party software and hardware. The company's growing services unit provides asset recovery, financing, infrastructure consulting, support, systems integration, and training, as well as hosted IT services. Dell was taken private in 2013 in a deal valued at nearly $25 billion.
Change in Company Type
In the largest leveraged buyout since the recession, the struggling PC maker was acquired in October 2013 by company founder and CEO Michael Dell and private equity firm Silver Lake Partners. (Dell partner Microsoft reportedly chipped in $2 billion to the deal in support of the PC industry's longer-term well-being.) Away from the scrutiny of Wall Street, analysts say Dell might stand a better chance of turning itself around -- something the company has had trouble doing amid heightened competition from the likes of HP, Lenovo, Apple, Google, Acer, and IBM.
The buyout was approved by shareholders in mid-September amid protests from activist investor Carl Icahn, who argued that the takeover price was too low.
Dell generates about half of its revenue outside of the US. Because it does a significant portion of its business in international markets, the company is looking to bolster its presence in developing markets, such as the BRIC (Brazil, Russia, India, and China) countries. It also continues to look overseas to cut operational costs. Based in Singapore, Dell's Asia/Pacific segment includes manufacturing and distribution units in China, India, and Malaysia, as well as a business center in India.
Dell has traditionally been a desktop PC company, and desktop PCs continue to generate nearly a quarter of the company's total revenue. However, this business has been facing shrinking demand as the popularity of mobile devices like tablets and smartphones skyrocket.
Meanwhile, Dell's mobility segment, which makes notebooks, generates a larger share of sales, accounting for nearly 30% of revenue. This segment also sells high-end gaming and multimedia PC products, including its XPS and Alienware lines. Other key products come from Dell's software and peripherals segment, which consists of Dell-branded displays and printers, as well as third-party peripherals, software, digital cameras, printers, and televisions.
Faced with the dominance of Apple's iPhone and a host of Android-based mobile devices, Dell exited the US smartphone market in 2012, discontinuing its Windows Mobile-based device.
Like many of its competitors protecting themselves against a weakening consumer PC market, Dell offers enterprise products, including servers and networking equipment, as well as storage devices such as the PowerVault product family and devices from EMC. On the services side, which has grown from 8% to 15% of sales since 2008, Dell offers a broad range of IT and business services, including infrastructure technology, consulting and applications, and product-related support services.
Dell's revenue decreased by 8% and its net profit decreased by 32% in fiscal 2013 compared to fiscal 2012. The decrease was primarily driven by a decrease in revenue from its consumer segment, though all of its segments experienced declines in revenue during fiscal 2013.
The declines were due to weak global macro-economic conditions, competitive pricing dynamics, and increased competition from alternative mobile devices. These dynamics particularly impacted demand for its client products. Revenue from the company's client products decreased 15% during fiscal 2013.
Dell is in the middle of a broad transformation to become an end-to-end technology solutions provider. As part of the transformation, the company continues to shift its portfolio of products and services to provide higher-value and recurring revenue streams over time.
In early 2014 it extended a reseller and implementation partnership with California-based NetSuite, which offers cloud-based business process management software to midsized companies and divisions of larger enterprises. The deal falls in line with Dell's focus on enterprise business. Also that year Dell partnered with Red Hat on network function virtualization technology.
The variety of the company's product and service selection is indicative of its ongoing effort to keep pace with the industry. Dell proved its ability to adapt to changes in the marketplace after expanding beyond its direct sales model to partner with retailers (including Best Buy and Wal-Mart), resellers, and distributors to reach new customer segments.
Mergers and Acquisitions
Since the beginning of fiscal 2012, Dell has acquired more than twelve businesses. These acquisitions have extended Dell's core capabilities in a variety of enterprise offerings, including storage, networking, virtualized server, data center, desktop solutions, and software-as-a-service application integration, as well as enabled expansion of its customer financing activities.
Dell completed nine such acquisitions in fiscal 2013, including its acquisitions of SonicWALL, Wyse Technology, and the $2.4 billion purchase of Quest Software, a provider of IT management products for handling areas such as systems, security, and workspace.
In 2014 Dell added to its data mining and predictive analytics portfolio with the purchase of StatSoft, a provider of advanced analytics software.