Dell - you can no longer invest in them - but don't count them out

Posted on February 5th, 2013

The deal today to take Dell Computer private today is quite a deal. In fact, that sentence has a mistake in it. They haven’t been called Dell Computer for quite a while. They are Dell Inc. They dropped the computer name a while back as they tried to transform themselves in to a mobile products and consumer electronics company.
But that move has not generated enough traction in a fast enough time window. As a result, they are set to go private and attempt to accelerate that transformation.
The world has changed and DELL needs to change with it. Give them credit for realizing that being publicly traded provided a scrutiny that was not conducive to the transformation. I for one applaud the move. I spent a decade in a publicly traded company that had a significant brand footprint and was followed very closely on Wall Street. The glare of the bright lights from the Southern end of Manhattan can really limit a company’s willingness to take risks. It is natural – not a criticism – just natural.
Now DELL can start to transform themselves in to the company they want to be: presumably a company with an improved mobile product offering and consumer electronics devices that satisfy the computing needs we have.
It will be interesting to see how quickly this transformation occurs. Private Equity is making a big bet (as is Michael Dell himself) so expect some quick moves. The deal must still close and that will take some time. But the management team will likely expedite some of the transition.
So what will this mean for the world of mobile, mobile computing, and consumer electronics? Only time will tell, of course. DELL does not have a track record of tremendous product innovation. However, you can expect that the firm will work harder to bring in the right talent to begin to introduce products that make more of a difference in your life. The private equity firms will make sure this happens and make the right introductions.
I bet the winners in this space right now are not too concerned: Apple, Samsung, and Lenovo, specifically. But this will be a fun competitor dynamic to watch in the coming years. If Dell can successfully launch one innovative product in the mobile computing space in the next 12-24 months, this industry could certainly get even more interesting than it already is. 

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