The choice between model and profit: Dale's hard road

Inspire human potential - this is the ultimate meaning of technology, and it is the source of all that Dell has done. Dell is convinced that no matter ordinary people, institutions, or communities, as long as you use appropriate tools and master certain skills, everything is possible. This is Dell's corporate philosophy. Mike Dell, Dell’s founder and CEO, stated to the public last week, “Dell’s challenge is still to explain to the outside world what Dell can do as a company.” Not everyone knows the answer to this question, but we now know Dell does not make mobile phones.

The original intention of Mike Dell is that what the company is doing now is to integrate various businesses and provide end-to-end services. This is Dell's transition from a pure PC terminal in recent years, which is Dell's choice from the profit and mode.

From the mobile phone point of view, Dell tried to launch Streak 7 tablet on Android, and also launched the same series of smart phones, but it and other Android vendors outside Samsung, did not find a way to obtain profits.

As Jeff Clarke, the head of Dell’s consumer business, puts it, “Android plays content. Amazon sells books, and Google is using search as a supplement. So far, we have not yet found a way to build an Android business.”

Difficult mobile road in the new technology, Dell is not cautious, back in 2009, Dell announced the development of Android-based smart phone products, when the iPhone prevailed, Nokia's Saipan business has shown a decline, and HTC has just begun to adopt Android .

Dell's exploration of mobile phones stems from the decline of the PC business and the rise of the mobile era. Smartphones and tablets (although the iPad had not been released at the time) are the future, and PC's low profits and Dell's advantages have gradually diminished, causing Dell to seek a transition.

Mike Dell, who came back in 2007, faced two transitional roads at the time, either following IBM's solution or following Apple's search for a high-margin consumer terminal. The difficulty of learning from the latter has undoubtedly increased the determination of the former.

Although it was announced early on that it entered the mobile phone market, Dell's pace of trials was not large. In the first two years, Dell had fewer than five mobile phones in sales, and the Chinese market is still not in the initial sales range.

While Apple and Samsung increased their brand investment in the Chinese market to achieve rapid growth in mobile phone sales, Chinese consumers can only look at the true appearance of Dell's mobile phones through parallel channels.

The similar is tablet business. The issue of when China was listed was mentioned several times at the earnings analysts' meeting. Dell's answer is always "Next Year."

In 2011, Dell opened a large-scale press conference for its own tablet business for the first time. The protagonist is the first pluggable tablet with Windows 7 touch screen. It faces business users and is difficult to find in the consumer market. .

The low profit of profit and model trend is the fundamental reason why Dell abandoned mobile phone business. Data shows that in Q3 this year, Apple and Samsung divided the profits of the smartphone market by 106%. The reason why it exceeded 100% was because other competitors were losing money.

In the Chinese market, the Lenovo smartphones that have rapidly climbed the ranks have adopted their strategy in the PC market, which is to use profit for the market. This way Dell will only snort.

In 2009, Acer exceeded Dell for the first time in terms of PC shares. Dell responded, "We are more concerned about profit margins." In 2011, when Lenovo surpassed Dell, Dell emphasized that "we will not pay too much attention to low-margin markets."

Profit is the source of Dell's choice, and Dell, who saw the direction, did not spare his energy.

In the past five years, Dell has acquired more than 20 companies, including hundreds of millions of dollars in "big singles," such as Perot. Most of the company's name is not familiar to ordinary consumers, but after the integration, these acquired companies formed all aspects of Dell's solution business and made more and more contribution in Dell's financial report.

In the last quarter, the profits from Dell's solutions accounted for more than 50% of the company's profits and are still growing rapidly.

The model in this direction is IBM, Hewlett-Packard. More than 10% of the high-margin market is Dell's future.

Although doubts and future funding are sufficient, Dell's success is full of doubts as to whether or not business solutions can run smoothly.

Among them, Dell has been criticized most from the R & D strength. Starting with sales, Dell is best at managing supply chain and control costs. Therefore, when the industry is not fully mature, it has sufficient price advantage, but in the solution market, R&D and technical strength determine the choice of users. Because here, customers have more say than manufacturers.

Unlike Intel and IBM, which spend more than 10% each year investing in R&D, Dell's related investment is only 1.3%.

Second, Dell's transformation has yet to be approved by the capital market. In 2005, Dell's share price reached a peak of 40 US dollars, and fell to 25 US dollars in 2007. Today, Dell's stock price is only 10.43 US dollars.