Stephen Foley: Late off the starting grid, Dell is hoping for an Apple-style tech miracle


US Outlook: It is hard not to sympathise a little with Michael Dell, the founder and chief executive of the global computer giant that bears his name.

His is one of the great entrepreneurial stories of our time, the tale of a man who began piecing together custom computers on his dorm room floor in Texas in 1984 and built the biggest PC manufacturer in the world. But today that crown has been lost to Hewlett-Packard, while it is the turtle-necked one over at Apple who is lauded as America's Entrepreneur-in-Chief, whose every product launch seems to generate a bigger wow.

I confess I was jabbing to get a reaction when I asked Mr Dell this week if he had an iPad. "I don't think that's a useful line of questioning," he responded, without a smile. I persisted. Surely you test out your rivals' products? "I don't think that's a useful line of questioning."

Mr Dell doesn't do soundbites, he doesn't pontificate on the tech industry, he doesn't depart from corporatespeak. In short, he couldn't be less of a showman – and that is absolutely no bad thing. The bulk of Dell's operations are not focused on the consumer. Three-quarters of its revenue comes from supplying PCs, servers and storage systems to business and, increasingly, selling the IT services that will help a company pull them all together. And if there is one thing that Mr Dell excels at it is talking deep tech with corporate IT directors and chief executives.

The important contrast between Steve Jobs and Michael Dell is not between a showman and a shy man, it is between Apple's soaraway profit growth and Dell's gnawingly disappointing financial results.

It is three years since Mr Dell sacked his chief executive and took back day-to-day control of the company (a fiction, since he was very much in control even when the roles of chairman and chief executive were split), and the share price has halved in that time. Dell is still paying the price for its founder's attachment to the business model that made his company huge. It used to assemble PCs itself, to order, shipping directly to customers. That stopped working in the middle of the last decade when PCs truly became a commodity product and Dell was ill-equipped to deal with a price war.

To his credit, Mr Dell has recognised the need to catch up, so these days the company ships ready-made PCs via retailers and outsources the bulk of its manufacturing, but it still has to deal with too much complexity in its product range and hasn't found all the cost- cutting tricks that its rivals use.

The company's investor day on Thursday was designed to highlight the business-to-business areas of Dell's operations, and especially its IT services division, and to drag the focus away from the miserable performance of the consumer business. The cutest line of the morning came when Mr Dell was asked about the opportunities for the company in the exploding market for smartphones. "The first thing I think about is all of the servers and storage required to serve up the data that will be pulled by these smartphone users."

Nonetheless, Dell is trying to get in on the act with phones. It has just launched a super-size touchscreen device called the Streak (yes, really), which it hopes will be big enough to satisfy people who lust for the iPad but don't want the hassle of a second device to carry around. It will have a tablet of its own later this year, and is refreshing its range of high-end laptops.

That will be a key component of improving the consumer division's operating margins from the current, paltry 1 per cent but, without an Apple-style miracle, the business looks like being a drag on the group for the foreseeable future. It is almost six years since IBM took the radical decision to sell its PC business to the Chinese firm Lenovo, in order to concentrate on higher-margin servers and services. Wall Street's patience is not inexhaustible and if Dell cannot soon show real improvements in its consumer division, there will be growing calls for a similar amputation – and that would surely be wrench too far for Mr Dell.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there