DELL - Dell Inc.

[Guest valueInv]

http://www.bloomberg.com/news/2012-10-09/at-t-shares-network-with-ibm-to-lure-more-customers-to-the-cloud.html

 

Pretty interesting to see IBM working hand in hand AT&T.  This shows that the "carriers" are continuing to expand into the provisioning of cloud infrastructure/services to their customers. 

 

One wonders what DELL's approach will be to working with the carriers.

Trying to play catchup to IBM?

[Parsad]

What does the board (especially those who are long DELL) think about the two qualitative issues I present:

 

1. This claim brought against DELL by the SEC that they accepted money from Intel to use Intel CPUs exclusively. Going far enough as having top Dell executives literally calling Intel to ask for money to meet analyst estimates?

PDF Here: http://sec.gov/litigation/complaints/2010/comp21599.pdf

 

2. The recent litigation against Jon Horvath of SAC Capital of passing on insider information from DELL to SAC Capital? What do members who are long DELL think of the fact that insiders disclosed this information?

 

Are these issues in the far past? Or does this culture still exist at Dell? Does it make a difference?

 

It probably does still exist to a degree.  People don't change their stripes.  But you are discussing two issues...one of meeting analyst estimates by 1-2 cents a quarter and the other is insider trading.  I like neither!  But what does that have to do with the remaining cash flow at the company, or the fact that they sell products and have been increasing margins?

 

Or does this culture still exist at Dell? Does it make a difference?

 

If the culture still existed, how would we even know?

 

It would make a big difference because the thesis for Dell rests on management's promises and Michael Dell's reputation (certainly not their track record). If you can't trust either, then the thesis collapses.

 

It would make no difference to the thesis at all.  Do you invest based on management or valuation?  We invest primarily on valuation, and if good management comes with it, then that's icing on the cake.  The margin of safety we apply takes into consideration that an idiot may actually be running the company.  Cheers!

[Guest valueInv]

What does the board (especially those who are long DELL) think about the two qualitative issues I present:

 

1. This claim brought against DELL by the SEC that they accepted money from Intel to use Intel CPUs exclusively. Going far enough as having top Dell executives literally calling Intel to ask for money to meet analyst estimates?

PDF Here: http://sec.gov/litigation/complaints/2010/comp21599.pdf

 

2. The recent litigation against Jon Horvath of SAC Capital of passing on insider information from DELL to SAC Capital? What do members who are long DELL think of the fact that insiders disclosed this information?

 

Are these issues in the far past? Or does this culture still exist at Dell? Does it make a difference?

 

It probably does still exist to a degree.  People don't change their stripes.  But you are discussing two issues...one of meeting analyst estimates by 1-2 cents a quarter and the other is insider trading.  I like neither!  But what does that have to do with the remaining cash flow at the company, or the fact that they sell products and have been increasing margins?

 

Or does this culture still exist at Dell? Does it make a difference?

 

If the culture still existed, how would we even know?

 

It would make a big difference because the thesis for Dell rests on management's promises and Michael Dell's reputation (certainly not their track record). If you can't trust either, then the thesis collapses.

 

It would make no difference to the thesis at all.  Do you invest based on management or valuation?  We invest primarily on valuation, and if good management comes with it, then that's icing on the cake.  The margin of safety we apply takes into consideration that an idiot may actually be running the company.  Cheers!

 

So what is the assumption in the "idiot running the company scenario"? What will the ES&S revenues be three years from now? What will the margins be 3 years from now?

[Parsad]

What does the board (especially those who are long DELL) think about the two qualitative issues I present:

 

1. This claim brought against DELL by the SEC that they accepted money from Intel to use Intel CPUs exclusively. Going far enough as having top Dell executives literally calling Intel to ask for money to meet analyst estimates?

PDF Here: http://sec.gov/litigation/complaints/2010/comp21599.pdf

 

2. The recent litigation against Jon Horvath of SAC Capital of passing on insider information from DELL to SAC Capital? What do members who are long DELL think of the fact that insiders disclosed this information?

 

Are these issues in the far past? Or does this culture still exist at Dell? Does it make a difference?

 

It probably does still exist to a degree.  People don't change their stripes.  But you are discussing two issues...one of meeting analyst estimates by 1-2 cents a quarter and the other is insider trading.  I like neither!  But what does that have to do with the remaining cash flow at the company, or the fact that they sell products and have been increasing margins?

 

Or does this culture still exist at Dell? Does it make a difference?

 

If the culture still existed, how would we even know?

 

It would make a big difference because the thesis for Dell rests on management's promises and Michael Dell's reputation (certainly not their track record). If you can't trust either, then the thesis collapses.

 

It would make no difference to the thesis at all.  Do you invest based on management or valuation?  We invest primarily on valuation, and if good management comes with it, then that's icing on the cake.  The margin of safety we apply takes into consideration that an idiot may actually be running the company.  Cheers!

 

So what is the assumption in the "idiot running the company scenario"? What will the ES&S revenues be three years from now? What will the margins be 3 years from now?

 

You'll have to work that one out on your own.  Mohnish once told me that the reason my fund was so small was because I gave away all the answers on here.  I haven't learned any better.  Cheers!

[LC]

 

It probably does still exist to a degree.  People don't change their stripes.  But you are discussing two issues...one of meeting analyst estimates by 1-2 cents a quarter and the other is insider trading.  I like neither!  But what does that have to do with the remaining cash flow at the company, or the fact that they sell products and have been increasing margins?

 

 

It would make no difference to the thesis at all.  Do you invest based on management or valuation?  We invest primarily on valuation, and if good management comes with it, then that's icing on the cake.  The margin of safety we apply takes into consideration that an idiot may actually be running the company.  Cheers!

Good point. I agree at some point any business has a price which makes it worth buying.

 

My concern is that this is a situation where management is not just idiotic but unethical and borderline criminal. It seems like both decisions (accepting Intel kickbacks to support an inflated share price and divulging insider information) are made to enrich management, not shareholders or the business. Although I guess maintaining a deceivingly-high share price would be to the shareholder's benefit...provided they knew the house of cards would one day fall.

 

According to the SEC complaint, management chose not to improve their business by incorporating lower cost/better quality AMD chips and move to higher margin products. Quote:

On April 3, 2004 Rollins sent Michael Dell an email arguing Dell should diversify its business towards higher margin server and other products. He noted Dell's reliance on Intel payments was a strategic "problem", stating that "for 3 qtrs now, Intel money has made the qtr. A bad way to run the railroad."

Meanwhile Rollins told shareholders that meeting EPS was due to execution, efficiency, strong customer relations, etc. etc.

 

So, Dell senior executives engage in unethical dealings to maintain their inflated share price. They publically misrepresent their business conditions to shareholders, and consciously resist changing their business model to higher margin products and services to keep the Intel money flowing in the short-term.

 

I understand I am beating a dead horse here, but that is what is holding me back from making an investment. If you believe your MoS takes this into account I wish you the best in your investment and hope I am wrong.

 

PS: Just as an aside: Buffett talks about buying a business even an idiot can run (because one day one will), but I can't recall any idiotic managers he has running his businesses.

 

PPS:

You'll have to work that one out on your own.  Mohnish once told me that the reason my fund was so small was because I gave away all the answers on here.  I haven't learned any better.  Cheers!

Who is this Mohnish and where can I get my hands on him!? He needs some sense talked into him! Kidding of course :)

[ItsAValueTrap]

PS: Just as an aside: Buffett talks about buying a business even an idiot can run (because one day one will), but I can't recall any idiotic managers he has running his businesses.

He made some comments about Kraft's management, saying that the sale of the pizza business was a terrible idea.

 

He also bought GenRe and its troubled derivatives unit.

 

2- Wasn't Dell buying back its stock when all that was happening?  It's pretty backasswards to pump your stock while you are buying it back.

 

Now that Dell stock is cheaper... they will issue dividends instead of buying back stock?!

[txlaw]

What does the board (especially those who are long DELL) think about the two qualitative issues I present:

 

1. This claim brought against DELL by the SEC that they accepted money from Intel to use Intel CPUs exclusively. Going far enough as having top Dell executives literally calling Intel to ask for money to meet analyst estimates?

PDF Here: http://sec.gov/litigation/complaints/2010/comp21599.pdf

 

2. The recent litigation against Jon Horvath of SAC Capital of passing on insider information from DELL to SAC Capital? What do members who are long DELL think of the fact that insiders disclosed this information?

 

Are these issues in the far past? Or does this culture still exist at Dell? Does it make a difference?

 

1.    Regarding the accounting issues associated with Intel loyalty rebates, this is a troubling part of DELL's past that I think it has put behind it.  Heads rolled, fines were paid, settlements/injunctive relief was agreed to, reputations were lost, and whole departments were reshuffled/purged.

 

I would disagree with the sentiment that companies don't change.  We all know that the pressure to meet quarterly earnings is intense and a lot of people -- good and bad -- succumb to this pressure.  Often when the sh!# hits the fan, that's when things change and people start regulating their (and their employees') behavior in a better way.  If you don't believe this, don't invest in the US banks -- at all.

 

Now, it should be pointed out that loyalty rebates are a controversial topic because it is not entirely clear when they are wrong and when they are not.  I remember discussing these when I took antitrust law back in the day.  Basically, the controversy is over whether or not they are legitimate programs that are pro-competitive or anti-competitive.  Essentially, you have a supplier lowering the cost of their wares so that a certain volume of goods will be bought.  The problems occur when the supplier is a monopolist.  I wouldn't get fixated on the concept of loyalty rebates themselves, which are a lot like volume discounting.  Even the fact that the discretionary percentage was assessed in short time frames isn't particularly troubling given that these OEMs are constantly negotiating with suppliers on price, and DELL was throwing its weight around against someone who could also throw its weight around, INTC.

 

What IS very troubling is the way that the discretionary lump sum payments were paid out and withheld by INTC, and requested by DELL.  The allegations in the various suits against DELL indicate that DELL was engaging in quarterly numbers smoothing to appease Wall Street, something that many well run companies -- GE and AIG, for example -- have done in the past.  In the insurance field, these companies have often gotten help from other companies like MBI or Gen Re.  This constantly goes on in the corporate world, and it's something one ought to look out for in assessing investments.

 

The disclosure was clearly inadequate at DELL given the material risk that INTC could pull the rug out from DELL's COGS by withholding the lump sum payments.  I think most people understood that DELL's gross margins were higher in part because they were paying less for INTC processors.  But the quarterly draw down of those rebates plus the huge impact on COGS wasn't adequately disclosed as a risk to investors.  Now, of course DELL couldn't just disclose numbers, but the risk definitely should have been disclosed.  But this was a problem across OEMs generally.  Bad things tend to occur when you have monopolists calling the shots (people invested in Apple suppliers should be aware of this phenomenon).  DELL skated a little too close to the line, and they paid for it. 

 

There appears to be a real belief among folks in the C-Suite that volatility in earnings and divergence from earnings guidance is really, really bad because the Street will punish you and your doing something wrong if your stock price drops.  This is just perverse thinking that has to be changed in the minds of public company managers.  I think regulatory actions help change the thinking at these companies and therefore serve a good purpose in the grand scheme of things.

 

MSFT was a monopolist who engaged in anti-competitive behavior.  Is MSFT gonna engage in the same behavior it did in the past?  I don't think it will.  INTC has thrown its weight out around in the past and definitely has gotten sued for it.  I still think it's a great company, and I think it will not be dinged like it was in the past.  There are lots of great businessmen who can't help but engage in monopolistic practices (as defined by the antitrust laws) -- it's part of their nature.

 

Bottom line, I'm aware of the past accounting issues and am comfortable that they have changed their behavior based on the actions that were taken at DELL.  Heck, the way that they missed their revenue guidance by a mile from about a year ago shows that they no longer are really trying to make numbers.  Personally, I think they should focus less on quarterly guidance.

 

2.  Insider trading is a different thing.  It's very person-specific.  David Sokol engaged in behavior that was inappropriate.  Why?  One of the most respected guys at McKinsey, who had it made really, engaged in insider trading.  Why?  I don't think you can ding BRK or McKinsey for these guys' mistakes.  Similarly, you can't ding DELL for the SAC matter.  Now SAC on the other hand . . .

[shalab]

Ballmer - Microsoft will be more like apple. This could impact DELL in a big way.

 

http://news.yahoo.com/microsoft-ceo-sees-company-becoming-more-apple-002521396--finance.html

 

 

[ERICOPOLY]

Ballmer - Microsoft will be more like apple. This could impact DELL in a big way.

 

http://news.yahoo.com/microsoft-ceo-sees-company-becoming-more-apple-002521396--finance.html

 

It would be refreshing to purchase a laptop directly from Microsoft without the pre-loaded crap the OEMs add on.

[tombgrt]

Ballmer - Microsoft will be more like apple. This could impact DELL in a big way.

 

http://news.yahoo.com/microsoft-ceo-sees-company-becoming-more-apple-002521396--finance.html

 

 

 

Bit off-topic but... why is Ballmer looking at Apple? MSFT isn't Apple in terms of being visionary, innovative, ... Does anyone really have faith that Ballmer will have great success in selling hardware? He refers to xbox but that is a total dud profitwise.

[txlaw]

Ballmer - Microsoft will be more like apple. This could impact DELL in a big way.

 

http://news.yahoo.com/microsoft-ceo-sees-company-becoming-more-apple-002521396--finance.html

 

This is a known risk that everyone has talked about for a while now.  That's why DELL is shifting from EUC to ES&S, of course.

 

Note that this shift could also impact MSFT in a big way, which is something we discussed when Surface was disclosed.  MSFT has relied heavily on OEMs to distribute their software as part of business technology solution purchases.  Everything is changing in the industry and MSFT risks alienating these guys who might start introducing OSX, Android, Linux, and thin-client computing into the picture.  Additionally, MSFT counts on the big OEMs like HP and DELL to sell some of their solutions like Azure boxes into data centers.  Those solutions are unlikely to gain traction if MSFT is throwing its partners under the bus (NOK?). 

 

A mitigating circumstance for MSFT could be BYOD.  (Yes, BYOD is starting to apply to more than just smart phones.)  If MSFT can become a winner to consumers and there is a way to cordon off personal data from business data, then you might see people bringing in their own devices, especially if we move to a more thin client/DaaS type of world.

 

Personally, I'm really excited to get my hands on a Surface device.

[PlanMaestro]

Bit off-topic but... why is Ballmer looking at Apple? MSFT isn't Apple in terms of being visionary, innovative, ... Does anyone really have faith that Ballmer will have great success in selling hardware? He refers to xbox but that is a total dud profitwise.

 

Read "The Innovator's Dilemma" from the perspective of Integration vs Modularization. Apple's integration culture is great for new products, Microsoft is trying to keep up. Microsoft needs to stay in the game long enough, while Apple has to build switching costs, for if/when that strategic shift arrives.

 

 

[Palantir]

Note that this shift could also impact MSFT in a big way, which is something we discussed when Surface was disclosed.  MSFT has relied heavily on OEMs to distribute their software as part of business technology solution purchases.  Everything is changing in the industry and MSFT risks alienating these guys who might start introducing OSX, Android, Linux, and thin-client computing into the picture.  Additionally, MSFT counts on the big OEMs like HP and DELL to sell some of their solutions like Azure boxes into data centers.  Those solutions are unlikely to gain traction if MSFT is throwing its partners under the bus (NOK?). 

 

How do you feel an OEM like Dell could possibly respond to MSFT becoming a competitor? They can't suddenly start offering OSX devices (Apple believes in integrating HW and SW), and I don't believe Chrome/Android OS has the "ecosystem" to be viable as a desktop OS. If it gets serious, then likely OEMs would start negotiating with Google or RHT to bring their OS's to market on desktop, but that would be in a contracting industry.

 

Furthermore, using thin client computing in the future is almost a certainty, and Dell's server business is going to be eroded by server virtualization.  The only way out I see for Dell is to do ES&S and combine with their server business to provide integrated virtualization solutions (infrastructure, serverV, desktopV, and appV) in package deals.

 

Remember, Google themselves may become a competitor to these OEMs (Motorola).

 

Just thinking out loud though.

[txlaw]

Note that this shift could also impact MSFT in a big way, which is something we discussed when Surface was disclosed.  MSFT has relied heavily on OEMs to distribute their software as part of business technology solution purchases.  Everything is changing in the industry and MSFT risks alienating these guys who might start introducing OSX, Android, Linux, and thin-client computing into the picture.  Additionally, MSFT counts on the big OEMs like HP and DELL to sell some of their solutions like Azure boxes into data centers.  Those solutions are unlikely to gain traction if MSFT is throwing its partners under the bus (NOK?). 

 

How do you feel an OEM like Dell could possibly respond to MSFT becoming a competitor? They can't suddenly start offering OSX devices (Apple believes in integrating HW and SW), and I don't believe Chrome/Android OS has the "ecosystem" to be viable as a desktop OS. If it gets serious, then likely OEMs would start negotiating with Google or RHT to bring their OS's to market on desktop, but that would be in a contracting industry.

 

Furthermore, using thin client computing in the future is almost a certainty, and Dell's server business is going to be eroded by server virtualization.  The only way out I see for Dell is to do ES&S and combine with their server business to provide integrated virtualization solutions (infrastructure, serverV, desktopV, and appV) in package deals.

 

Remember, Google themselves may become a competitor to these OEMs (Motorola).

 

Just thinking out loud though.

 

All OEMs are not equal.  Pure end user computing OEMs are gonna get shafted.  Technology solutions providers will respond by divorcing themselves from MSFT.

 

Ultimately, I think it's a good idea for DELL to be technology agnostic and solutions oriented. 

 

Better to use ARM in servers when that's what customers want rather than wed yourself to INTC.  Better to try new things like Project Sputnik (linux) and start offering more Android devices as part of your consulting work and solutions packages.  Re OSX, you're not gonna see OEMs actually selling OSX devices (I don't think), but rather incorporating the use of OSX devices into their consulting and solutions packages.  I also believe thin client computing is a certainty, and you see DELL moving into that through Wyse and working with VMware for DaaS.  We may see DELL getting into the datacenter biz like IBM is by partnering with "carriers."  You will see more support for OpenCompute, OpenStack, etc.  Software will clearly play a bigger part of the puzzle.

 

Adaptation is key.  Let's see how DELL responds to MSFT's actions.

[Palantir]

Out of curiosity - have you invested in any of these virtualization firms like RHT/CTXS/VMW? Do you feel that they're going to be partners or rivals to the "traditional" IT firms like Dell, HP, IBM?

 

 

[Parsad]

Ballmer - Microsoft will be more like apple. This could impact DELL in a big way.

 

http://news.yahoo.com/microsoft-ceo-sees-company-becoming-more-apple-002521396--finance.html

 

 

 

Bit off-topic but... why is Ballmer looking at Apple? MSFT isn't Apple in terms of being visionary, innovative, ... Does anyone really have faith that Ballmer will have great success in selling hardware? He refers to xbox but that is a total dud profitwise.

 

The turkey spends all of his time talking about how Microsoft is better than Apple, and then suddenly admits that they were so far behind...is this guy really the one you want leading the company forward?  Yes he's bought alot of shares, increased cash flows, income, revenues, etc.  But was that Ballmer or was that just Microsoft's enormous moat...and yes, an idiot has been running the company for the last 7 years.  Cheers!

[Parsad]

Barron's - "Investors Underestimate Enterprise Prospects, Says UBS"

 

http://blogs.barrons.com/techtraderdaily/2012/10/10/dell-investors-underestimate-enterprise-prospects-says-ubs/?mod=yahoobarrons

[txlaw]

Out of curiosity - have you invested in any of these virtualization firms like RHT/CTXS/VMW? Do you feel that they're going to be partners or rivals to the "traditional" IT firms like Dell, HP, IBM?

 

No, I haven't. 

 

I think they are going to be partners if not potential acquisition targets for people like DELL, HP, and IBM.  I love how these guys are making it possible to do more with less, and that's just a natural fit for productivity solutions providers like DELL, HP, and IBM.

 

There are people on the board who will understand much more than I do about the success that the various virtualization firms might have in the marketplace.

[Guest rimm_never_sleeps]

these virtualization companies represent furhter opportunity for dell and hpq to continue what they do best...buy high multiple story stocks while their own companies trade at 5 times earnings.

[shalab]

Migration to cloud is not going to be easy for Dell as there are established players like RAX and AMZN. Also, Office365 runs on Microsoft cloud and not on third party cloud. Essentially, with the cloud, you are seeing IT costs coming down by cutting the middle man out.

 

IBM/ORCL/CSCO/MSFT are better positioned for this change than DELL. I would even say HPQ is better positioned here than DELL is.

[txlaw]

Migration to cloud is not going to be easy for Dell as there are established players like RAX and AMZN. Also, Office365 runs on Microsoft cloud and not on third party cloud. Essentially, with the cloud, you are seeing IT costs coming down by cutting the middle man out.

 

IBM/ORCL/CSCO/MSFT are better positioned for this change than DELL. I would even say HPQ is better positioned here than DELL is.

 

What do you mean by migration to cloud is not going to be easy for DELL?  Do you mean that an attempt to provide data centers won't be easy?

 

RAX buys DELL servers and has always been a rumored takeout target, though I have always heard that the price demanded has been too high.  Also, see http://www.networkworld.com/news/2011/030811-openstack-cloud.html.

 

Office 365 is an app, and is sold by the likes of DELL with full support being offered. 

http://content.dell.com/us/en/corp/d/secure/2012-07-26-dell-cloud-microsoft-office-365

http://en.community.dell.com/dell-blogs/direct2dell/b/direct2dell/archive/2012/07/26/parallels-and-dell-make-the-microsoft-cloud-easy-for-small-and-medium-businesses.aspx

 

So not sure exactly what you're getting at here.

 

DELL focus on SMB and mid-market will mean less competition from IBM, ORCL, CSCO, etc.  That's the sweet spot for DELL.  And because ORCL and CSCO have their own higher cost solutions, DELL is at an advantage because their providing solutions portfolios.  IBM I would worry about.  HPQ too if they can get their act together.  It remains to be seen whether MSFT will be friend or foe.  I'm thinking friend probably.

 

Anyways, I told myself I would stop offering opinions, and here I am doing it again.  Gotta stop that.

[Guest valueInv]

Ballmer - Microsoft will be more like apple. This could impact DELL in a big way.

 

http://news.yahoo.com/microsoft-ceo-sees-company-becoming-more-apple-002521396--finance.html

 

This is a known risk that everyone has talked about for a while now.  That's why DELL is shifting from EUC to ES&S, of course.

 

Txlaw,, this is the link you posted on the other Dell thread:

 

http://www.pcworld.com/article/2010574/michael-dell-on-surface-tablet-the-impact-will-be-limited.html

[Guest valueInv]

Migration to cloud is not going to be easy for Dell as there are established players like RAX and AMZN. Also, Office365 runs on Microsoft cloud and not on third party cloud. Essentially, with the cloud, you are seeing IT costs coming down by cutting the middle man out.

 

IBM/ORCL/CSCO/MSFT are better positioned for this change than DELL. I would even say HPQ is better positioned here than DELL is.

 

+5

[txlaw]

Ballmer - Microsoft will be more like apple. This could impact DELL in a big way.

 

http://news.yahoo.com/microsoft-ceo-sees-company-becoming-more-apple-002521396--finance.html

 

This is a known risk that everyone has talked about for a while now.  That's why DELL is shifting from EUC to ES&S, of course.

 

Txlaw,, this is the link you posted on the other Dell thread:

 

http://www.pcworld.com/article/2010574/michael-dell-on-surface-tablet-the-impact-will-be-limited.html

 

Thanks for trying to pull a gotcha by referencing something in another thread that's taken out of context.  I appreciate that.  ;)

 

In response to shalab's post, I was referring to the more general risk that MSFT starts to be "more like Apple" and bundle hardware and software together for all of its products, thereby cutting out OEMs altogether.  Note, however, that in a subsequent post, I specifically stated that I suspect MSFT will be more friend than foe to a DELL.

 

Surface by itself is not a thread to a DELL or HPQ or IBM because it is intended to spur adoption of the Windows ecosystem, which at the moment still relies on OEMs.  Surface is the high end Win 8 device intended for consumers who actually want to also get stuff done (iPad doesn't cut it).  Surface may or may not be included as part of business packages -- it may be that businesses buy both lower end Win 8 tablets and Surface devices depending on the applications.  But when it comes to BYOD for non-smart phones (yes, ValueInv, it's true), we might start to see consumers latching onto Surface, which could help protect MSFT's share of business computing from the Apple onslaught.  That's not a bad thing for OEMs.

 

Btw, that Dell interview isn't really focused on Surface.  In fact, Surface is mentioned once in the interview.  I have no control over the title of the article.  The more interesting and useful takeaway from the article that I was intending for people to get was Dell's focus on transformation and adaptation.  Folks, take a look at the actual post I made and the sections of the interview I highlighted if you don't believe me:

 

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/for-you-believers-in-dell/msg87166/#msg87166

 

Also, if anyone is interested on a good discussion that VAL and I had about MSFT Surface, see http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/msft-rim-and-the-enterprise-%28and-intel%29/ .  We talk about INTC, ARM, thin clients, Android, and more.

[Guest valueInv]

Ballmer - Microsoft will be more like apple. This could impact DELL in a big way.

 

http://news.yahoo.com/microsoft-ceo-sees-company-becoming-more-apple-002521396--finance.html

 

This is a known risk that everyone has talked about for a while now.  That's why DELL is shifting from EUC to ES&S, of course.

Ok, let me break it down then:

 

Txlaw,, this is the link you posted on the other Dell thread:

 

http://www.pcworld.com/article/2010574/michael-dell-on-surface-tablet-the-impact-will-be-limited.html

 

Thanks for trying to pull a gotcha by referencing something in another thread that's taken out of context.  I appreciate that.  ;)

 

In response to shalab's post, I was referring to the more general risk that MSFT starts to be "more like Apple" and bundle hardware and software together for all of its products, thereby cutting out OEMs altogether.  Note, however, that in a subsequent post, I specifically stated that I suspect MSFT will be more friend than foe to a DELL.

 

Surface by itself is not a thread to a DELL or HPQ or IBM because it is intended to spur adoption of the Windows ecosystem, which at the moment still relies on OEMs.  Surface is the high end Win 8 device intended for consumers who actually want to also get stuff done (iPad doesn't cut it).  Surface may or may not be included as part of business packages -- it may be that businesses buy both lower end Win 8 tablets and Surface devices depending on the applications.  But when it comes to BYOD for non-smart phones (yes, ValueInv, it's true), we might start to see consumers latching onto Surface, which could help protect MSFT's share of business computing from the Apple onslaught.  That's not a bad thing for OEMs.

 

Btw, that Dell interview isn't really focused on Surface.  In fact, Surface is mentioned once in the interview.  I have no control over the title of the article.  The more interesting and useful takeaway from the article that I was intending for people to get was Dell's focus on transformation and adaptation.  Folks, take a look at the actual post I made and the sections of the interview I highlighted if you don't believe me:

 

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/for-you-believers-in-dell/msg87166/#msg87166

 

Also, if anyone is interested on a good discussion that VAL and I had about MSFT Surface, see http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/msft-rim-and-the-enterprise-%28and-intel%29/ .  We talk about INTC, ARM, thin clients, Android, and more.

 

Ok, let me break it down for you:

 

Michael Dell:

 

PCW: Microsoft is getting into the computer hardware business via its Surface tablets. Is this good or bad for OEMs in general, and what's your take on the impact of Microsoft's hardware aspirations on Dell specifically?

 

Dell: I think the impact will be limited, given the number of units they expect to ship. Microsoft developed the product largely as a reference architecture—to set a baseline for Windows 8 user experience. We’re aligning a significant portion of our product development with Windows 8, and we think it offers some great, new capabilities. Anything Microsoft does to support faster Windows 8 adoption is fine by Dell. However, our focus is less on their plans and more on designing and delivering compelling Dell products and solutions.

 

Steve Ballmer

This is a significant shift, both in what we do and how we see ourselves — as a devices and services company

 

So do I need to point out the disconnect?