04 Jan

Dell Does Year-End Reorganization – Don’t Expect Much Change for SMB

Dell reorgOn December 31, 2008 Dell announced it was organizing itself globally around 4 customer segments, instead of regionally.  CEO Michael Dell says the reorg is to respond better to customer needs which are “increasingly being defined by how they use technology rather than where they use it.”

The company has 4 business groups, as it calls them:  enterprise; public; small and medium business; and consumer.

The small and medium sized business, or SMB, group will now be run by Steve Felice, based in Singapore, who is currently president of Dell Asia-Pacific and Japan. According to the Dell announcement: “The new organization will accelerate creation and delivery of SMB-specific solutions and technology to the more than 72 million small and medium-sized businesses worldwide.”

This announcement comes after Dell slashed 8,000 jobs this year and asked employees to voluntarily take unpaid leave; lost market share to rival HP; and reported declining revenue year-over-year in the most recent quarter.

What does this all mean to small businesses? Here are my thoughts:

  • I suspect this global reorg suggests Dell sees more growth potential outside the U.S., and also sees opportunities to cut costs by consolidating globally.  In the Q&A issued by Dell (PDF) to accompany the official announcement, they point to “faster innovation and globally standardized products and services.”
  • For really small businesses in the U.S., which tend to purchase consumer products onesy-twosy from Dell, this reorg makes little difference. The consumer business unit is already organized globally.
  • For larger small-businesses, ones that have computer networks and purchase Vostros and other lines through the SMB unit, it remains to be seen what this means in 2009. Will it mean more computer hardware innovation, or more of the same as the focus shifts internationally? If I had to guess, it means more of the status quo.  The emphasis in 2009 is going to be on cost cutting more so than SMB computer innovation, I’m afraid, given the lowered earnings and lower demand for PCs (especially higher-margin PCs) due to the global recession.
  • There may be more emphasis on services, as it’s clear that hardware alone won’t cut it for Dell. So if there’s going to be much change, I expect it to be in the area of add-on services, such as data backup and online file storage, etc.  Dell already has some service offerings — but they can do more and services may be easier to deliver quickly to market, not to mention being higher margin.
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  1. Rose Anderson said on January 4th, 2009 at 11:25 pm

    Sad news, Anita! Maybe it’s with HP’s design, price and technical specifications that made them to top. No wonder also for Acer because theirs’ are really affordable.

    Reply
  2. Amanda said on January 5th, 2009 at 12:50 pm

    It sounds like they will have a lot of changes to come. It’s terrible to hear how badly their employees have been affected. I’m sure you will keep us informed to the changes that come about.

    Reply
  3. Martin Lindeskog said on January 5th, 2009 at 4:09 pm

    I get direct mail advertising from Dell on a regular basis. I don’t know how big market share they have in Sweden and rest of Europe.

    Have you read the book on M. Dell?

    Reply
  4. Rose Anderson said on January 5th, 2009 at 11:48 pm

    M. Dell? What does it tackles, Martin?

    Reply
  5. Arthur Bland said on January 6th, 2009 at 10:24 pm

    I have always been a Dell fanatic but this news is incredibly bad. But the lost market share ? That’s no wonder. Dell is far behind HP’s design and availability to other countries over the world. I think they should improve that aspect.

    Reply

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