Dell’s survival still hangs in the balance

At the core of the current shareholder battle over Michael Dell’s attempt to take private the company he founded, is a question critical to many technology makers:

Can a company reinvent itself when its core business starts to become passé?

That may be the kindest way to put it, since the technology behind personal computers is far from obsolete. But since the arrival of smartphones and tablets just a few years again, consumers no longer seem as interested in buying new computers as often as they once did. The results have been an upsetting shock to the profits of companies that have dominated the personal computing industry for the past two decades.

IBM saw the writing on the wall early, and sold its PC division to China’s Lenovo in 2005. Dell and HP, which have both been the number one maker of PCs at one time over the past six years, are now struggling to refocus their products to the corporate and government sectors. The only computer manufacturer to see yearly increased in market share over the past six years is Lenovo, which has positioned themselves as a dominant force in China and in the high-end computing segment in the US. It is a still a distant second behind HP.

None of these companies, however, have successfully made the jump to the mobile phone and tablet markets. It is two also-rans of the PC industry, Apple and Samsung, that now seem the dominant force in the market place, thanks to their foresight into mobile trends.

That doesn’t mean that Dell is by any means on the outs, but its ability to find new customers outside of consumer circles will determine whether is survives.

The ability to analyse so called “Big Data” in corporate and government sectors is the most likely segment for Dell to move into, but competition will be fierce from HP and especially IBM. The recent austerity trends that seem to dominate American and Europe governments will make moving into those sectors even tougher.

So does that mean the end of the road for Dell? Not likely. Microsoft’s involvement in the buyout will help boost Dell’s ability to make sales, especially to governments who are often resistant to move away from legacy systems.

But this will still be a tough time for Dell. It isn’t the first company to have consumers turn their backs on them for sexier technology. For many companies, it’s been too much to take. Hopefully, it won’t go the same way as American Online, Kodak or Atari.