Dell sees no end for desktop PCs

Never a man to jump at the latest IT fads, Michael Dell is sticking to a formula that has seen his company rise from a direct sales startup to the world’s largest maker of personal computers. By keeping in line with volume customer demand, Dell has outlasted many competitors and sees no reason to change tack.

That said, Dell the company is changing. Once known only for its desktops, such equipment now accounts for about a quarter of the firm’s revenue. Servers, printers, storage and managed services are among the engines that have helped Dell sustain its growth. The firm also now applies its direct sales model to LCD televisions and other consumer kit.

But the company is still focused on the business sector, and Dell himself still attends many customer meetings to ensure the firm has the right products.

“Managed services are the sorts of things that come out of these sessions,” he says. “We pay great attention to what [customers] say and the main message is they don’t want us to do something stupid or be something we’re not.”

Dell clearly believes that “something stupid” includes mergers along the lines of the HP-Compaq deal and he disputes the notion that IBM’s link-up with Chinese business Lenovo will create a lower-cost PC competitor.

“The IBM-Lenovo business has so far only helped us. When the HP-Compaq combination came out, I said it looked a good thing for us, and now you’d be hard-pressed to find anybody to disagree,” Dell says. “People say Lenovo will be cheaper because it’s in China but none of that is true. We have a lower cost structure in China, we are more profitable in China.”

He is also bullish on the future of the PC, and despite the fact that laptops form a steadily growing portion of his company’s sales, he believes its flexibility means the desktop still has a future. “With flat screens, the cost difference between desktops and mobiles starts to go away but I don’t think the desktop is going to go away,” Dell says.

Tablet PCs and set-top boxes are definitely off the agenda. Dell also mocks, but does not outright deny, reports that his firm is planning a laptop with a 19in screen.

Dell sees 3G and WiMax quickly accelerating wireless data communications options for mobile devices but rubbishes rumours that Dell could offer handsets.

“The [Axim] X50 [PDA] has done quite well for us but it’s not a massive area for us. We’re not in the phone business and we’re not planning to be in the phone business.”

With a nod towards Sun, Dell also has little respect for the grid-computing model being used to host clients. “There are lots of ways to sell Kool-Aid and there are companies that have a massive incentive to lock customers into proprietary ingredients. In many cases these are financing methods and quite expensive ones at that."

Despite having just turned 40, Dell sees no reason for a sudden change and lists companies that failed after stepping away from standards, including Commodore, Packard Bell and Amstrad. When a reporter notes that Sir Alan Sugar at least made it to present TV’s The Apprentice, Dell wryly observes: “Who? Oh yeah, I remember him.”