Struggling computer maker Dell is
considering a move into the
"wearable computing" space, as it
grapples with the effects of a
shrinking PC market. Sam Burd, Dell's global vice-
president of personal computing,
told the Guardian that "we're
exploring ideas in that space". The idea of computers that can be
worn on the body has become one
of the hottest spaces in the
technology business. Google has
thousands of people testing its
head-mounted Glass system, while the Californian company Pebble has
sold more than 85,000 of its
Bluetooth-connected "smart
watches". Persistent rumours
suggest that Apple will introduce an
"iWatch", while companies including Samsung, iPhone maker Foxconn,
Sony, LG and Philips have
announced – but in only a few
cases unveiled – wearable devices. "There are challenges in cost, and
how to make it a really good
experience," Burd told the Guardian.
"But the piece that's interesting is
that computers are getting smaller.
Having a watch on your wrist – that's pretty interesting, pretty
appealing."
With Dell preparing to take the
company private in a $24bn
leveraged buyout as the PC market
– the field which its founder and
chief executive Michael Dell first
exploited – begins to shrink in importance, the company is seeking
new sources of income. "Looking ahead five years, we
expect devices and form factors to
continue to change. There will still
be a need for 'static' computing on
desktops, but there will be a real
need for mobile devices. There's a lot of discussion about how that fits
into wearable devices like we've
seen with Google Glass and
watches. We're looking at a world
of lots of connected devices. "I don't see any magic new form
factor like the iPad – I don't think
anybody saw how that was going to
change devices. But the number of
[computing] devices per person is
exploding." On wearables, he said "we haven't announced anything,
but we are looking at the technology
in that space." Dell needs to add new revenue
streams as some larger customers
have slowed spending amid
economic belt-tightening. Though
the company has large enterprise
and services businesses, they have revolved around its PC business as
a means of winning services
contracts. But that is under threat. Dell's PC
revenues shrank by 9% to $8.9bn in
the three months ending in May
compared with the year before, and
income slumped 65% to $224m – a
2.5% margin. It has also been pushed into third place in the global
PC market by China's Lenovo, which
is now just behind the largest PC
maker, HP. And worse is to come, suggests the
research company IDC: it forecasts that global sales of PC desktops and
laptops will fall by nearly 8% this
year, the second year of decline in
a row – and expects they will keep
falling in 2014. Instead, tablets and "hybrid" devices
such as Microsoft's Surface are
expected to become increasingly
important; tablets like the iPad are
expected to outsell laptops this
year, and PCs (counted as laptops and desktops) by the end of 2015.
But Burd admitted that Dell has so
far only sold "hundreds of
thousands" of its XPS-10 and
Latitude 10 tablets, which
respectively run Microsoft's
Windows RT and Windows 8 software. However he added "I
think that's pretty exciting when we
look at the ramp [in purchasing]
that we expect from corporate
customers." He said Windows 8 on tablets had
not done well so far with the large
companies that make up a
substantial proportion of Dell's
customers. "Businesses are slow to
adopt a new operating system," he said. "But tablets really need
Windows 8 to sell well. Still, it is
encouraging to see some
businesses deploying Windows 8
and tablets. It's going to take some
time, and the jury is still out. IDC's numbers says that Windows 8 on
tablets is still far smaller than the
iPad, but there are successes.
Maybe in a few years when we get
to Windows 8 tablets being a third
or 40% of tablet volume we can feel it's happening. Tablets are
definitely an important piece of the
computing business." More broadly though the decline in
traditional PC sales is putting severe
pressure on Dell's revenues and
profits, driving the company to seek
to go private in a $24bn private
equity buyout and end its 25-year stock market listing. Burd insisted
that "the PC business
is important to us. It's how we
started as a company, and where
we have strong share globally. Lots
has been written about the demise
of the PC business, we we think it's an interesting area going
forward." The rapid growth of the tablet
market since the introduction of the
iPad in 2010 has seen Dell struggle
to keep up. Going private could help, thinks
Burd: "Michael Dell believes we are
on the right page for
transformation," he said. "The view
is that we can get ourselves out of
the quarterly reporting process where you can't make hard
decisions to speed up that
transformation." The company has struggled to make
an impact in the fast-growing
smartphone and tablet market. It
killed off its range of Android
phones after having effectively
invented the "phablet" range in 2010 with its Dell Streak 5in
smartphone. Flaws in the software
led to low sales, and the category
of a phone with a mini-tablet sized
screen was grabbed by South
Korea's Samsung, which has turned
it into a sector where it dominates through its Galaxy Note products.
