When Michael Dell (News - Alert), his M&A partners and Dell’s board first announced their plans to buy up Dell and take it private, we were – and we remain – significantly skeptical on many fronts. We haven’t followed every bit of maneuvering the interested parties – which include Carl Icahn – have been making since late April 2013, as there is very little point to it. Michael Dell himself has refused to budge in raising his offer (that is, putting in more of his own money), Icahn isn’t a big presence – at least nowhere as big as we originally thought he would be – and the rest of the large investors seem to be caught in the middle.
Today it certainly appears that Michael Dell will be able to more or less take his company back and take it private at a huge discount. Is it fair? No! It’s amazing to some of us that he will be able to benefit so greatly (while most investors will be taking a negative hit) from having shown great leadership ineptitude over the last few years – years that have seen Dell stumble, tumble and essentially completely fall down. It is certainly understandable that he wants to take Dell private – what better way to get out from earnings calls where one has to be publically accountable for performance?
Most recently Dell and his team were urged by various parties to raise their bid to make the leveraged buyout a bit more palatable to all shareholders, but Dell knows he now has the upper hand. In fact, only yesterday he announced that he had no intention of raising the existing bid, which had the exact effect of driving Dell’s share price lower in the market.
One of the key reasons Dell has underlined for taking the company private is that he has plans for Dell’s future directions that he would prefer not to have to deal with publically. Some of those plans are likely to go against the grain of Dell’s historic markets – that is, the enterprise in its many guises. Dell is looking to move away from its commodity enterprise PC business and establish itself in new markets. Some of these markets will be decidedly consumer focused and may show negative results in the short term before they are able to take hold and deliver in the long term.
For a public company, such a scenario would likely cause the financial analysts and shareholders to suffer seizures. So from a certain perspective, it makes a great deal of sense for Dell to go private for some period of time. It will likely help the company move more quickly with experimental technologies (read that to mean wearable tech and other related devices). If Dell’s strategy works, the company will no doubt eventually rejoin the public markets. If the strategies fail, no shareholders other than Dell and his partners will be harmed. A key issue of course is that none of Dell’s strategies over the last few years have worked.
Mobile Failed, Will Wearable Tech Succeed?
Aside from the company’s tried and true (or not so true over the last year or so) consumer PC business (which includes desktops, laptops and Ultrabooks), Dell has tried since 2010 to move into both the pure consumer mobile market as well as the enterprise BYOD market with a number of mobile products. But Dell smartphones and tablets – including its most recent efforts with Windows 8 and Windows 8 RT tablets – unfortunately have been uniform flops to date, and over the last week Dell noted that its tablet business is more or less failing to generate any meaningful new revenue streams.
Perhaps it is a “Windows” issue, but no matter. There isn’t any need to rehash Dell’s failed attempts at delivering mobile products. The key question is whether or not this is an indicator of where Dell is likely to end up with its latest brainstorm – getting into wearable technology.
In a recent interview with the U.K.’s Guardian, Dell’s global vice president of personal computing, Sam Burd, made it clear that Dell is exploring the wearable technology space. The following quote from Burd is from that article: "There are challenges in cost, and how to make it a really good experience. But the piece that's interesting is that computers are getting smaller. Having a watch on your wrist – that's pretty interesting, pretty appealing."
Well OK, but that begs the question: Is there anything original in that thought? No. Not that Dell has suggested that it has completed any deep dives and brainstorming as yet. It is clear the world is excited about wearable technology and Dell is simply getting on board.
No doubt Dell will work closely with Intel (News - Alert) – which is moving quickly to embrace both mobility and wearable tech. The long-term Dell-Intel relationship will undoubtedly help Dell move forward on wearable tech product delivery – whatever those products may end up being.
We can certainly guess there will be a smartwatch of some sort – perhaps a means to link together smartwatch, smartphone, tablet and Ultrabook – with underlying “new” technology that makes it all simple…and secure. Let’s not forget the enterprise.
Perhaps Dell will look to make some acquisitions – there are certainly lots of small wearable tech players around with very interesting technologies and wearable sensors. We only hope that Dell doesn’t end up serving as a vacuum cleaner picking up small wearable tech vendors and then bagging them up and killing them off.
The key issue with Dell moving forward on wearable tech is whether or not the company can innovate in any meaningful way. It’s a huge question. We actually believe that Intel (and we’ll note that Intel Capital (News - Alert) recently invested in the very cool Thalmic) will in fact deliver innovation. Perhaps Intel can help push the right Dell buttons.
All of Dell’s original mobile consumer products were derivative. Even the company’s efforts at delivering mobile enterprise capabilities were completely derivative. At this point the likelihood of Dell delivering innovation instead of derivative wearable tech is hard to believe. We won’t bet any money on it happening. Nor will we bet any money that Dell can rely on wearable tech to create any significant and significantly large new revenue streams.
Until we hear more concrete plans, we’ll need to leave it at that. History suggests Dell won’t be able to pull it off. But plenty of tech companies have defied history - think IBM in the early 1990s, think Apple (News - Alert) in the early 2000s.
As Dell moves – apparently in unstoppable fashion now – towards going private and becoming Michael Dell’s personal playground again, it will need to dream up new collections of innovation. Unlike Dell’s bid to take the company private, however – where Michael Dell’s founder and insider status gives the leveraged buyout a serious advantage over the likes of Carl Icahn and the other large shareholders – Dell has zero advantages it can bring to the innovation table, let alone to wearable tech. It will be extremely tough to pull off. But the former will hide failure and perhaps give Dell enough time to find some innovation to deliver.
We do invite Dell to join us at our upcoming Wearable Technology Expo and Conference. There is much to learn!
Edited by Alisen Downey
Wearable Tech World Home