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Privatize THIS!

January 16th, 2013 - 5:13 am

Dell really is looking to go the private-equity route, but as Michael J de la Merced points out, “Going private may not be all that easy — or help out the company in the end.” He continues:

The bigger question for the company is whether going private would solve any of the issues it has faced for years. Its traditional business of making and selling personal computers has become less and less profitable, and Dell has already been trying to move into the more lucrative and stable market of providing hardware and software services for corporations. That’s not something that requires Dell to be private, however.

Dell has two big problems:

• They have failed to compete in mobile.

• Other companies cracked the code to Dell’s low-cost/high-volume computer manufacturing.

If you wanted a custom-built PC fast, and you didn’t want to spend too much money, you went to Dell. Now every Windows PC-maker can do that. Dell could have picked up the slack with imaginative and well-built mobile products, but instead Dell tried to sell plasticky crap — and quickly discovered that what people would settle for on their desktops, they would not settle for in the palms of their hands. “Dude you’re getting a Dell smartphone!” said no one ever.

Going private, if even it turns out to be feasible for a company of Dell’s size, won’t pump any more life into their old business model, and won’t automatically provide them with a new business model.

It would be a neat financial trick to pull off, but then what?

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