Dell Discloses Consolidation Plans to Save $2B by 2015
Giant computer maker Dell has revealed plans to re-adjust its core operations that it hopes would lead to substantial savings, following the path of its chief rival, Hewlett-Packard (HP), which announced last month impending measures that would save the firm billions over the next two years.
Yet unlike HP, Dell held back explicit details on whether its operational overhaul will lead to global job losses that would greatly impact on the more than 100,000 employees currently listed on the PC vendor's global roster of workers.
HP said in May that it would reduce its workforce by at least eight percent in order to realise savings of $US3.5 billion in the near-term and over the long-term, the company sees itself gradually exiting from its hardware business to focus on the more lucrative IT security advisory services.
Dell is pretty much adopting the same tactic - redefining its business to grab considerable amount of saving, which the firm said on Wednesday should reach about $2 billion by 2015, according to The Associated Press (AP).
That should mean spending cuts in the immediate years ahead and mostly affecting Dell's production and sales divisions, which will incur budget reductions of $US600 million and $US800 million respectively.
Administrative and services departments will also feel the realignments of Dell's resources, according to company officials who addressed the reporters and analyst present during its Wednesday conference call.
While no mention of disturbing employee separation was ever mentioned by Dell executives, analysts noted that the struggling PC vendor has emphasised its focus on operational consolidation, which roughly means corporate divisions will have to shed away significant numbers of workers.
The reconfigure, Dell said, also takes into account the company's expansion path, which means future investments will be seriously considered as the PC vendor continues to absorb losses on revenues mainly due to dwindling sales of the traditional desktop and notebook computer sets in the past two years.
The usual culprit is the dominance these days of smartphones and tablet computers, the adoption of which by global consumers led to sales declines of PCs, leaving firms like Dell and HP grappling with the new realities of global computing competition.
It appears though that Dell has realised where its niche in the industry would be - selling software and technology to corporations and guiding them on their IT concerns and requirements.
Dell and HP would not be the first computer manufacturers to take a plunge on the field as tech giant IBM, once the dominant PC maker when Microsoft Windows was the only viable operating system, led the way much earlier.
One thing is clear on Dell's austerity blueprint - fewer product lines can be expected from the company in the future as it conceded that traditional computing presently lags behind mobile computing.
Analysts read the overall plan as Dell's way of announcing ahead the looming retirement of a number of its computer lines as the company accelerates its acquisition of new technology services and softwares that it can then integrate to its new business approach.
On the side, will Dell still venture into the lucrative mobile computing device competition based on its business review? It could take time before its does so, analysts said, and probably only when Windows 8 starts making headway against the present dominance of Apple's iOS and Google's Android.