Dell Focuses on the Broader Picture

Change can be quite painful sometimes, especially if you're a computer manufacturer like Dell. The IT giant recently came out with first-quarter revenue and revenues that were below analyst estimates. To add to the disappointment, Dell's forecasted second-quarter revenue fell below Street expectations as so then.

Variety of reasons have been recommended

A variety of reasons have been recommended, ranging from heavy competition from rivals just as Lenovo and HP to the weakness in European and Asian markets. Apart from these, the growing popularity of tablets just as Apple's iPad have as well contributed to the company's declining sales.

Number talk Dell's first-quarter revenue fell about 4% from the prior-year period to $14.4 billion on the back of lower sales across many of its product lines. Net income as well took a major hit, falling 49% from last year to $635 million.

It was not surprising to see Dell's consumer products business being the hardest hit, as it recorded a 12% decline, given that consumers and businesses have started to prefer more portable devices, with the Apple iPad being a notable example. The drop in overall revenue has as well been caused by sluggish PC sales, simply because companies are not but ready to adopt Microsoft's newest Windows 8 operating system -- they're sticking to Windows 7.

Not just a PC manufacturer Dell is slowly making a transition from being just a company that sells PCs to a company that offers a broad range of IT solutions for businesses. In the process, it's as well ensuring better margins and profitability henceforth.

I like the fact that Dell is increasing its focus on selling high-margin products just as enterprise servers, data storage, and networking equipment. What's moreover encouraging is its continued focus on products and services that are used in cloud computing, as businesses increasingly adapt to such systems. In addition, like rival HP, Dell is as well shifting focus to selling niche products just as powerful and lightweight laptops called ultrabooks. And by the end of this year, Dell as well plans to unveil its own Windows 8-based tablet. Nevertheless, the success of Dell's new tablet would largely depend upon the success of Microsoft's newest Windows 8 operating system. And there's always Apple to contend with.

But I feel that Dell's experience in the enterprise segment with its long-standing relationship with business clients should make it better-placed to compete with rivals.

The Foolish bottom line Dell is making the right moves

The Foolish bottom line Dell is making the right moves by focusing on more sophisticated product offerings or rather than on gaining market share in the PC space. Even though most of its revenue is for all that generated by its PC business, it might take a while previously the company manages to increase the revenue mix of its other products. I'll be keeping a close eye on Dell's progress, when all is said and done should you, by adding it to your free watchlist.

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