While Hewlett-Packard adapts to a changing PC market by reducing its workforce, Dell is reducing the size of its products. This week the company tried to temper a disappointing earnings report with promises of smaller, more mobile products later this year.
Dell (DELL) saw its stock price skid 17% on Wednesday after the PC maker’s earnings came in below Wall Street’s expectations. Net income fell 42% from the year-ago quarter, while revenue slipped just 4%. Dell earned $635 million on revenue of $14.4 billion during the three months ending in April.
Dell is losing business as tablets and even smartphones replace much of the work that PCs once did. The Texas company that was started in a college dorm room is moving quickly to adapt to the mobile landscape – Dell has launched a line of tablets and even a smartphone in China. Here in the United States, Dell is working with longtime partner Intel to define the ultrabook product category.
Intel, which has trademarked the “ultrabook” name, requires those devices to be less than .8-inches thick and to use its chip architecture. Other specs insure that sub-notebooks marketed as ultrabooks are fast and use power efficiently.
Dell’s XPS 13 Ultrabook has garnered good reviews, but faces competition from cheaper versions made by Acer, Samsung and Toshiba. Furthermore, competitors using chipsets from AMD and ARM are moving into the market with thin, inexpensive competitors to the ultrabook.
Microsoft’s Windows 8 may kickstart Dell’s ultrabook and tablet businesses when it is released later this year. For years, Microsoft, Intel and Dell were a formidable team in the enterprise PC market, and many of those customers are eagerly awaiting the release of Windows 8. During Dell’s earnings call yesterday, CEO Michael Dell said he expects customers to buy new devices to take advantage of the touchscreen capabilities of Windows 8. He says Dell will be ready with ultrabooks as well as new tablets.
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