Dell is being hammered by the smartphone and tablet PC sectors. This is not long after its prospects were damaged by poor management decisions and the rise of Asian manufacturers, which has taken significant market share from the company. Dell was one of the companies that capitalized on the creation of the IBM PC platform. Among the others were Hewlett-Packard (NYSE: HPQ), Compaq, and Gateway.
IBM (NYSE: IBM) exited the business when it sold its PC operations to China-based Lenovo in late 2004. After that, the PC industry went through two sets of transformations. One was consolidation: HP bought Compaq and Acer bought Gateway. The other was the emergence of large Asian PC businesses — Acer, Asus and Lenovo. All of these companies, Asian and American, face a substantial challenge today.
PCs are viewed as commodities, which has put pressure on prices. Computing has moved quickly to smartphones and tablets. Dell made another substantial mistake. As its share of the global PC market has fallen, it has not aggressively followed the successful model adopted by IBM. IBM built a $100 billion business offering consulting, software, IT support, hardware and financing. It does not rely heavily on a single offering. Dell’s reliance on PC sales has continued to sting, particularly now that the PC era has given way to one dominated by smartphones.
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