Annex Bulletin 2007-24 May 24, 2007
A partially OPEN edition
"The Last of the (PC) Mohicans - Analysis of Dell's strategy changes; Linux, Wal-Mart
Are We in "Buyback Bubble?" - Analysis of corporate stock buyback trends
Updated 5/24/07, 3:30PM PDT
Analysis of Dell's Latest Strategic Moves
The Last of the (PC) Mohicans
Dell (Finally) Embraces Linux, Strikes Wal-Mart Deal
SCOTTSDALE, May 24 - Dell became this afternoon "The Last of the (PC) Mohicans" to jump out the proprietary Windows and into the open Linux world. At the same time, the world's No. 2 personal computer maker threw a gauntlet at the PC champ, Hewlett Packard (see "Per Ardua Ad Astra," May 2007), by entering the consumer market through Wal-Mart's giant global distribution channel.
Meanwhile, Wal-Mart announced that it would start selling two Dell PC models at 3,400 stores in the U.S. and Puerto Rico. Both PCs run AMD's Athlon X64 dual-core processors. So "goodbye Wintel," hello Linux-AMD!
Both Linux and Wal-Mart moves represent dramatic departures from Dell's traditional business model based on direct sales. As the company lost market share to rival HP, it was forced to reinvent itself. And what better person to orchestrate the reincarnation that the man who invented it in the first place - Michael Dell.
Apple, Dell: Founders Reinventing Themselves
A series of strategic moves that started in September of last year have sent a clear signal to the marketplace that nothing is sacrosanct at the former top PC seller. So the company first brought in a top EDS executive (Steve Schuckenbrock) in January to run its Global Services unit. Then it bid adieu to the former CEO, Kevin Rollins. This was followed by a wholesale change of its top executive team. And now, the company is trying to reinvent itself through new marketing strategies, too.
This type of a thing does not happen very often, especially not with companies as large as Dell ($58 billion revenue; $58 billion market cap). Most enterprise-size leopards have a hard time changing their spots. But there are exceptions. Steve Jobs and Apple are one. And now Michael Dell and Dell inc. could be another one.
What lessons can we learn from that? It takes an entrepreneur to create a successful business. It takes an entrepreneurial revamp a successful business into a Second Life. Alas, that's often easier said and done. That's why Steve Jobs and Michael Dell are exceptions to the general rule.
Happy bargain hunting!
The Greening of Big Blue; Power6 Chip (IBM to spend $1 billion on "going green")
To Buy (back shares) or Not to Buy? - Analysis of stock buybacks in corporate America
IBM Stock Still Grossly Undervalued - A preview of IBM 1Q business results]
Accenture Beats Forecasts, Again -Analysis of Accenture's 2QFY07 results
The Value of pi (π) - Analysis of IBM System p and System i market and product strategies
The (T)ides of March Sink Markets Again - Analysis of global economic & investment trends
Capgemini Caps Great Year, Saves Best for Last (Analysis of Capgemini's fourth quarter business results)
EDS: On Sunny Side of Street (Analysis of EDS' fourth quarter business results)
CSC: Where Less Seems More (Analysis of CSC's third quarter fiscal 2007 business results)
Fujitsu: Sales Up, Profit Down (Analysis of Fujitsu's third quarter fiscal 2007 business results)
IBM Shatters Records (Analysis of IBM's fourth quarter business results)
IBM Stock Passes Century Mark (Analysis of Big Blue's Stock Performance)
Happy Days Are Here Again (Analysis of Top 20 IT leaders' latest stock market and business performances)
Globalization Accelerates (Analysis of United Nation's annual survey of global investments)
IBM: A $125-Stock? (An update to "From Small Acorns Mighty Oaks Grow")
Capgemini: Longest Sustained Stock Price Rise (An update to "By Leaps and Bounds")
HP: New King of the Hill (Analysis of HP's fourth quarter business results)
IBM: From Little Acorns Mighty Oaks Grow (Analysis of IBM's "State of the Union")
Capgemini: By Leaps and Bounds (Analysis of Capgemini's preliminary third quarter business results)
Fujitsu: Good Performance Gets Better, More Global (Analysis of Fujitsu's first half FY2007 business results)
IBM: A Slam Dunk Quarter (Analysis of IBM third quarter business results)
IBM: Services in a Box (Analysis of IBM Global Services' Ground-shifting Announcements)
Strong Comeback by IT Stocks in Third Quarter (Analysis of top 20 IT companies' market and business trends)
Stock Buybacks: A Fading Fad (Dell, erstwhile "King of Fluff," suspends its stock buybacks)
Capgemini: Growth Continues (Revenues, net profit up in double digits, margins also improve)
Power of Manpower (While others move to India, Russia... AMD invests in New York, hailing "phenomenal" quality of its labor force)
Ebb Tide Lowers Most Boats (Analysis of EDS' and CSC's latest quarterly results)
IBM vs. HP: A Tale of Two Blues (Both companies are doing well in business, but only HP is favored by Wall Street; Big Blue trying to change that now with its new "India Opus") [Annex clients click here]