Dell Inc. is a multinational computer technology company headquartered in Texas, US, that is engaged in the design and marketing of personal computers and mobile devices. Dell also invests in areas such as software development, gaming consoles like the Xbox. Let us know Dell Swot Analysis & Competitors
Products offered:
Dell is known for its Core i3, Core i5, Core i7, and Xeon products. Their online store enables the ordering of inexpensive PCs with no guarantee on the delivery date, review of any system before you buy it, and a 30-day money-back guarantee.
Markets:
Dell’s top markets are the United States, Canada, Mexico, Europe, and Asia-Pacific.
Dell’s strengths:
1. Customer service – Dell has often been praised for its customer service in the past.
2. Innovation – Being one of the first to introduce new technologies like laser printers, flat-panel monitors, and thin client technology.
3. Sales Channel Power – Dell boasts it can sell its products to 90% of small and medium-sized businesses in the United States which gives it incredible power in reaching end-users with its merchandise.
4. Brand awareness – Since its founding, Dell has introduced many innovative products that have kept the name at the forefront of technology.
5. Financial strength – The company is very financially strong with a lot of cash on hand which helps it to buy many new companies and even buy back a large number of shares from the market each year.
6. Supply-chain specialists – Being a technological giant, Dell has many suppliers in different locations around the world allowing them to provide products to its customers in just a matter of days.
7. Market share – Dell’s core competency is in the computer hardware field using the largest distribution network in North America allowing them to have a tremendous influence on how much revenue is being generated for their customers.
8. Geographic Expansion – One of Dell’s greatest advantages is their geographic reach as they have expanded from selling computer hardware through their networks in Canada & Mexico to selling computers and other IT products to other countries in the world.
9. Lifespan – With a lifespan of 38 years, Dell has shown that it is a lean and mean company surviving the ups and downs of the market despite being a tough competitor with many competitors who have not been able to sustain themselves for this long.
Dell’s weaknesses:
1. Slow to adapt – This is especially true in the face of the poor sales of the Tablet PC, which was started 18 months before Apple released its popular iPad.
2. Consumers – Dell has had trouble reaching end-users with their products which are needed to show growth.
3. Lack of organic growth – Dell works by selling computers, not making them – so it earns money selling its products rather than collecting revenue from supplying its components or developing proprietary innovations
4. Short-term thinking – Dell has only had two CEOs in its 27-year existence, which some think is a result of the company placing short-term gains ahead of long-term corporate strategy.
5. Stock price – The stock price has remained flat for many years while their competitors like HP have seen their shares rise significantly over the past 5 years.
6. Continued decline in sales – In 2015, it saw a quarterly net loss of $595 million on revenues of $16.9 billion, while the year before it lost $6.
7. End users – Dell has very few sales to end-users and much of its sales come through large retailers like Best Buy and Staples which is a much harder path to profitability than selling directly to end-users.
8. Too big to fail – Once a company reaches this size, it becomes more difficult for them to move quickly enough to stay on top of their competition or make any changes necessary in their company structure.
9. No dividend payouts – The company does not pay dividends because it believes the earnings are not consistent enough yet to warrant this action.
Dell’s opportunity:
1. Mobile Computing – Dell is the world’s largest supplier of PCs to businesses and as such has a huge opportunity to take over the industry by selling its products to consumers as well.
2. Ruggedized Compatibility – Dell sells traditional PCs that can be used as rugged computing devices and other enterprise systems.
3. Integrated Solution for Life – Dell is capable of providing complete solutions for other companies and consumers and should look to continue this trend with other products like the XPS 13 ultrabook, XPS 15 ultrabook, Precision 5510 workstation, and other models.
4. Sales channels – Dell’s sales channels are well established around the world through its direct sales force as well as through major distributors like Ingram Micro in North America which allows them to have a much larger reach than others in the marketplace at this time.
5. Enterprise Solutions – The company sells software like Dell OpenManage to help manage networks of PCs running Windows Server or Linux.
6. Software expertise – The company has invested in various software companies over the past few years including Quest Software (now Quest) and AppAssure (now SonicWall, Inc.) which bring expertise in security, cloud computing, and backup technologies.
7. Franchises – Dell has built a large network of franchise dealers in North America through the company’s direct sales force.
8. Profit margins – The company has somewhat high-profit margins on traditional PCs due to economies of scale in production and distribution which allows them to maintain healthy margin rates on all their products while companies like HP are seeing declines in their margins due to competition from other computer companies.
9. Gaming Industry – Dell uses its gaming brand Alienware to introduce gaming PCs to the market which has shown great success.
10. Cloud computing services – If Dell can work with firms like Microsoft to provide cloud computing services they could see an increase in revenue that will likely be more profitable than selling personal computers on their own.
11. Look for new markets – Dell may be able to enter the tablet computer market due to their focus on enterprise computing for corporations and consumers, but are currently looking into adding other products like smart TVs, POS tablets, and USB hubs.
Dell’s threats:
1. Declining PC industry – The traditional PC market has been declining for the last decade and showed no sign of recovery in 2015.
2. Mobility – Dell’s traditional PC business is being threatened by the mobile computing market which is moving more towards smartphones and tablets replacing laptops for many people.
3. Profit margins – High-profit margins are a good thing in most cases, however, when attempting to keep up with companies like Apple it can be difficult to maintain these high-profit margins.
4. Smaller mobile PCs – Dell’s smaller mobile computers are selling poorly against larger tablets, which are more preferred by consumers at the moment due to their size and convenience of use on the go.
5. Higher costs of manufacturing – The cost of manufacturing smaller tablets is making it more appealing to many consumers, which also means there is little room for error in the production process with bigger companies.
6. Weak Salesforce – Dell has failed to adapt to changing consumer preferences in the mobile computing market by not creating new products to specifically meet this growing need.
7. Loss of distinct brand – Dell’s brand recognition has been declining over the past few years due to not being able to adapt to changing consumer demands.
8. Dell Finance – The company recently decided to sell a portion of its finance business for a one-time profit instead of continuing to use the business as a source of cash for its operations.
9. Acquisitions – Dell has been acquiring companies over the past few years as part of an attempt to move into expanding markets, however, this could also lead them into larger financial difficulties should they have trouble integrating these new companies into their operations.
10. High Debt – The company currently has over $36 billion in outstanding debt, which is equal to approximately 50% of its market capitalization.
Dell’s Competition:
1. AMD: The Wall Street Journal reported in January 2015 that AMD has been poaching Microsoft officials to try and build a PC unit for the company.
2. Hewlett-Packard: HP is still a major competitor to Dell in the PC market with a very large supply of both traditional and mobile PCs, while it’s also a large seller of servers and networking products.
3. Lenovo: The world’s largest PC maker has been on an aggressive expansion trail over the past few years with its acquisitions of IBM’s servers and technology business, Motorola Mobility from Google, Motorola’s smartphone business, Samsung businesses such as Samsung Semiconductor, and Inotek and Acer Group which all bring software expertise for robotics into its fold.
4. IBM: IBM began selling Lenovo’s PCs in March 2014 after acquiring its PC unit in 2005.
5. Microsoft: Microsoft has been focusing on the enterprise market to try and get Windows 8 into businesses while also trying to build up its product line of Surface Tablets for consumers.
6. Apple: Apple is the world’s largest maker of smartphones and tablets which have eaten into Dell’s market share in both segments. Apple also operates its retail stores which are becoming more popular due to their premium image over other large retailers like Best Buy, Staples, Walmart, etc.
7. Amazon: Amazon is the world’s largest online retailer that sells a variety of products including computers, computer systems, and other hardware due to its Amazon Web Services cloud business.
8. Google: Google has been making headway into the enterprise market with its Chrome platform and Chromebooks which run on this platform and it’s also pushing its Android platform heavily with smartphones and tablets.
9. Asus: The Taiwanese company is competing with other companies in the smartphone and tablet market as well as traditional PCs.
10. Others: Other competition includes smaller companies like Acer, ZTE, and HCL among others
How does the future look for Dell?
To better understand how Dell is performing in the long term, analysts use research like the DCF model to compare the company’s value to its cash flow. We can see that Dell’s stock price has been on an upward trend throughout 2015, which has led to a total of eight companies reporting positive earnings. The stock price goes up when investors consider that Dell continues to be able to maintain healthy profit margins and still keep growing at a rate of 20% per year. We can also see that Dell’s stock price has been on an upward trend over the last three years as analysts began expecting greater profits due to lower costs of production due to economies of scale and more adaptable products.
To forecast the future growth rate of the stock price, analysts will look at this model to try and figure out how much it will grow in the future. They use Dell’s current growth rate of 20% when they forecast growth into their models. They also don’t account for any taxes or the cost of goods sold when running their models. This is because Dell doesn’t have much in taxes due to its large tax loss carryforward, which means it can use the losses in previous years against its profits in recent years. The company also doesn’t have much in the cost of goods sold since most of its products are sold directly to consumers and not through third-party businesses like Wal-Mart or Staples.
Therefore, when an analyst tries to forecast Dell’s stock price, they don’t account for the cost of goods sold in their models because that would be misleading. The last thing analysts look at when trying to forecast the future growth rate of Dell is how long it will take for Dell to pay off its debt. They don’t try to figure out how much it will be paid off since they are constantly using new loans against the old ones so there is always more money being borrowed.
Conclusion:
Dell is a multinational computer manufacturer that sells its goods all over the world. Technological progress is a two-edged sword. It’s a chance and a threat at the same time. Because low-cost leadership strategy is no longer a concern for computer firms, Dell must distinguish out. Dell has strengths and possibilities, but it also has to improve in some areas, as we saw in the weakness sector, and prepare for impending problems, as we saw in the threats segment.
Dell needs to be more innovative, it should have taken advantage of the opportunities provided by tablets and smartphones, but the company has failed so far.
Some frequently asked questions and answers:
1. What are some of the main areas of business for Dell?
A. The main areas of business for Dell are PC, servers, enterprise software, and mobile devices.
2. Does Dell make gaming laptops?
A. Dell makes gaming laptops under the Alienware brand name.
3. What is Dell’s market cap?
A. Dell’s market cap is around $25 billion.
4. What is Dell’s annual revenue?
A. Dell has annual revenue of $60 billion per year.
5. How many employees does Dell have?
A. Dell has around 128,000 employees worldwide.
6. What is Dell’s price/earnings ratio (P/E)?
A. Dell’s P/E is 13.21 and the average P/E for computer and electronics companies is 18.29
