Skip to main content

'Dell'wether: Does the desktop decline point to an era's end?

By Ramy Inocencio, for CNN
May 17, 2013 -- Updated 1250 GMT (2050 HKT)
A woman operates one of the early desktop IBM computers in this photo from 1955. Today, desktop and laptop computers are on the decline as consumers flock toward tablet devices. Dell's first quarter profit plunged 79% because of slower PC sales.
A woman operates one of the early desktop IBM computers in this photo from 1955. Today, desktop and laptop computers are on the decline as consumers flock toward tablet devices. Dell's first quarter profit plunged 79% because of slower PC sales.
  • Dell says first quarter profits fall nearly 80% on slump in desktop, laptop sales
  • Analyst: 'PC industry throwing darts at the board to see what sticks'
  • Gartner: PC shipments fell 11% year on year in the first quarter
  • Dell attempting to shift from personal computers to "enterprise solutions" focus

Hong Kong (CNN) -- Dell, the world's number three PC maker, reported Thursday a 79% profit plunge for the first quarter of the year -- to just $130 million -- owing to a slump in desktop and laptop sales, so-called "end-user computing" products. Quarterly operating income for the division fell 65% year on year.

"In the PC industry, everyone is struggling -- not just Dell -- and especially in the mobile PC market," says Craig Stice, Senior Principal Analyst at U.S.-based Compute Platforms. "When I look at those (Dell) revenues split between mobility and desktop, they're really not too far out of line with where the industry is at. The entire PC market struggled in Q1."

Technology research firm Gartner estimated 79 million PC shipments occurred in the first quarter of 2013 -- a fall of more than 11% year on year. HP saw a 24% drop in PC shipments, Dell fell 11% while Taiwan-based Acer Group fell nearly 30%.

The fall in global PC shipments contrasted with a rise in tablet volumes, according to IDC, an IT market research firm. From January to March this year, Apple shipped nearly 20 million units to be the world's number one tablet maker; Samsung shipped nearly 9 million units for second place. The world's top five tablet computer companies shipped more than 49 million units to record 142% growth year on year.

2012: Last rites for PCs?
Who will win control of Dell?
Dell's humble beginnings

Dell has been trying to counter losses in its PC division by shifting to enterprise solutions, which includes hardware like computer servers, software for business applications and technical support to service clients.

Dell's quarterly operating income for the enterprise division soared 71% to $79 million but contributed just 8% of the company's total income.

"Enterprise solutions are significant growth opportunities," says Stice. "The margins are certainly better than the PC area -- high single digits to the low teens -- versus the enterprise space which is considerably higher."

In terms of hardware units sold for enterprise solutions, HP has traditionally been number one, with Dell and IBM rounding out the top three, adds Stice.

Still, the future seems anything but bright for the PC industry despite a flurry of attempted innovations, from super-thin and light ultrabooks to convertible PCs that can morph into tablet forms.

"Dell was a bit slow to the Ultrabook game and lost to players like (Taiwan's) Asus and Acer," says Richard Lai, Editor-in-Chief of Engadget Chinese. In addition, Dell's dive into convertible laptops "was rather half-hearted: poor screen, too bulky."

"You can kind of say the PC industry is throwing darts at the board to see what sticks," says Stice. "If they can find that combination of a whole computing performance PC, with mobility and a low price point to compete with some of those $200 media tablets, then I think there's opportunity. There's still an opportunity for a PC refresh cycle. That can happen."

Part of complete coverage on
October 9, 2014 -- Updated 0804 GMT (1604 HKT)
Liberia, Sierra Leone and Guinea -- the three countries facing the biggest health crisis -- are also facing huge bills to try and contain the virus.
September 22, 2014 -- Updated 1316 GMT (2116 HKT)
Twitter has lost its position in the top 20 coolest brands for the first time in three years.
September 25, 2014 -- Updated 1554 GMT (2354 HKT)
As the crisis in Iraq escalates, CNN looks at how Iraq could crack down on ISIS' oil riches under the guidance of its new oil minister, Adel Abdul Mahdi.
August 29, 2014 -- Updated 0842 GMT (1642 HKT)
Recep Tayyip Erdogan is Turkey's new president . So can he revitalize its economic fortunes?
September 19, 2014 -- Updated 1724 GMT (0124 HKT)
Experts share their tips on cities they see as emerging financial hubs...they're not where you think.
October 9, 2014 -- Updated 1511 GMT (2311 HKT)
Growing numbers of us are willing to serve as bank, teacher or travel agent to people we have never met, and entrust them to serve us in turn.
August 28, 2014 -- Updated 1244 GMT (2044 HKT)
The European Union is stepping in to save its dairy from going sour.
August 18, 2014 -- Updated 1236 GMT (2036 HKT)
Europe's deteriorating relationship with Russia has hit the region's growth, even before new food sanctions begin to bite.
July 16, 2014 -- Updated 1634 GMT (0034 HKT)
With cyberattacks on the rise and here to stay, it's a modern-day challenge for people and businesses to get smarter about preventing them.
August 14, 2014 -- Updated 1324 GMT (2124 HKT)
Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
September 19, 2014 -- Updated 1124 GMT (1924 HKT)
Peer-to-peer finance lets businesses bypass bank loans. Creative companies with quirky ideas find new lending models advantageous.
July 20, 2014 -- Updated 1524 GMT (2324 HKT)
Evidence points to pro-Russian separatists as perpetrators of the attack and Vladimir Putin is facing questions, David Clark writes.
September 3, 2014 -- Updated 0952 GMT (1752 HKT)
CNN's Jim Boulden looks on the future of online shopping.
August 5, 2014 -- Updated 1440 GMT (2240 HKT)
The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.