Michael Dell sends memo, of sorts, to HP

From InfoWorld: Michael Dell sees no benefit to splitting off a PC division, and is probably wondering why Hewlett-Packard is even considering such a move.

Dell Inc. is holding its first enterprise user conference in Austin, Texas, this week with a number of themes, including the increasing capability of x86 systems to handle high-end workloads and an early preview of Windows 8 from Microsoft CEO Steve Ballmer, who is slated to speak here on Friday.

But HP FUD (fear, uncertainty, doubt) aside, Michael Dell, the chairman and CEO of the company that bears his name, Wednesday offered several straightforward reasons why selling a PC division isn't a good idea.

First, he noted, the PC market growing.

There are 1.5 billion PCs in the world and estimates are that there will be 2 billion PCs in a few years, "so it's a growth market," Moreover, Dell says that smartphones and tablets "are augmenting the PC. "We see our customers continuing to use PCs as part of the total solution," he said.

Second, he contended that getting rid of a PC division could lead to a loss of buying power leverage.

"There are also big economic reasons to be in the client business," said Dell. Client devices drive the vast majority of component use. For instance, about 95 percent of all disk drives in the world go in PCs, and the remainder in servers and storage. The same is true for microprocessors and memory, and so from a cost standpoint you can have enormous scale, said Dell.

Third, cutting out the PC business may be like sawing off the leg of a stool.

Or as Dell explained, "We know from our history that there is enormous connection from one device to another." The company sells storage products, systems management tools and other systems to clients, Dell said, and "the foundation of that business for us is the client business."

Charles King, an analyst at Pund-IT, said Dell speaks as someone who has been "legendary for understanding the ability to drive volume discounts and component discounts, and how to squeeze out every dollar."

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