- Last Updated on 05 July 2013
- By guardian.co.uk
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Sam Burd, Dell's global vice-president of personal computing, told the Guardian that "we're exploring ideas in that space".
The idea of computers that can be worn on the body has become one of the hottest spaces in the technology business. Google has thousands of people testing its head-mounted Glass system, while the Californian company Pebble has sold more than 85,000 of its Bluetooth-connected "smart watches". Persistent rumours suggest that Apple will introduce an "iWatch", while companies including Samsung, iPhone maker Foxconn, Sony, LG and Philips have announced – but in only a few cases unveiled – wearable devices.
"There are challenges in cost, and how to make it a really good experience," Burd told the Guardian. "But the piece that's interesting is that computers are getting smaller. Having a watch on your wrist – that's pretty interesting, pretty appealing."
With Dell preparing to take the company private in a $24bn leveraged buyout as the PC market – the field which its founder and chief executive Michael Dell first exploited – begins to shrink in importance, the company is seeking new sources of income.
"Looking ahead five years, we expect devices and form factors to continue to change. There will still be a need for 'static' computing on desktops, but there will be a real need for mobile devices. There's a lot of discussion about how that fits into wearable devices like we've seen with Google Glass and watches. We're looking at a world of lots of connected devices.
"I don't see any magic new form factor like the iPad – I don't think anybody saw how that was going to change devices. But the number of [computing] devices per person is exploding." On wearables, he said "we haven't announced anything, but we are looking at the technology in that space."
Dell needs to add new revenue streams as some larger customers have slowed spending amid economic belt-tightening. Though the company has large enterprise and services businesses, they have revolved around its PC business as a means of winning services contracts.
But that is under threat. Dell's PC revenues shrank by 9% to $8.9bn in the three months ending in May compared with the year before, and income slumped 65% to $224m – a 2.5% margin. It has also been pushed into third place in the global PC market by China's Lenovo, which is now just behind the largest PC maker, HP.
And worse is to come, suggests the research company IDC: it forecasts that global sales of PC desktops and laptops will fall by nearly 8% this year, the second year of decline in a row – and expects they will keep falling in 2014.
Instead, tablets and "hybrid" devices such as Microsoft's Surface are expected to become increasingly important; tablets like the iPad are expected to outsell laptops this year, and PCs (counted as laptops and desktops) by the end of 2015.
But Burd admitted that Dell has so far only sold "hundreds of thousands" of its XPS-10 and Latitude 10 tablets, which respectively run Microsoft's Windows RT and Windows 8 software. However he added "I think that's pretty exciting when we look at the ramp [in purchasing] that we expect from corporate customers."
He said Windows 8 on tablets had not done well so far with the large companies that make up a substantial proportion of Dell's customers. "Businesses are slow to adopt a new operating system," he said. "But tablets really need Windows 8 to sell well. Still, it is encouraging to see some businesses deploying Windows 8 and tablets. It's going to take some time, and the jury is still out. IDC's numbers says that Windows 8 on tablets is still far smaller than the iPad, but there are successes. Maybe in a few years when we get to Windows 8 tablets being a third or 40% of tablet volume we can feel it's happening. Tablets are definitely an important piece of the computing business."
More broadly though the decline in traditional PC sales is putting severe pressure on Dell's revenues and profits, driving the company to seek to go private in a $24bn private equity buyout and end its 25-year stock market listing.
Burd insisted that "the PC business is important to us. It's how we started as a company, and where we have strong share globally. Lots has been written about the demise of the PC business, we we think it's an interesting area going forward."
The rapid growth of the tablet market since the introduction of the iPad in 2010 has seen Dell struggle to keep up.
Going private could help, thinks Burd: "Michael Dell believes we are on the right page for transformation," he said. "The view is that we can get ourselves out of the quarterly reporting process where you can't make hard decisions to speed up that transformation."
The company has struggled to make an impact in the fast-growing smartphone and tablet market. It killed off its range of Android phones after having effectively invented the "phablet" range in 2010 with its Dell Streak 5in smartphone. Flaws in the software led to low sales, and the category of a phone with a mini-tablet sized screen was grabbed by South Korea's Samsung, which has turned it into a sector where it dominates through its Galaxy Note products.