Dell Profits Plummet; Slumping PC Sales Blamed

With consumers moving away from PCs in favor of tablet computers and smartphones, Dell has reported a significant decline in both its revenue and its share price.

Dell Inc., for many years a major PC maker, recently made public its second quarter earnings. The report shows that the firm's second quarter profits declined 18 per cent, while revenues dipped nearly 8 per cent.

Even more concerning may be the company's inability to predict this trend. In May, Dell suggested that revenues would significantly increase, not decrease.

Mobile Devices Lure Consumers Away from PCs

Dell has blamed its declining revenues on changing market trends, including "the uncertain economic environment, competitive dynamics and soft consumer business."

However, insiders suggest the biggest problem has been the decision by many consumers to delay PC purchases and to opt instead for mobile devices like tablets and smartphones.

These devices are considerably cheaper and more portable than most PCs. (Source: wsj.com)

No doubt Dell has also suffered from the emergence of a new sub-$200 tablet market niche. A number of technology firms are currently scrambling to fill that void with their own products.

According to reports, Dell's revenue from desktop computers dropped 8.9 per cent in the second quarter of 2012. Experts indicate that much of Dell's financial trouble came in developing markets, specifically Brazil, India, and China.

The company may also suffer from a recent personnel loss. Brad Anderson has left his post as president of Dell's enterprise unit and will be replaced by Marius Haas, who has previously worked for Hewlett-Packard, Compaq, and Intel. (Source: zdnet.com)

Windows 8 Tablet Planned for Fall 2012

There is hope for the company, however.

First, the release of Windows 8 this fall could revive interest in the flagging PC market.

Second, Dell plans to release its own tablet devices in time for Windows 8's October 26 launch. They will reportedly be running Microsoft's Windows 8 RT operating system.

However, with several other firms offering similar devices, Dell will need to develop and aggressively market a unique tablet computer if the firm hopes to distance itself from the pack.