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Dell free to look at long-term strategy after going private
Last Updated: 2014-01-11 16:09 | China Daily
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Michael Dell was having a great time at Dell Inc's annual conference, held to wrap up 2013, an "exciting" and "solid" year for the man and his namesake company.

"This past year has been a really big year for Dell," he said. "You may have noticed we are a private company once again. We are really excited about this."

The 48-year-old CEO kissed Wall Street goodbye and took the world's third-largest personal computer vendor private, spending nearly $25 billion.

After getting full control over Dell, the founder and CEO will be able to focus on long-term strategies and make investments without thinking about quarterly earnings.

"Privatization has created a renewed sense of excitement about Dell," he continued. "I feel like I'm part of the world's largest startup."

China, one of the few PC markets in the world that shows any strength, and a vibrant spender for enterprise information technology, has become Dell's most important overseas battleground.

According to research firm IDC, Dell is the second-largest PC brand in China by shipments after local vendor Lenovo Group Ltd.

Analysts said Dell's strong channel network and good relationship with the government has leveraged its China business.

Dell's ambitious China plans include 2,000 more retail stores in small cities.

"Small cities mean tremendous opportunity for us," Dell told China Daily in September. "Every percentage point of shift in urbanization in China represents a population the size of New York City."

Bobbi Dangerfield, chief customer advocate and vice-president of commercial operations, said: "We do have a fairly significant initiative in place. We have at least 1,500 outlets in China today, and our job is to expand that number in 2014."

Lower-tier cities are new battlegrounds for vendors such as Dell. Chinese computer companies such as Lenovo and Acer Inc have many local channel partners in county-level towns.

"We have established a pretty significant presence in first- to third-tier cities. A close relationship with electronics retailers, such as Gome Electrical Appliances Holding Ltd, will help Dell to secure market share in big cities," according to Dangerfield.

It's a good chance to provide affordable technology to people who may not have had access in smaller cities, she added.

"Because China is the top overseas market for Dell, the company has established manufacturing capabilities in the country," said Dangerfield.

"In June, Dell opened a new manufacturing plant in Chengdu to supply Chinese customers. That's something we don't have in the US anymore."

China serves as the center of Dell's global business, with the company striving to provide end-to-end solutions to customers in different industries, said CEO Dell.

Dell will put most of its energy into developing the enterprise market in China.

"Dell will move faster in technology innovation, including cloud computing and mobile technologies, in 2014," said Gene Cao, senior analyst at industry research firm Forrester Research Inc.

"The company would like to offer more flexible pricing models, contracts and financing services, which can significantly improve client experience," said Cao.

The organization's divisions such as service and software could be stronger and more flexible, analysts said.

Now that the company has gone private, Dell's enterprise services arm will accept a longer cycle of return on investment and be more patient in developing and maintaining clients in China and other emerging markets, said Cao.

"Companies operating in emerging markets will soon find more local bandwidth and alternative options from Dell services," he said.

Marius Haas, president of enterprise solutions at Dell, said going private will make the company more agile, especially in China, where small and mid-sized enterprises are thriving.

Going forward in 2014, the biggest change will be if Dell can provide multiple enterprise solutions after more software firms join the Dell ecosystem, said Haas.

Dell is to release more services tailored for Chinese customers over the next few months, he said.

"But our top priority is to join hands with more local partners in smaller Chinese cities to enlarge business coverage. We are doing an OK job in tier-one cities, but we did not do great in the rest of China," said Haas.

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