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The Upside of Microsoft Part-Owning Dell

A Redmond investment in the Texas PC-maker-that-wants-to-be-a-services-company will assist both, but the true benefit is for PC buyers.

January 23, 2013
Dell XPS 12

News is breaking that Microsoft may toss in as much as $3 billion to help Dell go private. Over the past week it's now clear that Michael Dell has been wooing private equity investors to buy his company and maybe even his stake in the company and take the company out of the stock market.

Over the past couple of years, Dell's CEO has told anyone who'll listen that the company is morphing into a services firm to compete more with IBM, rather than take on Lenovo and its hardware. This would be a major de-emphasis on the PC. Dell PCs would still be sold, but not headlined. Nobody wanted to listen to this and all the reports still refer to the company as "PC-maker Dell." Even HP isn't stuck with this epithet.

When you combine what Dell is doing with the other meme going around—that the PC is dead, as I have written about more than a few times—you end up with a simple equation: "PC-maker Dell" + "PC is dead" = "Dell is dead."

Somewhere along the way Dell decided that this death knell could not be fixed. I would hope that he fired a few PR people along the way, although I doubt it.

Enter Microsoft.

My readers know my thesis about the future of Microsoft and that future is hardware. The Surface tablet is only the beginning. Microsoft sees the Dell deal as an opportunity to build bigger equipment. Dell has large factories in China which would be ideal for manufacturing Microsoft-branded gear. As a part owner of Dell, the company would not have to worry about Dell getting irked by the channel conflict. It's a dream come true for both companies.

The biggest beneficiary will be the buyers of the machines. Microsoft knows that the public is at the end of its rope regarding Windows and the near impossibility of keeping a system running trouble-free. Third-party machines running Windows allow anything and everything to be installed, much of which causes conflicts. Apple has a different approach with its control over the software and hardware.

With a Microsoft-branded PC or laptop you'd at least get the sense of a reference standard Windows machine. Microsoft could actually receive a small premium if it marketed these products correctly.

This is all part of the Microsoft grand strategy of rolling out retail operations across the world to sell branded Microsoft products in much the same way as Apple Stores.

Curiously, the original computer store was an operation called "Computer Kits" run by MITS, the seller of the first successful personal computer, the Altair, and was dedicated to sales of the Altair. This soon morphed into emporium-like stores culminating in Computerland and CompUSA. These emporiums had no focus and ended up like the stereo stores of the 1970s and 1980s: unfocused and riddled with misleading information.

Those days are over. In the future you'll be shopping at the Apple Store and the Microsoft Store and that will be that. At least until a better idea comes along.

You can Follow John C. Dvorak on Twitter @therealdvorak.

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About John C. Dvorak

Columnist, PCMag.com

John C. Dvorak is a columnist for PCMag.com and the co-host of the twice weekly podcast, the No Agenda Show. His work is licensed around the world. Previously a columnist for Forbes, PC/Computing, Computer Shopper, MacUser, Barrons, the DEC Professional as well as other newspapers and magazines. Former editor and consulting editor for InfoWorld, he also appeared in the New York Times, LA Times, Philadelphia Enquirer, SF Examiner, and the Vancouver Sun. He was on the start-up team for C/Net as well as ZDTV. At ZDTV (and TechTV) he hosted Silicon Spin for four years doing 1000 live and live-to-tape TV shows. His Internet show Cranky Geeks was considered a classic. John was on public radio for 8 years and has written over 5000 articles and columns as well as authoring or co-authoring 14 books. He's the 2004 Award winner of the American Business Editors Association's national gold award for best online column of 2003. That was followed up by an unprecedented second national gold award from the ABEA in 2005, again for the best online column (for 2004). He also won the Silver National Award for best magazine column in 2006 as well as other awards. Follow him on Twitter @therealdvorak.

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