Dell's Midlife Crisis

I have always liked Dell. Not that the company makes a better computer product or is more efficient than any other PC vendor, but because its founder Michael Dell and I grew up together in sort of an existential way.

I was saddened when the company announced recently that Dell intended to buy back all of the public stock for over $24 billion, in a partnership with the investment firm Silver Lake, Microsoft and a large sum of his own money, and take the company private. Not that I care whether or not Dell is publicly traded, but the move was made to help save the company. A company that until a few years ago was the world's leading shipper of PCs.

The thought that Dell had to take such a drastic, and expensive, step to save his company is worrisome. The move reminded me too much of the final gyrations that Gateway endured during its last few years as an independent company before finally being acquired by Acer. Gateway tried everything from selling TVs and MP3 players to closing up all its retail stores. Nothing worked.
Its time had come.

Several analysts have given the deal a thumbs up. Possibly because they know the company cannot succeed under its old structure, but the changeover is far from a fait accompli.

But let's go back a bit. The soft spot in my heart for Dell starts in the 1980s. At that time Dell became a student at the University of Texas at Austin in 1984, while I matriculated through the State University of New York at Plattsburgh starting in 1982. Dell left school after one year. By that time he had started his own company called PC Limited that built computers to order and was on his way to riches. I was on my way to the middle class.

Granted, my position in life is directly tied to how I handled myself in college. What I am about to say does not paint me in an overly glowing light, but it is the truth. When I was a freshman, I spent the majority of my time partying, playing intramural sports and talking in the dorm lounge until 3 a.m. Granted, I did get started on my journalism career that year by joining the school newspaper, but that was for fun. I never thought being a reporter was in my future. On the bright side, I did stay in school four years and graduate. Which is more than Mr. Dell can say and I'm sure he regrets not having a degree to this day.

What makes a person quit school and take a chance on a throw of the dice and another become just a regular working guy? I was fairly familiar with the computers available at that time. I had taken a few programming courses, but it never occurred to me the level the PC would attain in just a few short years. I stayed my course.

So when I started to see Dell and its very innovative business model, which built PCs to order for direct delivery, stumble, I became worried. Had the company reached the end of its life?
Nope, as it turns out Dell seems stuck in a condition familiar to many people of a certain age. Dell is undergoing a full-blown midlife crisis.

When a person hits this stage in life he or she questions just about every aspect of their life. Did they make the right job choice, are they being a good parent and what is their next step?
Dell is in the same position.

While a human might do something stupid like overspend on a sports car, or get divorced, Dell's answer was to branch out and try to reinvent itself as an enterprise-level solutions provider, a la' IBM. By going private Dell can focus on this change instead of having to listen to Wall Street analysts yammering about its quarterly reports. In an odd bit of serendipity Dell has gone on a very human like spending spree buying up companies that will help build its new business strategy.

Implementing this change will not be easy. As anyone reaching the same position in their life understands major change at this age is never easy. People get set in their ways, they have other obligations, and if they fail others will suffer. In Dell's case its 100,000 employees, for me my family.

So I have to applaud Michael Dell's guts in making this move.

So the answer to my question about how some people end up running massive corporations is that they have guts.

Me? I'm going back to work.