4 ways consumerization threatens Dell and HP

You'd think the employee-driven tech trend would be good for the PC makers. But it ain't necessarily so

As with practically every other vendor on the planet, Dell and Hewlett-Packard execs have been waving their arms to get press attention for their views on consumerization -- the trend that's turning IT inside-out and becoming the latest buzzword for vendors to attach to whatever they're selling. You'd think the two companies moving the bulk of PCs in the world would be in the catbird seat when it came to consumerization. After all, consumer devices are what they do.

In fact, Dell and HP are worried, for good reason: Consumerization's trajectory is not going toward their sweet spots. It's true that consumer devices are the vehicle for much of the consumerization trend, but these companies aren't making the devices people are opting for. That threatens not only their consumer-facing business but the IT business where they actually make their money.

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There are four related issues keeping Dell and HP execs up at night, and what they're struggling with concerns both IT and users. I spoke recently with Mike Rosenstein, who runs Dell's business group; he was quite candid (and optimistic) about what Dell was facing. HP has also shared some of its thoughts, but in a highly scripted way that didn't get to the core issues. Here's my take on what they're up against.

1. Dell and HP are not in the mobile game, where the main action is
The never-ending frenzy in the blogosphere -- and users in general -- are all about mobile devices. They line up for the latest iPhone and iPad models and sometimes for competing devices. Dell and HP are worse than no-shows in that business; both failed spectacularly last year in their mobile efforts. HP touted WebOS as the future of its entire computing lineup, shipped a mediocre tablet six months later, and killed the WebOS project six weeks later. Starting in mid-2010, Dell shipped several woefully bad Android-based Streak mini-tablets, becoming the poster child of an old-guard company that doesn't get it.

Dell hasn't formally given up on Android, but it has, in essence, ended the Streak effort. It sells two smartphones under the venue name: one running Android 2.2 and the other running Windows Phone. I doubt anyone knew that. HP is completely out of the game; its website's few links to smartphone products go to deleted pages for ancient products such as the iPaq, which died years ago.

Neither company shows an indication of engaging in the smartphone market, ceding that market and brand awareness to the Apple, Samsung, and the other mobile leaders. As for tablets, they're banking on the forthcoming Windows 8, as I describe later.

2. PC sales are shifting to individuals' choice -- threatening lucrative sales through IT
Most of us consider Dell and HP to be mainly about consumer PCs (and printers, in HP's case). But both have been moving away from consumer PC sales, due to the low margins for the $600 units dominating that consumer market. Sure, some people pay more for PCs, but most of them buy Macs. Dell and HP couldn't enter the Mac market if they wanted to.

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