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

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As a possible differentiator, Dell continues to push the use of Trusted Platform Module (TPM) chips in its business-class laptops. TPM has been around for years with little adoption, but whatever its technical merits, it's simply not used in most PCs and in any mobile devices. At best, its utility is for laptops that IT provisions employees with exceptional security needs -- the minority of workers who can't join the consumerization party.

Dell and HP are banking more on Windows 8 than anything. That OS has versions that will work on desktop PCs, laptops, and tablets -- plus perhaps "convertible" laptop/tablet hybrids. I've detailed the Windows 8 strategy (and how it compares to Apple's OS X/iOS/iCloud strategy) before, but suffice to say it doesn't leave a lot of room for differentiation among vendors. We'll see regular PCs, touchscreen PCs, laptops, touchscreen laptops, and perhaps some tablets that run what is essentially Windows 7 plus the widget-oriented Metro UI, with the idea that the more mobile you are, the more likely you are to use the touch-oriented Metro UI than the Windows 7 UI and its traditional apps. There'll also be Metro-only tablets and perhaps laptops running on ARM processors, for a more iPad-like user context.

Windows 8 may give Dell and HP the opportunity to stand out. Perhaps one of these companies will become successful in a new form factor, such as convertibles, and be able to become the MacBook Air of that product class. As far as I can tell, that's the main hope -- and that Windows 8 will lift all PC sales, which have been languishing as iPad sales have skyrocketed.

It's possible that HP and Dell will take the Windows 8 opportunity to come up with meaningful innovation, using the breakpoint Windows 8 brings to the PC market as the reason to, er, think different. But I'm not counting on it. Neither company has produced meaningful PC innovation for a good decade or more. They've both reduced their PC R&D budgets drastically over the years, and they let the Taiwanese companies who actually design and build their PCs do the real work, with advice from Intel and Microsoft. The Taiwanese companies are all about manufacturing scale, not about technology differentiation and innovation. Dell and HP would have to make significant, sustained investments in fundamental PC design, not just case design -- which is exactly the opposite of what they've been doing.

Worse, Windows 8 is likely to be loathed by Dell's and HP's target IT customers. Its new Metro UI will require massive user retraining. There's really nothing new for IT in the Windows 7 legacy environment that runs underneath Metro, so why would IT -- which is only now beginning to adopt Windows 7 -- invest in the new OS? The touch UI in the Windows 7 portion is unusable (in Windows 8, Microsoft has not fixed the fundamental issues that have long plagued Windows's touch UI), but users will demand touch-capable laptops and monitors nonetheless, adding more unnecessary cost from IT's point of view. And ARM-based Windows 8 tablets can't connect to Windows domains for administration, forking Windows management and thus making IT's life that much harder. Individual users may like the simplicity of Metro, but they're no longer who Dell and HP are trying to reach.

4. Their consulting businesses suddenly look too tactical
Remember, for both Dell and HP, the consumer PC has become a low-margin commodity designed to maintain brand awareness and keep cash flow moving. Even their business PC efforts are more aimed at getting the opportunity to pitch consulting services to IT than about selling PCs per se.

Consumerization should introduce a new opportunity here for both companies, as IT wrestles with managing a heterogeneous technology portfolio. Both Dell and HP are making that pitch, but so are consultancies considered much more strategic, such as Accenture, Avanade, Deloitte, IBM, PwC, and Unisys. IT may go to Dell or HP for help on virtual desktop deployments or backup strategies, but consumerization consulting is ultimately about risk assessment, policy development, process design, and federated management -- very strategic issues that a tactical consultancy such as HP or Dell just doesn't have the cred for, whereas those other entrenched consultancies do.

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