How Google Can Help Dell Reboot Its Business
In the three years since he returned as CEO, Michael Dell has failed to turn around the company that bears his name. But news that Dell (DELL) wants to switch operating systems from Microsoft (MSFT) Windows to Google (GOOG) Chrome highlights a tremendous opportunity for the faltering computer maker to reboot its business.
Google's Chrome OS will offer Dell several advantages over Microsoft Windows.
- Cost: Dell has already said that the cost of Microsoft Windows is an issue for its customers. Not only is Chrome free, but it would allow Dell to focus on producing cheaper, less powerful machines.
- Integration: Consumers want devices that play well together. Dell needs to produce laptops that can sync easily with its new offerings, like the Streak tablet.
- Mobile: Google's Android is already running on more phones that Apple's (APPL) iPhone OS. Microsoft's mobile offerings have been a flop. Dell is smart to cozy up to the winner of this rapidly growing sector.
But the company's attempt to return to growth have been hampered by the rising cost of components for its core PC business. According to Business Week, Dell's gross profit margins have narrowed for several quarters in a row and the company's stock price has fallen by more than half since Michael Dell returned as CEO.
That's why yesterday's news that Dell is in talks with Google was so important. The company is not going to be able to rejuvenate itself by focusing on hardware. It needs to embrace the future of personal computing: cheap, web centric and spread across multiple devices.
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