If I told you there was a multibillion-dollar PC company that continues to grow at a double-digit rate in this so-called age of the dead PC, you'd think I was nuts. The reason you don't hear about it is because it's buried in Dell and doesn't have much of a marketing budget. This company-within-a-company is also unique, building highly customized PCs to order.
I wonder if it doesn't point the way to the future of the PC.
Dell OEM Division Tackles Custom PC Development
The Dell OEM division has fascinated me since I first heard of it a few years now. Even though it was a fraction of the size it is today, back than it brought in more than $1 billion in revenue and grew faster than what was still a healthy PC market.
Yes, it's a small percentage of the PC market, estimated to be well over $100 billion annually, but Dell OEM fills a unique need in a sub-market saturated by firms that build their own PCs into highly customized hardware before they sell them.
Custom development is expensive - and timely upgrades and patches are even more expensive. The firms doing this development, in industries such as healthcare, networking and manufacturing, build their own PC-like components at volumes are so low that their costs are substantially higher than what Dell charges.
On top of that, their capability to patch and perform updates is woefully inadequate compared to a modern PC company, particularly against current security threats. This becomes a massive problem as firms connect this custom equipment to the network and put it at risk of being attacked - and much of this equipment was never designed to survive the kinds of attacks that prevail in today's market.
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Dell OEM is cutting through this market like a hot knife through soft butter because its competing offering is cheaper, designed to be patched and built by a company that designs computers for a living - all of which makes these machines easier to service and upgrade.
Dell Bringing Configure-to-Order Consumer Past to Enterprise Present
Remember, Dell made its name on the configure-to-order concept, giving consumers a standard case and motherboard but letting them choose the mouse, keyboard, memory and hard disk size, GPU and type of processor. If you wanted a faster machine, you got faster memory and a faster processor, maybe a better graphics card and, more recently, an SSD drive. If you wanted a larger hard drive, but you wanted to keep costs down, you bought from the bottom of the barrel.
This is different than opening up the entire design for your choice. It's walking in with a drawing you thought up, along with some specs, and asking a firm to build what you designed. This is what Dell OEM does.
This makes perfect sense in certain vertical markets with unique requirements that can't be easily met with off-the-shelf computers. Think of the manufacturing floor, the science lab and hostile military, petrochemical and police/emergency response environment. The capability to design computers concealed in cars or built into chemists' tables, while still maintaining full upgrade and patch capability, offers a huge advantage.
What about building them into desks as removable modules, or into walls for home automation, enhanced security capabilities or just to create a cleaner look? A school could create unique laptops and tablets that would better meet students' need and be hard to resell (and therefore nearly worthless to a thief). A firm could equip its sales force with a PC that better promotes the company brand or uses a unique component that the firm sells; this would help sales, create a deep connection between the employee and the company and still retain the support advantages of a more off-the-shelf solution.
Are You Ready to Think Out of the Box?
What would you do if you could have any PC configuration you could imagine, limited only by the technology available? Heck, what if the PC maker worked with AMD to customize the processor and GPU to order? It could be portable, wireless, look wild, hide in a modular case, run any x86 operating system (and likely Android as well), come with (or without) a display. The only lasting design limitation would be your imagination. Wouldn't that be the near ultimate choice?
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I may not have that kind of imagination, but it would sure be fun to have that level of freedom. Remember Apple's "Think Different" campaign - wouldn't this kind of freedom be more conducive to actually thinking differently?
Imagine if you could build the perfect PC. Would you be up to the challenge? Apparently, a ton of people are. That's why Dell OEM is the incredibly successful and largely unknown PC company.
Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.
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This story, "Meet the Most Profitable PC Company You've Never Heard Of" was originally published by CIO.