How will going private really change Dell?

The company no longer has to answer to the public markets, but will that be enough to spark a renaissance?

The one thing Dell folks couldn't stop talking about at this week's Dell World 2013 conference was how stepping away from the public markets was going make all the difference for the technology vendor. The mantra came from just about everyone - from CEO Michael Dell, who engineered the tortuous process to take the formerly public company private in a massive $24.9 billion private equity deal to mid-level execs to booth personnel.

Being a private company is "liberating"

In the Austin, Texas, event's opening keynote Q&A with Elon Musk of Tesla and SpaceX fame, Michael Dell called going private "tremendously liberating" for the Dell team. "We can make bold bets without worrying about the short-term implications," he explained. "Being able to do this with a longer-term focus is tremendous," he added.

(Musk, who's had his own issues with the stock market, claimed he doesn't spend a lot of time thinking about stock prices. "It's a big distraction, actually," Musk said, drawing laughs by likening the market's vicissitudes to a manic depressive.)

But let's be realistic. Dell still gets some 60% of its revenues from PCs, and despite lots of Dell World happy talk about the importance of the PC business ("PCs are how business gets done" and offer "great economies-of-scale advantages") that is clearly NOT where the growth lies in the technology industry.

The CFO talks truth

Talking to reporters, Dell CFO Brian Gladden enthused that as a private company, "we can be longer-term oriented" and "we can invest in multi-year opportunities" while being "less distracted by quarterly results" (Musk would have been proud.)  He said the move would allow Dell to make more aggressive investments (like the $300 million investment fund announced during the week), speed decision-making, and give the company an "edge" without affecting its strategy or culture. But Gladden also acknowledged that "some investments will put short-term pressure on bottom lines." Although he added, "That's OK," he also noted that Dell is working to "simplify the company to focus on things that matter most to customers."

Maybe I'm just being paranoid, but that sounds like it could be code for layoffs, and company insiders confided that they fear job cuts could be coming in the new year.

All that doesn't mean Dell isn't on the road to a brighter future. And as Musk noted, there are real benefits in avoiding the obssessive, short-term scrutiny of the public markets. But despite the excitement of Dell World, the company still faces significant structural challenges in its core businesses. Not to mention a whopping $20 billion in debt from the buyout. Not all those challenges will fade away just because Dell is no longer traded on Wall Street. More to the point, perhaps, the company is making it clear that it will take years before we know for sure whether this grand experiment will really pay off. 

Disclosure: I was an invited guest at Dell World, and the company paid my travel expenses.

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