Dell Inc. (DELL), International Business Machines Corp. (IBM): What About Strategy?

The main concern IBM has is the surge in the cloud computing market. Currently, companies are averse to disbursing large quantities of money for building software and hardware systems. Instead they prefer to rent those systems as they are less expensive, take less time to implement and give flexibility for future changes.

In response, IBM’s management announced plans to center on reducing expenses (expect layoffs) and diverting businesses such as its server business, which could be acquired by Lenovo, to focus on growth areas such as cloud computing. This will take time and money, since IBM will have to invest in new technology; still, the company has the opportunity and experience to craft a change.

Final Comment

Lenovo, International Business Machines Corp. (NYSE:IBM) and Dell are dealing with tough conditions in each of their businesses. Lenovo’s strategy seems to be expanding its market share in the PC business and being aggressive in the new tablet, smartphones and smart TV market. It is also trying to diversify revenue by extending its reach to IT storage and cloud computing markets. It is well positioned to withstand this crisis.

Dell Inc. (NASDAQ:DELL) is really having problems with the weak PC market. Its revenue is not diversified as its peers and it is declining in almost all its business segments. Also, it is currently facing management problems as it could go private, it could be taken over by Icahn or it will have to pay a hefty dividend. Its financial situation is fragile and the next months will decide the fate of this PC giant.

IBM is also experiencing some of the actual problems in the PC and hardware market. Although in no problems for the moment, management will have to change the strategy and focus on areas of significant potential growth to deactivate its decline in revenue in the hardware and software businesses. Cloud computing could be a good option. The company finished the first quarter of 2013 with $12 billion in cash on hand that could use for acquisitions.

The article Prepare Your Portfolio for Changes in the PC Sector originally appeared on Fool.com and is written by Damian Illia.

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