Dell Goes Private - Should Apple Follow?
Feb 11, 2013 5:00 AM PT
I'm not asking the question, "Could Apple follow?" because the amount of cash that would need to be raised would be mind-boggling. Most thought that taking Dell private was impossible, and once you get past "impossible," degree doesn't make that much difference.
With Apple stock down sharply and at least a 20 percent potential level of headroom, which likely will go up if Apple continues to slide, the opportunity may increase to eliminate the impossible part.
Still, it's worth looking into why a company might want to go private, and why it could be equally attractive to Apple's board as it is to Dell's.
I'll close with my product of the week: the Amazing Surface Pro tablet, which I've had for a couple weeks now.
There are two primary reasons for going private. The first is largely economic and competitive. You step out from under a massive amount of compliance BS that surrounds everything you do and makes it nearly impossible to keep big strategic bets either funded or secret.
The second reason is that you can make huge bets much like you did as a startup requiring massive changes that could set record levels of cost or result in short-term revenue shortfalls. In effect, as a private company, you can do the one thing a company can do that a person can't -- and that is to truly be reborn as something very different.
The market that created Dell is long gone, and Dell is trying to slowly remake itself into a firm that is more in line with the world as it exists today. It's been doing brilliant acquisition work, but it's been hounded by its PC roots. The world is clearly moving to something both very different and seemingly very similar to what it had with mainframes and terminals.
Much like it is nearly impossible to make major changes to a race car while the car is on the track or during a race, it is almost impossible to fully restructure a company while being pounded for quarterly results.
Think of "going private" as a big pit stop, and you get a better sense of the big things Dell will likely try to accomplish that it can't easily do as a public company, and you'll have a better idea of why it wants to do this.
Apple's problem is that it was recreated around the vision and image of one man -- Steve Jobs -- and he is gone. While the company has clearly been complimentary in recognizing Jobs' role in achieving Apple's success, it has also been in near complete denial as to how critical his contribution was.
If it wants to recapture anything like what Jobs did with Apple, it either has to recreate Jobs or recreate Apple so it no longer needs him. Either of these things would go far better if Apple weren't constantly pounded for meeting some revenue or profit measurement.
In the former case, though, if it wanted to recreate a Steve Jobs-type role, it would be better to do it outside of the public's eye, avoiding the need to announce what would undoubtedly be a long trial-and-error process.
If Apple follows the path it is currently on -- which is looking more and more like the path Apple was on after John Scully fired Steve Jobs -- it's pretty clear what the outcome will be. This time, however, there will be no Steve Jobs to hire and bring back -- not unless Apple creates him.
If it wanted to do something truly dynamic and recreate Apple TV as a service or go truly vertical with phones -- bypassing the carriers -- both moves would require massive bests and be far more easily done as a private company.
You can see Apple struggling with making moves like this, but it is constrained because were it to acquire a carrier, its stock would fall off a cliff. Still, the resulting vertically integrated carrier would have a greater chance of dominating the existing market than even AT&T does through Apple's superior customer experience.
Like Dell, Apple is precluded from making any of the big changes it needs to make, and as its stock continues to fall, management will increasingly be looking at ways to cut costs -- avoiding building the new Apple campus, and looking more and more like a group of folks trying to paddle up a too-quickly moving stream.
If Apple could get that stream to stop, even for a short time, maybe it could build a better boat to ride it down.
Dell is taking an incredibly bold and risky move in going private and in tying more closely with Microsoft. However, great gains often come after great risks are taken. The iPod, iPhone and iPad were all great risks that paid off. Had Apple not made any of them, it would likely be gone today.
Apple needs to make some huge changes either to recapture Steve Jobs' benefits or find a structure that doesn't need them. Making these changes while private would be far more possible than making them as a public company. Getting it done wouldn't be trivial, but then when has Apple ever shied away from the impossible?
Product of the Week: Microsoft Surface Pro
What makes the Surface line interesting isn't the product, so much as what created it. Surface resulted because Windows 8 wasn't being wrapped by the hardware that Microsoft felt would really show it off.
You see Microsoft, Intel and the PC OEMs have been somewhat dysfunctional for some time -- all watching Apple's success and pointing to each other as the problem. So each has been going out of its way to see if it could go it alone.
Intel tried doing its own OS -- that didn't end well. HP tried buying Palm, resulting in the biggest short-term loss -- at that time -- in the firm's history. A bunch messed with Google Android or the Chrome OS with little success.
Surface is Microsoft's response, and it was done by a group in Microsoft -- the Surface group -- that loved hardware and wanted to do something truly special.
The line shows it -- from the magnetic keyboard to the power supply plug, to the touchscreen and kickstand, to the jet black finish. This is a line like no other, and it showcases the love of those who designed it.
Surface RT came out first because the ARM side of Windows 8 needed more hardware work, and it is still largely my favorite thanks to its massive 10-hour battery life.
Surface Pro comes as close as anyone has come to get full Intel Core performance into a similar form factor. Yes -- you take a hit on battery life, cost, and weight, but the result pushes the limit on what can be done in fully featured Windows 8 Intel design.
Sometimes folks have to push the envelope -- and because Microsoft's Surface Pro does that, it is my product of the week.