"Understanding the Impact of Dell Technologies' Layoff Announcement on the Tech Industry"

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“Dell Cuts Jobs as PC Market Struggles with Diminished Demand”

Dell Technologies Inc. announced in a regulatory filing today that it plans to lay off approximately 5% of its workforce, or approximately 6,650 employees.

Jeff Clarke, Dell’s co-chief operating officer, wrote in an internal memo that the move was part of an initiative to “structure us better for the future, work better together, reduce complexity, increase velocity and accelerate innovation.” . The initiative also sees Dell making a number of changes to its organizational structure.

Dell will reorganize the business units responsible for providing technical support to customers. In addition, the company plans to update the structure of its regional sales and DT Select divisions. DT Select, a sales division focused on Dell’s largest enterprise customers, was formed after the company acquired storage device maker EMC in 2016.

Dell’s Infrastructure Solutions Group will also see changes. The group responsible for the company’s data center hardware portfolio will adjust its engineering investments. Clarke stated that ISG will reallocate engineering resources to the “priority offerings that best meet the needs of our customers and partners.”

ISG accounted for $9.6 billion of the $24.7 billion in revenue generated by Dell for the third quarter ended October 28. ISG’s revenue rose 12% year over year this quarter, thanks to increased customer demand for servers, networking equipment and data center storage systems.

In contrast, Dell’s Client Solutions Group saw revenue decline 17% over the same period. The division is responsible for Dell’s personal computers and other consumer devices. The division’s revenue was impacted by a decline in global PC demand, which also impacted Dell’s competitors.

International Data Corp. estimates that global computer shipments fell 15% year-on-year in the third quarter. According to research from IDC and Gartner Inc., the PC market saw an even sharper 28% drop in demand in the fourth quarter, the largest drop on record.

Dell rival HP Inc. has also been impacted by the decline in PC purchases. HP’s Personal Systems revenue segment, which includes its PC division, reported revenue for the quarter ended October 31, down 21% from a year earlier. Shortly after it released quarterly results in November, the company announced plans to lay off 4,000 to 6,000 employees over three years to reduce costs by up to $1.4 billion annually.

“Remember, we’ve weathered economic downturns before and come out stronger,” Clarke wrote in today’s memo to employees. “We will prevail as always, for our customers, partners and each other. We are becoming more competitive, more focused and reaching a new level of operational performance. We will be ready when the market recovers.”