Dell Computer has made the strategic decision not to return to producing Android-based hardware, but instead, to focus on devices running Windows OSs in future.

Jeff Clarke, Dell’s VP of Global Operations, speaking at the Dell World conference in Texas this week, said that margins for Android based hardware are nonexistent or even negative as firms like Google and Amazon take hardware losses.

They make up these losses through advertising and content sales using their ecosystem of marketplaces and services offered by Google and Amazon).

Naturally, a hardware vendor like Dell would find it harder to compete with these ecosystems. Last year, Dell discontinued its Streak line of Android devices in the U.S., and Clarke’s comments rule out a return to that OS.

The VP added,

“We’ve been really clear about smartphones – we’re not going to do smartphones. We’re not going to be in the smartphone hardware business,” Clarke said. “We’re going to provide smartphone solutions, we’re going to be the preferred BYOD provider of solutions in the marketplace.”

Dell has encountered turbulent fortunes recently. Revenues fell 11% drop in revenue year-on-year during the third quarter. Desktops registered an 8% decline in the period also – to $3.1 billion, while sales of mobile devices plunged 26% to $3.5 billion.

Clarke however, is bullish about the future of the PC industry, citing demographics. He added;

“I look at the long term prospects of the PC business and I’m very optimistic. 85% of the world’s population has a PC penetration rate of less that 20%.”

“I look at the middle class as it grows over the next 20 years from 1.8 billion people to 4.9 billion people and the opportunity for PCs there. I look at the number of small businesses that we sell to today. The creation of small business continues at an unprecedented rate and serving that with PCs we still think is a huge opportunity for the company.”

Dell’s current roster of laptops include the XPS 12-inch convertible Ultrabook running Windows 8 costing $1,200 and up. There is also a Windows RT-based XPS 10-inch tablet at $500 and up; plus a Latitude 10-inch tablet running Windows 8 Pro, beginning at $650.

In regard to Windows 8 vs Windows 7, he sees a focus on Windows 7 migrations for the time being, saying;

“The business side is still making its way from XP to Windows 7, and that migration will continue to happen for the next couple of years. I don’t think you’re going to see a major change in that, but you’re going to see new applications of the technology or new deployments.”

That mirrors reported trends, but Clarke adds that he sees many opportunities for Windows 8 in tablets.

Some wonder if Dell recapture its old glory, especially now it has fallen to #3 in the PC market, after HP and Lenovo.

What are your thoughts? Share them in the discussion below.

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