Dell layoff part of repositioning for PC demand thaw

Dell has been shrinking its workforce as PC sales declined globally because of the COVID-19 pandemic, but market improvements are coming, according to IDC.

This week, Dell underwent another major layoff, although the number of affected employees remains unconfirmed. Over the past year, Dell's workforce shrank from 133,000 to approximately 120,000 employees, as noted in a February SEC filing. To reduce costs, the company has limited hiring and reorganized its staff.

In Dell's 2024 fiscal year, which ended Feb. 2, its revenue dropped 14% to $88.4 billion compared to the previous year. In a statement about its most recent reorganization, Dell said it is "becoming a leaner company."

The Dell layoff is focused on its go-to-market teams, indicating the company is changing its sales and marketing strategies.

Linn Huang, research vice president of devices and displays at IDC, noted that Dell's global PC market share dropped by 1%, meaning a loss of some ground to competitors, from 2022 to 2023. He added that the "restructuring is probably not all about the PC business."

There is much to be optimistic about as a PC vendor, particularly one that does so well in the enterprise.

"There is much to be optimistic about as a PC vendor, particularly one that does so well in the enterprise," Huang said regarding Dell. Enterprises are going through a major hardware refresh cycle as they migrate to Windows 11, he said. Schools are also "sitting on four-year-old devices shipped during the peak of the pandemic."

Another factor that might help the market is the shift to PCs capable of processing AI workloads. Dell recently introduced Latitude AI PCs, featuring Intel Core Ultra processors and integrated neural processing units for handling AI tasks, including machine learning and data analysis.

Huang said he also believes that some of Dell's reorganization is the result from improved internal use of AI. "It's undeniable that the rollout of AI will have an impact on human labor, and I think we're seeing Dell experience that now," Huang said.

David Foote, chief analyst and chief research officer at labor market research group Foote Partners, said he expects that as part of Dell's repositioning, "they will be hiring in the next quarter after they announce this quarter's earnings."

"This is exactly what a lot of employers have been doing in the tech industry, especially the big tech companies like Meta and Microsoft," Foote said. These companies are "repositioning their workforces for the next wave of innovation."

Patrick Thibodeau is an editor at large for TechTarget Editorial who covers HCM and ERP technologies. He's worked for more than two decades as an enterprise IT reporter.