Dell Technologies is set to cut 6,650 jobs as the company looks to weather an increasingly sluggish PC shipment market, according to reports.
Sliding global demand for PCs in recent months has severely impacted the tech company and prompted a range of cost-cutting measures, including a pause on hiring and limits on travel, according to reports from Bloomberg.
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However, in a memo to employees, co-chief operating officer Jeff Clarke informed staff that cuts already implemented may not be enough to contend with deteriorating market conditions that “continue to erode with an uncertain future”.
The round of layoffs, which equates to around 5% of Dell’s global workforce, will help the firm mitigate increasingly challenging conditions and drive efficiency, according to Clarke.
“We’ve navigated economic downturns before and we’ve emerged stronger,” Clarke told employees. “We will be ready when the market rebounds.”
Dell’s workforce cuts mean that the company headcount will reach its lowest point in more than six years, according to analysis.
Deteriorating market conditions
The move from Dell is the latest in a long list of big tech layoffs to strike the global industry in recent weeks.
Google, Amazon, Salesforce, Microsoft, and IBM have all announced workforce cuts as market conditions continue to sour amidst a looming global recession.
A key factor in Dell’s decision has been sliding global PC sales, the company revealed. Consumer hesitancy and spending reductions due to the cost of living crisis have had a marked impact on sales in recent months.
Gartner analysis in January found that global PC shipments declined to record levels across 2022.
The total volume of shipments in the fourth quarter of 2022 stood at 65.3 million, marking a 28.5% overall decline, a finding Gartner revealed to be the single largest quarterly dip in nearly 30 years.
This decreased demand appears to have had an acute impact on Dell, which generates around 55% of its revenue from PCs.
Research from IDC found that Dell witnessed the largest decline among major industry players such as Apple, Lenovo, and HP in the PC shipments space, recording a 37.2% drop compared to the same period in 2021.
The firm also reported a 6% decline in overall sales in the quarter ending 28 October last year – and revenue forecasts from the firm suggest this is likely to continue.
Bloomberg reported that Dell is expected to provide additional insight on the full impact of the workforce cuts alongside the publication of its fourth-quarter results on 2 March.
Dell isn’t alone in experiencing a dip in hardware sales in recent months, research shows.
A recent earnings call from Microsoft highlighted that the Redmond-based tech giant also witnessed decreased consumer traction on this front. While cloud continues to be a key revenue driver for the tech giant, device earnings dipped significantly.
Fiscal results from the second quarter of 2023 showed that revenue in the More Personal Computing segment of Microsoft decreased by 19% to $14.2 billion (£11.5 billion). Similarly, device sales dipped by 39%.
Additionally, Intel recently announced a raft of cuts following disappointing quarterly results.
The chip giant revealed that revenue reached $14 billion (£11.6 billion) in Q4 2022 – a 32% year-on-year decrease. Intel’s client computing group also reported a 36% YoY decline.
