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April Fool’s Day is a bad day to announce a major strategy shift. Case in point: Dell announced today that the company will slash US$3 billion in costs over the next 3 years, according to PC World via Yahoo and Engadget. This includes eliminating 5600 jobs on top of an previously announced cut of 3200 positions.

Dell will also close a desktop computer manufacturing plant in its headquarters city of Austin, which accounts for 900 of the lost jobs according to the Austin American-Statesman. Desktop computer sales continue to flag while Dell shipped 37% more portables during the fiscal year.

Dell Financial Services may be sold or spun off. DFS provides consumer and business financing for computer hardware and software sold through Dell’s direct sales channels.

Dell is preparing ahead, as computer hardware manufacturers tend to lead the economy out of recessions.

Motorola announced last month that it wants to sell its mobile phone unit, which is ranked third in global market share, according to Engadget.

No one’s buying. This month, several companies including Samsung and Dell have announced that they are not interested in laying out US$9 to 12 billion for the business.

It’s a bit of a shock. The Motorola brand name is well known, and the company has remained competitive. Certainly some up-and-coming manufacturer would want that nameplate! It’s the kind of play that made sense a few years ago, when Chinese manufacturer Lenovo purchased IBM’s personal computer business, including the ThinkPad name.

Motorola executives backpedaled last week at the Mobile World Congress, announcing that the company remains committed to the mobile handset industry.

Last Monday, Microsoft purchased Danger, the developer of T-Mobile’s Sidekick line. Om Malik estimated that Microsoft paid US$500 million for a mobile handset line that has a decent market share among the under-30 crowd.

Early Sunday, I saw this on a BoingBoing article: Google legal counsel David Drummond has released a statement that criticizes the proposed merger as anticompetitive. Here’s a New York Times article about the announcement. Google claims that Microsoft would use Yahoo to push proprietary solutions. Microsoft has a long history of developing and implementing its own extensions to Internet standards.

Elizabeth Montalbano of NetworkWorld had similar concerns in her article. She and the Register point out that Microsoft is really buying Yahoo’s computing platform and user base, partly because Microsoft’s Internet presence ls ineffective.

Of course, both companies have different cultures. One uniting factor may be their mutual envy of Google, as discussed in this BusinessWeek article.

This is not a “done deal” by any means

Yahoo’s board will most likely resist the buyout offer, which may give the Federal government and the EU more time to raise their objections. BusinessWeek has a good summary of the potential challenges to the proposed purchase in this article.

Even if Microsoft does actually purchase Yahoo, victory is not assured. As Joe Nocera of the New York Times pointed out in his article today, Microsoft’s online division is the only one of the company’s five strategic business units (SBUs) that loses money. Adding Yahoo may not stem the flood of red ink.

See my Friday, 1 February 2008 post and comments about the proposed Microsoft purchase of Yahoo for more information and links.

From one of my students comes a link to this article about Asustek, also known as ASUS. Here’s a November 2007 article from Forbes with some more details.

The company’s US$299 Eee PC laptop runs Linux on an Intel processor, and ships with OpenOffice and Firefox preinstalled. The price is less expensive than a copy of Microsoft Windows Vista, and was enough to scare Microsoft into a special deal: Eee PC buyers could add Microsoft Windows for US$40.

While the XO project and other spinoffs try to bring their low-cost laptops to the US mass market, Asustek is moving aggressively.

Vendors have been selling inexpensive personal computers for years. Dell has offered models that are more-or-less disposable – the case is sealed, and the repair costs may exceed the computer’s actual value.

Business Week reported on 9 October that sales of ultra-low cost PCs are growing, especially in Asia and Latin America. One popular market for these computers is in schools, where students need durable computers. Some models lack hard drives, relying on flash memory and network storage instead. This 16 June 2006 ZDNet article describes an Intel project to design similar computers. The article also points out some of the distribution challenges in these markets. Weekly payments, microloans, content filtering and asset control systems are important features.

The One Laptop Per Child initiative provides similar computers that run the Linux operating system instead of Microsoft Windows. This 4 October article in the New York Times provides a brief overview of the XO project, and Laptop Magazine has an extensive hands-on review. Wikipedia has an article, of course, and it notes that Intel has redirected its ultra low-cost PC program to support the XO project.

As this spec sheet shows, the XO computer is not a fast device. Its power usage is only 2 watts, which is less than some PDAs and smartphones. The XO’s battery can be recharged in several clever ways, as described in this list from OLPC News.

Ultra-low cost PCs aren’t supposed to compete with standard consumer and corporate models, so the key success factors in this industry may become quite different than those found in mainstream PC markets. The XO is inexpensive, easy to manufacture, and easy to deploy in local schools.