By Rita Chattaraj - May 30, 2012 | Tickers: AAPL, DELL, HPQ, RIMM | 0 Comments

Rita is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.

Worlds third largest PC manufacturer, Dell (NASDAQ: DELL), came out with its fiscal 2013 first quarter earnings last Tuesday and the results fell short of the expectations. The company is facing intense competition from all angles and is attempting to manage them through restructuring and repositioning itself. Here is all that has happened and all that is happening.

A look at the numbers The PC maker delivered a top line of $14.4 billion, reflecting a 4% fall from the year ago period. The revenues from its security and services businesses were up 31% and 4%, while that from the software and peripheral business plunged 7%. The most disappointing performance was delivered by the notebook business which fell by 10%.

Lower than expected sales along with poor economic conditions were responsible for the relatively poor performance of Dell in the first quarter. Another factor that negatively affected the top line was the availability of substitutes. Consumers are prioritizing the purchase of other mobile devices over personal computers. However, Dell is not the only player who is facing these issues. Its peer Hewlett-Packard (NYSE: HPQ), which reported results similar to that of Dell, is also in a similar soup.

What else is going on? Among the major IT players who are seeking to gradually shift their business focus from the relatively low-margin personal computers and peripherals, Dell is surely walking the talk. The IT giant seeks to position itself as an end to end IT provider.

But, what is the need for this diversification and what is Dell doing about it? Lets look into these.

The market environment in which Dell functions is a mature and a saturated one. The demand for personal computers is shrinking every day as more and more people are actively shifting to tablets from manufacturers such as Apple (NASDAQ: AAPL), Samsung, Research In Motion (NASDAQ: RIMM), HCL and many others. In such times it is risky to be stuck with the personal computers business. Dell needs to adopt itself to the changing environment and be flexible.

Now we come to how Dell is trying to deal with the diversification strategy. Dell is trying to take a more service-oriented structure. The company is looking at enhancing its portfolio of cloud-based solutions, security and software solutions through inorganic growth. This IT giant has announced five acquisitions out of which three deals have already been closed this year. The most recent merger, which took place in the last week of May, was that of Wyse Technology, a leading cloud-based service provider. With more than 180 patents under the belt of Dell Wyse, Dell is now the market leader in Thin Clients. Dell is also in talks with Quest Software, a network security software provider, to acquire the later. Apart from Quest, Dell is eying BMC Software, as another target.

The bottom line Its very clear that a lot is going on in the IT M&A space and Dell seems to be a pretty active participant. However, the Company needs to act fast on its plans as its competitor Hewlett-Packard is also active in this space. Being just fit wont ensure survival anymore. Survival of the most adaptable is the new rule of the game. Dells strategy seems to be logical, but how soon will these moves start paying off is what actually matters. Dell first needs to find synergies among its core business and those it is acquiring and then it needs to sync them together if it wants to become an end to end IT provider.

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