Dell’s back at the helm, with his rep on the line

January 31, 2007, 2:33 PM UTC

DelllogoOn days like this, those quips come back to haunt you.

The year was 1997, and Dell (DELL) was riding high. Steve Jobs had just taken the helm as interim CEO at rival Apple (AAPL), and had begun slashing and burning, trying to whip the company he co-founded back into shape. Meanwhile, at the Gartner Symposium in Orlando, someone asked then-Dell-CEO Michael Dell what he’d do if he were running Apple.

“What would I do?” he said. “I’d shut it down and give the money back to the shareholders.”

Fast forward not quite 10 years, and the Jobs management strategy looks a lot smarter. Dell’s market cap is not quite double what it was then. Apple’s is about 12 times higher.

Now Dell Chairman Michael Dell has to think about what he’ll do as he’s running Dell. CEO Kevin Rollins has resigned and Michael Dell is taking back the reins of the company he founded, with his reputation on the line. In gadgets, Apple and its iPod have beaten Dell to a pulp; its mp3 player efforts went nowhere. Sony Ericsson (SNE) is beginning to see breakout success with Walkman phones, and Apple has buzz there, too.

Meanwhile Hewlett Packard (HPQ) has retained its printer dominance and taken the PC crown from Dell; HP CEO Mark Hurd wins accolades for discipline that once went to Dell himself.

I was talking to a Dell executive several months ago who said he expected 2007 to be the year when Dell flexes its muscle again; Michael Dell will take an even more hands-on approach with the company, he assured me. That’s clearly true. I expect to see Dell form deeper alliances with underdog chipmaker AMD (AMD), and launch aggressive laptop marketing during the Dads & Grads season that starts in a couple of months.

There’s a lot of work to do, from Wall Street’s perspective. Comparatively, Dell’s market cap stood at about $55 billion when trading was halted this afternoon ahead of the CEO announcement, while Apple’s is nearly $74 billion.

It’s been a decade since Michael Dell’s anti-Apple flare-up, so who knows? Perhaps he’ll be placing a call to Jobs this time, to ask what he would do if he were running Dell.