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  • Dell Reaps What it Sows

    March 7th, 2007

    Do you remember that infamous statement back in the 1990s from Michael Dell, CEO of Dell Computer (once again)? Apple was on the ropes, hemorrhaging millions of dollars of red ink, and Dell suggested Apple give the money back to its stockholders; more or less close up shop.

    Of course, Dell was on a roll then, but consider how the situation has reversed itself.

    Without going into all the nasty financial details, Dell is now the company that’s confronting a sliding market share, reduced profits and all the rest. With growing problems moving product, and attempts to recover from a reputation for poor customer support, founder Michael Dell has returned to the drivers seat and his hand-selected CEO, Kevin Rollins, was sent packing. Well, technically Rollins quit, but if you believe that, I have this bridge in Brooklyn that I can sell you real cheap!

    When Dell was in its heyday, it could do no wrong. Starting from a lowly PC assembler in his college dorm, Michael Dell epitomized commodity hardware. He is to be commended for finding ever-cheaper ways to build personal computers from off-the-shelf parts, and maintaining a lean, mean supply line from manufacturing to delivery.

    Indeed, Dell rose to become the number one PC maker. Not that the Dell product line was altogether different from other generic PC boxes, except for the label and a few minor case design issues, but it was a an efficient place where an individual or company could order a product and have it assembled to their precise specifications.

    Indeed, Dell became the envy of the industry. Despite the fact that you couldn’t buy a Dell at the corner Best Buy or CompUSA, millions of their products were sold every single year, and stockholders were joyous as the company managed to meet or exceed Wall Street estimates.

    However, all good things come to an end. I won’t suggest that there was any single problem that emerged as more significant than others. Maybe it was just a gradual erosion of product quality and support, or maybe the rest of the PC industry caught up with Dell’s vaunted manufacturing efficiencies. Or perhaps a combination of these and other factors.

    Indeed, even a few years ago, I encountered difficulties with Dell’s support. I recall a situation where there was a an Internet connectivity problem on a friend’s PC. I telephoned Dell to help find a solution. The first support person sounded as if he was reading from a prepared script. Whenever I interrupted him to move on to another step, he struggled to find his place. Finally, I suggested he take me to his leader, and thus waited and endured endless phone music while a supervisor was supposedly being located.

    During that time, I figured out the solution myself, which required a change to a couple of command line settings accessed via the pseudo DOS prompt under Windows. No other support person ever came online, and I finally just hung up.

    Later, Dell outsourced their support overseas, which only made matters worse, and they reportedly committed over $100 million for a “Dell 2.0” to right the company’s listing ship. They even hired design engineers to try to improve upon the generic look of their products, and moved to bring support back in-house.

    Did they succeed? Well, right now, with falling earnings and dimmed prospects, it’s clear that Michael Dell has his work cut out for him. With thousands and thousands of jobs at stake, one has to hope he succeeds for their sake if for no other reason.

    This isn’t to say that Dell makes bad products. I am an enthusiastic user of one of their 24-inch displays, the 2407WFP. In fact, I think it delivers a better picture than Apple’s 23-inch counterpart, and sells for a lot less ($629 currently). Yes, it doesn’t have a pretty, metallic case, but such things can be easily overlooked.

    So what should Michael Dell do to fix the company that bears his name? No, I won’t suggest that he close shop and refund the money to his investors. But I also have to wonder just what he’s thinking about the infamous statement he made about Apple once upon a time.



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