“For the past 22 years, Dell has laid waste to mighty rivals with one of the most groundbreaking business innovations of the past half-century: selling technology products directly to customers via the telephone, and later the Internet, instead of going through retail stores or resellers. But now the remaining competitors, such as Hewlett-Packard, have narrowed the gap in productivity and price,” Louise Lee writes for BusinessWeek.
“That leaves Dell in a tight spot. Rollins and Michael S. Dell, founder and now chairman, must either come up with another breakthrough innovation or face a future of slugging it out on near-equal footing with rivals. ‘Michael broke the paradigm about how to run a computer business, but they haven’t been so great at finding the next paradigm,’ says David Yoffie, a professor at Harvard Business School. ‘That’s the big challenge for Dell the company and for Michael,'” Lee reports. “The world is clearly changing around Dell. The once-torrid growth in sales of personal computers has slowed, to about 5% a year. More surprising, consumers seem less enamored of buying their tech wares over the Web or phone. According to researcher NPD Group, the percentage of PC sales done via the phone and Web fell last year, and the share of sales through U.S. retail stores rose, as people flocked to shops to fiddle with new gear such as digital-music players, digital cameras, and slick laptops.”
“Consumers’ buying habits are a reflection of a broader shift in the technology world. People are mesmerized by new digital gear with unique features and style. Commodity technologies, such as plain-vanilla PCs, are passé. That’s a difficult development for Dell. It spends less on research and development ($463 million) than Apple Computer ($534 million), despite being four times Apple’s size. ‘Not investing in R&D works great in the commoditized PC world,” says Vinnie Muscolino, general partner with Babson Capital Management. “It doesn’t work as well in other areas,'” ” Lee reports. “Putting more money into R&D. Selling through retail stores. Breaking with Intel. None of these steps sound anything like Dell. The fact that analysts are raising these ideas underscores how dramatically the times are changing. If Rollins and Dell want to keep up the company’s image as one of the great stock market performers of all time, they may have to think different.”
Full article here.
MacDailyNews Take: It’s simple: SIDAGTMBTTS. Note that Apple Retail Store grand openings continue unabated.
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