Can Dell learn to Think Different?

“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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39 Comments

  1. When the only ‘innovation’ you have is a cheaper price, it’s only a matter of time before the gap closes and you are left with nothing to differentiate your product. Dell and Apple. Two companies that couldn’t be more different in philosophy.

  2. may plummet but they’ll still be around forever, and they’ll always be a GREAT place to get cheaply made, troublesome machines lacking a decent software bundle, along with so-called “coupon” headgames that make you feel like you’ve gotten a great deal on your ho-hum stripped-down box that has one or two yummy-sounding specs (usually Ghz) on the surface and a whole lot missing under the skin. A good, cheap ticket to virus-land, until it breaks down, which Dells have a history of doing. Cheap parts kinda have that effect! Just like they make Dell laptops twice as thick as a MacBook. Boat anchor, anyone?

    Go Dell!

  3. One of my clients was about to purchase a whole bunch of Dell PCs when I threw a spanner in the works. For £10 a unit less, they could get higher spec units from HP. They were really shocked, as they’d always believed HP to be far more expensive.

    IMHO, Dell kit is not suited to business. You don’t know whether two boxes side by side have the same parts or not. And their customer support stinks.

    If you must go PC, buy HP. If you have a real choice, try a Mac.

  4. i’d rather like to ask this question: can Apple continue to ‘think different’? More importantly, can Apple continue to produce ‘insanely great’ products not just ‘different’ products. How long can Jobs stay CEO? who’s there to replace him if he steps down? Everything from Apple seems to have his ‘fingerprint’. What happens if he leaves? Will Apple still have the people in place to continue to produce ‘insanely great’ products?

  5. Apple has absolutlely NO advantages other than Steve Jobs. They are just like any PC maker, plus Steve Jobs. And there are no other visionaries at Apple or in the world, so when Jobs retires, Apple can no longer make great new products.

    Oh, wait, none of that is true ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

    One day Jobs will pass the torch to someone with a different vision. One day. And maybe it will be a better vision? How do we know?

    What we do know is that Apple has a ton of cash and a ton of growth and a ton of great products nobody can come close to matching. That means if they ever have some screw-ups again, they can survive them until better leadership comes along. Just like the survived their so-called dark days 15 years ago.

  6. “who’s there to replace him if he steps down?”
    Steve may be the one with his hand on the tiller but he has a very good crew of officers and seamen on board with him. Steve doesn’t write the code or actually design the circuits or packages. Other great minds do that. But he gets to say “Go make me this” and then choose from what results. Steve is a powerful force no doubt but his greatest asset is he ability to keep he customers focus and attention.

  7. Isn’t it interesting… Dell never was really on the same playing field as the rest of the industry. Then, the rest of the industry became like Dell and offered their computers for competitive prices. Dell no longer has anything to set itself apart from your average computer company. While they do have this mystique that they are cheaper than everyone they really are not so. In fact the only company that can’t relly distinquish itself from the rest of the industry is Apple. They were just a few years ahead of the curve. It will be interesting to see how Dell tries to sell the Dell name brand to consumers. However, at least they try to unlike Apple.

  8. The article read…

    That’s a difficult development for Dell. It spends less on research and development ($463 million) than Apple Computer (AAPL) ($534 million), despite being four times Apple’s size.

    You Get What You Pay (your computer manufacturer) For!

    MW: Didn’t, as in. Michael didn’t learn to think different.

  9. MacDude, I really hope you’re kidding because you said something that was bull and then linked to a bull article to defend it..
    Where’s that article that proves it wrong now.. I forgot, but it’s somewhere.

    Are you people serious? You honestly think that even when Jobs steps down from CEO, he’s just not going to be involved in the company one bit anymore? You must be kidding.
    Jobs would probably be willing to help out Apple when he’s 90. Not lead anything, but give suggestions, help with design, help with software, hardware, whatever. He’ll always give guidance, he just won’t be the CEO. Too bad.
    Jobs revived the company. He set them on the right track. They will always follow what he wanted for the company even if he left, which I highly doubt he ever will.

    Anyway, Michael Dell wouldn’t know what to do with his company of somebody offered to do it for him, much less him doing it himself. Dell won’t go anywhere and they won’t change anything. Let them lose their lead, they’re all arrogant, incompetent and unwilling to adapt. We don’t need a PC maker like that.

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