“These are the dog days of Texas summer, with grass bleached yellow and the mercury hitting 100 by noon. But nowhere is the heat being felt like it is inside Dell’s no-frills compound outside Austin. For company founder and Chairman Michael Dell and Chief Executive Kevin Rollins, this summer has been one mishap after another: a massive recall of potentially self-igniting laptop batteries, a dismal earnings report, and an announcement that the computer maker is under Securities & Exchange Commission scrutiny for the way it counts revenues. By mid-August, Rollins was being asked on CNBC about how long he would occupy the tandem corner office he shares with Michael Dell,” Nanette Byrnes, Peter Burrows, and Louise Lee report for BusinessWeek.
“Rollins looked to be the picture of calm in the face of the rebuke. But make no mistake, this is a pivotal moment for a tech icon. Dell may not have hit a wall in quite as dramatic a fashion as did Eastman Kodak or IBM . For all its problems, it is still expected to make nearly $3 billion this year. Yet its predicament may be intractable. Dell remained slavishly loyal to its core idea of ultra-efficient supply-chain management and direct sales to consumers, even as rivals have stepped up their game and markets have shifted to take away some of Dell’s key advantages. Instead of adapting, critics say, Dell cut costs in ways that compromised customer service and, possibly, product quality,” Byrnes, Burrows, and Lee report.
Byrnes, Burrows, and Lee report, “Says one top tech executive in reference to Dell’s lean, mean direct-sales machine: ‘They’re a one-trick pony. It was a great trick for over 10 years, but the rest of us have figured it out and Dell hasn’t plowed any of its profits into creating a new trick.'”
MacDailyNews Note: For more information about one-trick ponies, please see: Apple growing faster with more innovative products, better support than ‘one-trick pony’ Dell, Dell CEO: Apple can’t just have one product and then say they’re the innovative leader of the world and Dismissive Dell CEO not impressed with Apple Mac mini, calls iPod a ‘one-product wonder’ and a ‘fad’.
Byrnes, Burrows, and Lee report, “While Dell’s problems may seem to have sprung up only recently, Rollins may have revealed the limits of its model in an interview with BusinessWeek back in 2003. ‘There are some organizations where people think they’re a hero if they invent a new thing,’ he said. ‘Being a hero at Dell means saving money.'”
“Even Dell’s decision in May to end its exclusive deal with Intel by using chips from Advanced Micro Devices could cause short-term pain. The move was cheered by investors, but it comes just as Intel is introducing chips that close AMD’s technology lead,” Byrnes, Burrows, and Lee report.
MacDailyNews Take: Intel new chips close AMD’s technology lead? More like decimate.
Byrnes, Burrows, and Lee report, “‘This may not be such a bad thing [for Intel],’ says one Intel insider. ‘Exclusivity was great when Dell was growing faster than the rest of the world. But being tied to the hip to a company that is struggling isn’t necessarily a good thing.’ This source thinks Intel may now tighten its links to Apple Computer and HP.”
Full article here.
[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son,” “David O.” and “Fred Mertz” for the heads up.]
MacDailyNews Take: Perhaps Mr. Dull should consider shutting down his box assembly plants and givie the money back to the shareholders?
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