“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?
Related MacDailyNews articles:
Windows portion of PC industry has serious issues while Apple’s Mac thrives – August 24, 2006
Professional Inventors Alliance: Dell’s lack of engineering expertise to blame for exploding laptops – August 24, 2006
AP: Time to think different, Apple Mac beats Dell on price, software compatibility, and more – August 23, 2006
More blood on Apple iPod’s Click Wheel: Dell’s ‘DJ Ditty’ flash-based MP3 player is dead – August 22, 2006
Survey shows big jump in consumer interest in buying Apple Mac; Dell takes steep slide – July 06, 2006
Dude, you got a Dell? What are you, stupid? Only Apple Macs run both Mac OS X and Windows! – April 05, 2006
Apple Mac is #1 in European education market, pushes Dell down into second place – February 03, 2006
‘Being a hero at Dell means saving money.’
Michael Dell, be the greatest hero: sell and give back the money to your shareholders. THAT is going to save TONS of money.
You can thank me later.
Cheers.
Dell suck. Always have.
If saving money is top priority, why do Dell always sell their PC’s with Windows on? Surely moving to an OS that is reliable will save them millions in tech support, anti-virus subscriptions etc.
Every PC company (apart from Apple) has this HUGE achilles heel which is Windows. And because they signed an OEM agreement Dell cannot sell anything other than Windows on their discount boxes. Sad.
IS Dell doomed?
Why of course it is. All companies that have swelled to the size of Dull eventually start losing customers because they want a new brand.
Kids don’t want a computer like their parents have, hipsters who need the latest thing and so on.
Look at Gateway, look at IBM, look at Compaq. All pillars that were swiped away by the flood of time. Apple remains because it never really had the spotlight, it’s destiny was robbed from it early on and to us old timers Apple needs it’s glory. To new folks Apple is a new company that’s not a Dull PC.
Apple invokes passion, it makes girls horny and sexy. Girls dig cool geek dudes with Mac’s.
Girls love music, but hate technology. Guys can handle the technology and give the girls the music they love.
What does Dull do? Ditty? What’s a fringing Ditty? It rhymes with Sh*tty.
Apple is planning to become the next “PC king” in the market place, Apple store employees are already selling tons of MacBooks to PC owners who go home and install Windows on it.
Sad but true. But lets see how this reflects in increased Mac OS X market share.
Dell still has severeal years of “runway” left because corporate leases will continue to be renewed but Dell will continue to face pricing pressure.
The real vulnerability for Dell is the consumer market where Apple is kicking the “Dell” out of them with superior laptops at competetive prices and the ability to down-grade to Windows should one choose to.
If 18-24 months from now the home landscape has 10-20% of new computers coming from Apple, Dell will be facing a snowball that they cannot counter.
Why?
Because Dell relies on Microsoft to make their boxes do something. Apple relies on Intel/other OEMs to make their software do something.
For as much as Apple is a “Hardware company” the reason people buy a Mac is the software.
Michael Dell,
You will eventually reap what you sow. This maxim has been repeated in many different cultures, faiths and philosophies because it is true.
Michael Dell,
You will eventually reap what you sow. This maxim has been repeated in many different cultures, faiths and philosophies because it is true.
Actually the dog days ended august 11 with the biginning of the Perseid meteor shower. These are technically the Cat Nights. I hate it when people get that wrong.
I always hated that Dell kid who smoked pot. And I hate Dell’s machines also. Matter of fact I chucked one out my window today.
Dell rots. You know where the future is pal ? Sweat free shirts. Write it down.
Dell is only doomed when we see the press use the term: beleaguered.
So MDN, since you’re part of the press, when are you going to use the term “beleaguered”?
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Dell, along with M$, has taken computer tech– perhaps the most promising technology of human history– and made it cheap. Not just inexpensive, but cheap. What should be amazing, enlightening, and enjoyable for the masses has become… ordinary.
Project into the future– Star Trek: Dell. The Starship Enterprise littered with black Dell boxes, cables strewn about. Captain Kirk is muttering obscenities because underpowered USB ports can’t charge his phazer. The bridge is shaking uncontrollably as the cooling fans from the boxes whir to keep the processors from melting. Spock is attempting to mind-meld with an Inspiron. ‘Why have you chosen to lock up…’ , he asks. But to prevent the connection, the Inspiron blows up its own battery and commits suicide. It’s chaos. As the Enterprise passes through a viral cloud, the Dell boxes begin to shut down one by one. System failure, system failure! Mr. Scott, swallowing the last bites of a ham sandwich calls out, “Captain, the engines are dead. They cannot be fixed– but I have a new Dell coupon! They’ll be here to replace them in four hours!”
“Dammit, Mr. Scott! That’s the third time this month!”
Dr. McCoy yells out, “We can’t take much more of this, Captain!” He passes out, clutching his Dell Ditty, a impotent relic from the past. He dies. There is no music playing.
“Bones! Bones! Reboot! REBOOT!”
No applause. Just throw money.
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“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.'”
I’ve felt this way for the past two years or so. A few months ago I met a woman whose husband had been cut loose from Dell last year in one of their purges. We both felt that Dell moved into the box building business, took the heart out of it and added nothing as it passed through. Like a spider it poisoned its prey and sucked out the juicy center leaving only a dead husk. Now it has nothing left to feed on.
I am typing this on a Dell. Not because I love Dells, but because the military must have a contract with Dell and Microsoft. If the military is SO concerned about security, why not switch to Apple? Just a thought.
My Boss’s Dell just died…no kidding. About an hour ago. I can’t wait to go home and use my Mac.
Dells rule.
Most companies praise – and pay bonuses to – those who save them money, particularly when this also involves boosting the bottom line. Dell is not unique in that fashion. What may make them unique is that most other companies also praise – and pay bonuses to – those who innovate the company into more profit. Adding value without adding cost is as important – most places – as reducing cost.
Dell designs from specs and costs. #2 HP goes a bit further and fiddles a bit with the results to make sure the design is a good choice at the price point. A modest difference, to be sure. Apple starts with a market niche, rather than a price point, and builds to it. Sure, price is a consideration for any niche, but it is more the content that defines the niche, than the price alone. But then, Apple avoids the profit-free ‘niche’ of cheap-as-dirt systems … unlike Dell.
Here’s what happened:
Dell offers innovative approach to high performing machines, easily customized, low prices, and great customer care. They thrive, Mike becomes one of wealthiest me in the world.
Dell stops doing all of the above, ships crappy machines with crappy parts inside, abandons customers.
Dell customers buy their crap anyway.
Anything about this picture look familiar to the Apple faithful? Look closely and you will come up with an unfortunate ‘yes’.
And so it goes when you have nothing to offer your customers but a lower price. And now they don’t even have that edge.
The only thing Dell revolutionized/pioneered was inventory management and online e-commerce. Unfortunately for them, those things are eventually copied and become standard business procedure and it was only a matter of time before someone else did just that. (Thank God, Apple was one of them!)
They create none of the critical components for their products—they don’t make the CPU, the drives, video cards, the OS or the software—no one would miss Dell if they suddenly vanished from the face of the earth. 10 other PC assemblers would instantly fill their void.
The few “original” ideas they have had—PDAs, MP3 players—have failed miserably. Maybe they’ll try cell phones or games consoles next.
Hey, I have worked with the American and British Army Engineer Corps and they use Macs. That’s how I got my first fix.
They did up until ’98, hope they haven’t gone backwards.
Leo
The day was that buying Dell would never get you fired, as before with IBM.
Changes in that perception, leading to collapsing confidence in Dell products will cause this company to sink like a stone.
As has been said before, Dell doesn’t innovate, it doesn’t engineer well, it doesn’t re-invest. So that leaves it with creating $$$. Not for long if the great we don’t want to buy their stuff anymore…
Seems to me that there are eerie similarities with Microsofts problems.
What a blessing it all is for Apple. Just need to knock the stock option saga on the head and role on!
Oh dear, maybe Dell has to start selling Macs, Ipods and iPhones.
The Apple train just keeps on rolling.
It looks to me like Apple is preparing to squeze Dell and HP down into the low-margin, low-cost consumer market by undercutting Dell and HP’s high-margin professional desktops and laptops. Because Dell and others are barely making a profit on the cheap gear they have to make up the margins at the high end. Apple can make a better computer at a lower margin at the high end because they have good overall margins to begin with.
All Apple has to do is take the high-margin top end away from Dell and HP. If Apple is willing to play the long game they can strangle Dell and HP in the high-margin market and leave them with only the low-margin stuff. Dell might not be able to survive on just the low-margin.
Dell sucks and I hate them – but I live in Round Rock Texas and hope they stay alive and well until I can sell my house and move to Houston or Dallas.
I recently had to go to an Apple store to pick up a few things. entering the mall, there was a Dell BOOTH about fifty steps from the Apple store with a Dell employee uncovering it. the most prominent item were 2 plasma tvs with some laptops on the side. a far cry from the prominent company from a bygone age. I feel for the employees that are going to get canned after the booths fail to provide enough revenue to keep the company going
Maybe Apple can buy up the unused capacity at Dell to assemble the MacBooks so they can meet demands. Dell may be a poorly run corporation, but no sense putting the little guys out of work for the actions of a few.
The hype back in the day was that Dell used “best of breed” components, but that hasn’t been true for quite a while. That, and their tech support, was supposed to set them apart from the crowd. I think the thing that’s accelerating Dell’s decline is the suspicion/realization that that was just marketing hype, and that people shelled out big bucks for cheap Chinese trash. The buyers are ready to riot.