“Welcome back, Michael. Don’t get too comfortable. By returning to the top job at Dell, replacing departing Chief Executive Kevin Rollins, founder Michael Dell takes on perhaps the toughest job in the computer industry. Since mid-2005 the PC maker has battled problems with customer service, quality, and the effectiveness of its direct-sales model. Lately, rivals Hewlett-Packard and Apple have been gaining in sales and market share. On Jan. 31, the day Rollins’ departure was announced, the Round Rock (Tex.) company disclosed that its fourth-quarter earnings and sales would fall short of analyst estimates. It’s also under scrutiny by the Securities & Exchange Commission and a U.S. Attorney for accounting irregularities,” Louise Lee and Peter Burrows report for BusinessWeek.

Lee and Burrows report, “As recently as last November, Dell insisted to BusinessWeek that Rollins’ job was safe… But financial performance has been deteriorating for a while now, and Michael Dell apparently ran out of patience in light of the latest disappointment.”

“But does Michael Dell have what it takes to turn the company around? It’s been years since he shouldered day-to-day operational responsibility on his own. Since the early 1990s, Dell has always had a strong No. 2; back then, the company had less than $3 billion in yearly sales. Today it is a $60 billion company. But Dell says he has a clear plan. He believes the company’s supply chain and manufacturing can be improved. ‘I think you’re going to see a more streamlined organization, with a much clearer strategy,'” Lee and Burrows report.

MacDailyNews Take: You can’t get blood from a stone, Mikey. You make nothing innovative. You assemble boxes with an OS that’s inferior to Mac OS X. Your PCs, like every other dime-a-dozen box assembler’s, are OS-limited and run a smaller library of software than Apple’s Macintosh. You should crawl on your hands and knees to Steve Jobs’ feet and beg him for exclusive Mac OS X licensing. It’s your only chance – and not a very good one at all. Failing that, we suggest that you shut down the company and give the money back to the shareholders. (No, it never gets old, it just gets better and better.)

Lee and Burrows continue, “None of the paths to improve performance will be easy. Dell doesn’t have the innovation DNA of an Apple or even an HP, should it want to overhaul its utilitarian products and services. Any effort to crank up R&D would crimp margins. Trying to win over more consumers, the fastest-growing part of the market, may well require a move away from its direct-sales model into retail. That could prove costly as well.”

Lee and Burrows report, “According to a Jan. 30 study done by Goldman Sachs, Dell is losing share in business spending for PCs. (Hewlett-Packard is also losing share of spending, while Lenovo and Apple are gaining.) … Dell has also lost the top spot in the worldwide PC market-share rankings. In the fourth quarter, Hewlett-Packard’s worldwide market share grew to 18.1%, while Dell’s share dropped to 14.7%, according to market researcher IDC… Dell says, ‘I’m going to be the CEO for the next several years.’ He adds: ‘We’re going to fix this business.'”

Full article here.

MacDailyNews Take: Start crawling westward to Cupertino, Mr. Dell.

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