BusinessWeek: Welcome back, Michael Dell – don’t get too comfortable

“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.

Related articles:
Rollins out as beleaguered Dell’s CEO, replaced by Michael Dell immediately – January 31, 2007
Fortune: Michael Dell reiterates he’d love to sell Apple’s Mac OS X if only Jobs would license – January 22, 2007
Total eclipse of Michael Dell goes off as predicted – January 10, 2007
SEC starts formal probe of beleaguered Dell – November 16, 2006
Apple does it again: New Macbook Pros much cheaper than Dell – October 25, 2006
Dell feels the heat from Apple – October 04, 2006
The Motley Fool: ‘Intel to Dell: you guys stink’ – September 28, 2006
Beleaguered Dell’s OS-limited PC sales ‘declining rapidly below expectations’ – analyst – September 21, 2006
Fortune compares Mac vs. Dell: ‘you’ll get more for your money with Apple’ – September 11, 2006
PC box assemblers like Dell and others wish Apple would license Mac OS X – August 31, 2006
AP: Time to think different, Apple Mac beats Dell on price, software compatibility, and more – August 23, 2006
Dell profit falls almost in half; announces informal SEC probe – August 18, 2006
Dell cannot compete with Apple’s new Mac Pro price or feature set – August 15, 2006
Bear Stearns: Apple’s new Mac Pro, Xserve pricing well below comparable Dell systems – August 09, 2006
Dell warns of earnings miss; shares plunge 15% – July 21, 2006
Survey shows big jump in consumer interest in buying Apple Mac; Dell takes steep slide – July 06, 2006
Dell warns 1Q earnings will miss mark; shares tumble – May 08, 2006
Apple passes Dell in market value – May 02, 2006
InformationWeek: Apple Mac run Mac OS X, Windows, and Linux; Dell and HP should be concerned – May 01, 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


  1. A 70-year old friend of mine said he was thinking of buying a computer and asked what I would recommend. I plugged Apple of course and showed him the Shoot-out cost comparison I found somewhere.

    He had of course been studying all Dell’s offers in the pres, and I didn’t really expect him to switch from his old PC.

    Two weeks later he went to the Apple store and bought an iMac!

    What did it was the simple fact that he could see it in a retail store, touch it, feel it and fall in love with it. Dell – mail order only was a big zero.

  2. “What did it was the simple fact that he could see it in a retail store, touch it, feel it and fall in love with it. Dell – mail order only was a big zero.”

    That may work for Macs, but how would it help Dell if people could touch and feel their products in a store? I think that would turn people off. They’re better off selling by mail and having people unpleasantly surprised when they open the box.

  3. I have a 3 1/2 yr. old Dell box. It has for 2 yrs. now, run like a 133mhz machine from 1995. PC’s are notorious for getting clogged with corrupt files and spyware, adware, etc. Do yourselves a favor you PC owners…just get a Mac. I use an older Mac from 2001 and never have issues with performance. It’s the OS as well as the quality control. Dell = throw away. Do not get tricked into spending 1000.00 for a machine that will last 2 yrs. running malware all day long. Spend it on a Macbook and be happy for 4 yrs. at least. The tide is turning. Abandon the windows nightmare.

  4. Here is what I’d like to see happen, just for grins:

    • Do a freeway blog campaign (banners at overpasses) in Round Rock telling Dell to shut down the company and give back the money to shareholders.
    • For Apple to open a big and impressive new retail store in Round Rock for the Dell folks to see.

    I wonder if Dell will expand their experiment with retail stores — you know those places where you can try out a Dell but not actually leave the store with one. HP can survive the coming changes, I don’t Dell has what it takes.

  5. Vista was released and all I hear is blurry silence. A.k.a normal day, people aren’t truly excited about the latest product. That’s how Detroit died. Will Redmond begin to look like Detroit in 15 years?

    Dell sells computers.
    Computers need OS.
    Their only realistic choice of OS’s doesn’t look so “great” anymore to their customers.
    One of their competitors has great OS and they are doing good.

    Can Dell create their own OS?

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