“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
“He’s back ’cause he’s excited about VISTA.”
Oh, is THAT what he says he has to fix?
You’re reaching ZT, and it’s evident in your tone.
Part of the ‘fix’ involves making sure that the those beautiful beige boxes are outfitted with vista cutting edge technological features in the best way possible.
Reminds me of Gateway…
My Dell experience… bought a Dell as an upgrade to my PC laptop. Was quite happy actually. It wasn’t cheap, and it wasn’t sexy, but I liked the feature set and the performance.
But about 18 months into ownership it started malfunctioning… as in often failing to startup. Now this is for my day job, 7 days/wk, so I need an immediate working machine while the techs try to fix the Dell. That replacement, obviously, came from a retail store, and, obviously, was not a Dell.
I haven’t had my HP long enough to know if it is really going to last longer (I’m guessing it will). But what I do know is that Dell’s model really only works for organizations with IT departments (who keep their own spares) and maybe kids. I also suspect they do have worse quality… and laptops are harder.
Anyway, when you go through my scenario you realize just how little consumer focus they have. Contrast with Apple. Not only do I have retail outlets, but I just might not bother because the Apple online store delivers so quickly (Hint to Dell: if you want to sell direct, be able to get it built and here FAST. If that’s all you do, you’d think you’d be good at that.)
Anyway, Dell is still worth more to its shareholders alive than dead (and they still make more profit than Apple–though not that much more considering about 4x the revenues!).
But “beleagured” NEVER gets old!
Here is my list of benefits to Apple for allowing Dell to license OS X.
<Start List
End List>
It ain’t gonna happen.
MW: bad, as in “Looks bad, Mikey. Sell the company and give the salvaged money back to your investors.”
About a year ago I was asked by a smallish non-profit to recommend a computer that would be used for a variety of purposes and by a number of people. They wanted to go with a PC and specified a Dell. I tried, and tried… and TRIED to understand my options and compare products with Dell’s Website but it was the most confusing, unintuitive and downright FRUSTRATING Website to navigate and get information from. After several HOURS trying to understand the options and compare different systems I finally gave up. I met again with the management of the non-profit to understand more about their intended use and what their hard requirements really were. When I suggested a Mac they were immediately reluctant and dismissed it out of hand. But when I was able to help them understand the advantages (low maintenance and IT costs, simple to understand and operate, easy multi-user accounts, built in software for multimedia projects, etc., etc. ) and that the cost was at least comparable to the Dell (in its 1000 iterations) they were sold. They were especially impressed with the look of the iMac and many people commented about how great it looked and worked. It has been a little over a year and there has been no significant issues but a lot of good productive work being done on it. I think any future purchases will be Mac’s and I for one would never recommend a Dell – even in their supposed strength of being an internet reseller – they fail miserably.
Dell deployed the Wal Mart model – sell crap cheaply and buyers will come. At first they did – in droves. (I bet Zune Tang has a Dell). Large corporate buyers came to Dell in droves, even if personal buyers didn’t. But Dell’s model didn’t work very well for smaller businesses, or for home users. Small business buys from reseller/integrators who can install and support their networks. Some home users will buy from the web, but the cost to acquire each new personal customer with a constant advertising blitz means growth outside the corporate world comes at a very high price.
HP have a good retail presence and despite their best efforts they still have a channel of sorts. The channel helps them in the small business space and their retail presence gives consumers the opportunity to touch and feel before they buy.
Apple have gone a different direction with Apple stores. People queue all night before they open – it is hard to imagine people queuing outside a Dell store. (well perhaps Zune Tang will).
Worse still for Dell, consumers who buy once from Dell don’t seem to be very loyal – so that expensive “customer acquisition” process is not delivering the level of repeat business that they would have expected.
And now it appears that Vista may be greeted by a yawn. A beige plastic box with a “lipstick over DOS” operating system might just look very expensive for what it is.
Zune Tang loves Dell. Did you know ZT was an “early adopter” of the fabulous iPod-beating Dell Ditty? Its true – ZT admitted to this just yesterday on this very site. But even Zune Tang wasn’t very loyal – and as we know, Dell gave up on the Ditty and it bit the dust. You could have waited Zune Tang. Michael Dell might bring it back – the Dell Ditty II. Now that is an exciting prospect. Almost as exciting as Zune II really…
Michael Dell only needs to look to Redmond for inspiration for the Dell Ditty II after the runaway success of the Zune. Zune Tang tells me that the Zune already has 76% market share where he lives, and that the Zune has sparked a worldwide craze for everything brown.
Which just goes to show – the REAL problem with Dell was the colour. They chose beige when they should really have chosen a Zune brown sort of colour to really get people excited.
Not as exciting as a new Dell beige plastic PC with that DOS-with-lipstick software MS call “Vista”.
Now THAT’s exciting…
I’m still amazed that people in these forums who read and Zune Tang’s comments still take him for a windows user, Dell owner etc. Zune Tang is a Mac user with a great sense of humor.
Why does Mikey Dell keep copying what Steve Jobs does?
@sapiens: Mac user or not Zune Tang’s stories have become tiresome! Next!
@sapiens
Damn. Are you serious?
Zune Tang – are you a fake? Are you a closet Mac fanboy?
I should have realised you were joshing when you admitted to owning a Dell Ditty. I guess no-one would seriously own up to owning anything with such a silly name…
Damn Damn Damn. I was enjoying that… My MDN experience just won’t be the same again…
I bought one Dell, back in 2000.
If I had seen that Piece Of Shit in a store or at a kiosk I would never have bought that POS.
Dell will lose his shirt if he goes retail big-time like Apple did and tries to sell those POS’s.
Keep finding suckers online Mikey. That’s your only option in pushing those POS’s you sell.
Actually, I’m not the real ZT. I just fill in for him part time. The real one is much funnier. I just enjoy imitating him from time to time.
I don’t think ‘we’ are closet Mac fan boys but you will have to hear from the real ZT.
My Dell story:
I’m now working on my 4th Dell Latitude laptop. They are amazing machines! The one I use now is over a year and a half old and runs Vista like a charm. Yes, the wonderful POS you guys claim to be Vista. And I’ve never had any problems with my Dells either. Retail store?! What do I need that for when a Dell technician will COME TO MY HOUSE tomorrow to replace a screen or keyboard under warranty. I’ve been using Dells for over 10 years and probably won’t be changing anytime soon.
Yeah, I could tell you weren’t the ‘real deal’. You didn’t seem as deluded and out of touch with reality as the real Zune Tang.
Nice try, though.
Many years ago, Apple learnt the hard way that profit margins are vital for a healthy company. Since then, they’ve maintained margins that are the envy of PC manufacturers.
It looks like this Machead “gets it” – Apple has raped its customers for years in the interest of maintaining high profit margins so they can give the Great Steve a private jet for a present.
Poor Fracks…..
Why did they choose that “give the all money back, dude Dell”? Is it because the Dell has lost more than 20 Billion$ (only 15,8 Billion €) of the market value??
Give the money back to shareholders! Don´t be Enron of the computers! They should elect George W Bush The Vampire “suck the 1000 Billion$ out of the people who has no health insurance” instead.
It’s like what MDN said ‘Dell dont innovate’.
Innovations costs big $ and it means you have to actually employ talented and forward thinking people.
This is not Dell’s bag at all.
Dell is the ‘make it cheap but sell as many as possible company. They dont give a damn about customer service, user experience or innovation.
SJ shoul NOT licence OS X to ANY manufacturer, Apple tried that in the 90s and their market share fell through the floor.
SJ should just watch and smile as Dell goes the way or all non innovational cultured companies…
… down the toilet with Microsoft following after them.
re: Former Mac User:
Many years ago, Apple learnt the hard way that profit margins are vital for a healthy company. Since then, they’ve maintained margins that are the envy of PC manufacturers.
It looks like this Machead “gets it” – Apple has raped its customers for years in the interest of maintaining high profit margins so they can give the Great Steve a private jet for a present.
Poor Fracks…..
—-
Apple gets away with it because it’s products are so great and they are percieved by the public as a quality’ brand.
‘Quality brands’ can get away with charging more, and more importantly, people freely pay more for the items they make because people feel they are paying for a product that is worth the extra bucks.
God job Apple – keep it up!
Former Mac User said:
Many years ago, Apple learnt the hard way that profit margins are vital for a healthy company. Since then, they’ve maintained margins that are the envy of PC manufacturers.
It looks like this Machead “gets it” – Apple has raped its customers for years in the interest of maintaining high profit margins so they can give the Great Steve a private jet for a present.
Poor Fracks…..
I suppose by your reckoning Porsche Owners are “Poor Fracks” too, since Porsche has higher profit margins than Ford.
The Porsche owners are charged a premium (which they get in line to pay) and all they get for it is getting to drive a Porsche instead of a Ford (poor guys).
Mac Owners pay the premium (and we line up for it) because you get what you pay for. We might pay what amounts to a higher profit margin for Apple, but the value we get is still better than a comparably equipped PC (of course no PC can give us OSX) and our cost of ownership is lower too.
For instance, I haven’t spent a dime on anti-spyware, or getting rid of a single virus. Let me guess, you are one of those Windows users “who never got a virus”, aren’t you? Y’all guys sure like Mac Sites.
Almost a Zillion pieces of malware floating around for Windows, and I’ve never met a Windows user at a Mac Site who got even one…
Wow.
~M