“Like many long-forgotten former champions, Dell succumbed to complacency in the belief that its business model would always keep it far ahead of the pack. While Dell broadened its product line, it never dealt with the vast improvement in the competition or used its lead in direct sales and the cash generated to invest in new business lines, talent, or innovation that could provide another competitive edge. ‘Dell is a textbook example of single-formula growth: ‘We make PCs cheap. This is what we do, and we do it a lot,” says Jim Mackey, managing director at the Billion Dollar Growth Network, a research consortium focused on large-company growth. ‘You can grow very fast when you’re on a single formula, but when you get to a certain point, you don’t have the ability to create new growth,'” Nanette Byrnes and Peter Burrows report for BusinessWeek.
MacDailyNews Take: “You can’t just have one product and then say you’re the innovative leader of the world. I’m a big admirer of everything [Apple’s] done. It’s phenomenal. But then to say it’s the world-beating wonder of forever? No, it’s not.” – Former Dell CEO Kevin Rollins, February 22, 2005. How’s “early retirement” treatin’ ya, Kevin?
Byrnes and Burrows report, “Long-term success demands constant reinvention. Research done by Mackey and others shows that most fast-growing companies hit a point somewhere over $50 billion in revenue at which they falter. By then, growing apace demands billions of new sales every year. Rarely is the original, unchanged business model up to the job. The only way around the challenge: Nurture the next growth platform long before it’s needed.”
“Dell has struggled to find other growth areas large enough to matter. After a promising start in printers, moving quickly to No.3, the most recent quarterly data from research firm IDC shows Dell’s market share at 3.6%, down from 6.2% the previous year. Its once-promising move into networking gear has fizzled, and its share in the storage systems market is flat compared with a year ago,” Byrnes and Burrows report.
Byrnes and Burrows report, “And Dell’s management bench doesn’t seem as deep as it should be. When Dell ousted its chief financial officer on Dec. 19, the company ended up filling the spot with an outsider, board member Don Carty, the former CEO of AMR Corp., the parent of American Airlines. Industry sources say many of the recent management departures were not terminations but rather people burned out by an increasingly dismal turnaround effort.”
Full article here.
[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son” for the heads up.]
MacDailyNews Take: Gee, that’s too bad for Dell, huh? What would we do? Glad you asked! We’d shut it down and give the money back to the shareholders. 
Related MacDailyNews articles:
Biting words on Apple come back to haunt Dell – February 10, 2007
Dell faces investor lawsuit over ‘illegal Intel kickbacks’ – February 02, 2007
Michael Dell is no Steve Jobs – February 02, 2007
BusinessWeek: Welcome back, Michael Dell – don’t get too comfortable – February 01, 2007
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
Steve Jobs emails Apple team: Michael Dell not the best prognosticator, Apple worth more than Dell – January 16, 2006
Dell CEO: Apple can’t just have one product and then say they’re the innovative leader of the world – February 22, 2005
Dismissive Dell CEO not impressed with Apple Mac mini, calls iPod a ‘one-product wonder’ and a ‘fad’ – January 17, 2005
Oh MDN, you are enjoying this!
Typical MDN – kick people when they are down and stir up a bit of hate.
Dell copied Apple’s automated factories and reduced PC costs.
The flaw is being tied to Windows and the fact that they are selling less boxes
proves that Apple is winning the desktop war. HP should go back to printers
and leave the rest to us.
I’m tired of being advised to shut it down and give the money back to the shareholders. What money? Point to one thing of value that can be sold and the proceeds returned to the shareholders. Perhaps a few buildings – Apple might buy them, or maybe HP, for expansion. Who wants to buy a business model that everyone, even HP and Apple, has copied and is busy executing. Hell, you buy a product from Apple and it is assembled and shipped from China. We can’t even beat their cost anymore. We’ve beat up and strangled every supplier we have to cut costs, to the point where they can’t afford to do business with us. We quit spending money on R&D years ago to cut costs. That’s why we laid a turd with our mp3 player before Microsoft did with their Zune. We had to take kickbacks from Intel to boost the bottom line. Tell me, what thing of value do we have that can be sold for the shareholder’s benefit?
I’ll never get tired of reading the “classic” MDN take on Dell’s options
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Stir up a bit of hate? John, I think you are taking
this (and possibly yourself) a little too seriously.
MW: thirty….
Just thought you’d like to know
In the Reat World of Information Technology in Corporate America Dell is King
and Dell will always be king in the real world of Enterprise Information Technology.
The World of Corporate IT Servers — Outlook — Exchange — Office — runs on Dells.
Never mind what Daniel Eran says in (see link below) about Apple taking on MSFT’s server business.
<http://www.roughlydrafted.com/RD/RDM.Tech.Q1.07/8DFEC70D-ED31-46AD-B23A-558AF0473F91.html>
Microsoft will win the upcoming epic battle over Exchange and Outllook.
And by extension Dell will win over Apple too.
We in the real world of corporate IT know this to be the ultimate true.
Dell and Microsoft are our only kings.
We’d shut it down and give the money back to the shareholders.
No, of course MDN wouldn’t. Better keep them humming and thus reduce the chance of a competitor becoming too profitable and applying those profits in innovative ways, eh?
Stay the course, Dell! You’re doing great as you are.
We’d shut it down and give the money back to the shareholders.
I’ll never get tired of hearing that about Dell.
That’s what you get for being short-sighted and without vision. Good luck turning your company around, Michael Dell.
And no, Steve Jobs isn’t going to license OS X to you, no matter how much you beg. You burned that bridge a LONG time ago…
Well… there is always one option…..
Shut it down and give the money back to the shareholders!!!
“Long-term success demands constant reinvention. Research done by Mackey and others shows that most fast-growing companies hit a point somewhere over $50 billion in revenue at which they falter. By then, growing apace demands billions of new sales every year. Rarely is the original, unchanged business model up to the job. The only way around the challenge: Nurture the next growth platform long before it’s needed.”
Interesting point. MSFT is at $44 billion now, and they still haven’t found an alternative growth platform. Everything apart from Windows, Server and Office loses billions every year.
From: John
Typical MDN – kick people when they are down and stir up a bit of hate.
Is there a better time to kick someone? It’s really hard to kick someone when they are standing!
Typical MDN – kick people when they are down and stir up a bit of hate.
What goes around, comes around.
I noticed that the word “innovative” was used in the first paragraph of a story about Dell. Isn’t that illegal or something???
Micheal Dell:
You ask what Dell has of value? Chairs! That is unless Steve Ballmer has visited lately.
The hidden story here is why only now is the MSM using words like “wrong,” “struggling,” and “beleaguered” on Dell? Are these journalist bozos synching their stories with the market makers and hedge fund managers? Are the latter finally going to make their move to dump Dell stock and move their institutional investers over to a better investment — say, Apple? AAPL has been the victim of an unrelenting FUD campaign aimed to rape the small investor. But Apple’s business fundamentals are so outstanding that the game can not go on forever. I can’t predict when the rally will come, but there will be one — and it will be big.
It’s not like Dell didn’t kick Apple plenty when they were down 10 years ago. Now things have come full circle, so Dell today is getting what they’ve richly earned and deserve. Payback is a bitch.
their problem isn’t really their model… but Dell has never really claimed to make quality stuff. That’s what irks me about them.
They should just focus on the Business market and forget about the home PC market. XPS Gaming rigs? Please. They started off as a business PC company and should go back to that. Dell TV’s. Who are you fooling…
Even the Server line is okay… Dell printed (which aren’t even made by Dell)…
I mean.. what are you complaining about.. you’re selling a commodity… You’re better off being an IBM-type consulting thing. Use the PC relationhsips to build service relationship… PC profit expectations (%) should be low, but plan for higher margins on Knowledge/Services.
But you can’t expect to sell business sense, when Dell is a confused oversretched business.
My advice: Dell is a b2b company.. Get out of all that Dell TV crap. Dell is not sexy, and not cool. It was never that kind of company. Stop that.
“Long-term success demands constant reinvention”
I would like to challenge this Fortune Cookie thinking. Long term success demands integrity.
It’s easy to reinvent yourself to be ‘trendy’ and hip with the times. That’s where companies lose their way. It’s actually falling into temptation.
PS. No one looks to journalists for business advice. Thanks.
Well, I would not say that this is entirely Dell’s fault. They have tried to make different looking packages thinking that that was why Apple hadn’t tanked. But the bottom line is “It’s the OS, stupid.” If everyone has the same OS and there is nothing really special about the hardware, then the sales go to the cheapest. That means low profit margins and that’s risky business if your volume isn’t high. If the competition builds a product that has similar cost and value, you’ve got nothing to distinquish you from the other.
I’m afraid that John just doesn’t get it. All he can do is come here and whine about how justice eventually comes to those who speak foolishly; case in point, Michael Dell. Here’s a clue for you, John — don’t say hateful things and you won’t have them coming back to haunt you. They are haunting Michael Dell right now and from what I’ve seen of the man, he deserves such.
Note to Mike Dell
The good news is people are still buying some of your PCs.
The bad news is they’re clunky-looking pieces of shit…..
and so are the PC’s.
What goes up comes down, one way or the other..
Some days, life is just extra good.
Enjoy the long, sad descent into irrelevance, Mr. Dell. Couldn’t happen to a more deserving guy. I look forward to a world with less of your cut-rate technology in it.
Oh, those 2 brand new UltraSharp 2007FP monitors I got at work a couple of weeks ago? Yeah, one of them is already going tits up. Blue snowy static in the dark areas, and sometimes it just blanks completely. Great product. Well done.
I think you can look at brands like Oldsmobile and Plymouth to see where you’re headed, business-wise. Redundant, bargain-priced marginal adequacy, because, you see, you have no taste. Consumers do, sometimes it just takes a while to remind them of that.
Have a very very beige retirement. See you on the links.
-c
Dell is not the ‘King’ of server rooms everywhere. I work for the federal government and help to support a server farm of over 500 servers. Over the past several years Dell began to make some serious headway into our environment. capturing over 25% of our space at one point. But, after horrible support and very, very spotty performance the pendulum has swung back to HP which truly makes a superior product. The biggest threat to Dell right now isn’t Apple (I wish!) but HP and their superior hardware and very competitive pricing.