“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. 
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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
The remark made by M.Dell in 1997 to thousands of IT executives was arrogant.
Dell was up and Apple was down. I can’t imagine S. Jobs making such a remark about a rival firm which had fallen on hard times.
For me, that’s the difference between the two men as far as personality goes.
As far an profession goes, the one is a seller of cheap goods, i.e.a tinker; the other is a creative innovator.
Several people I have know have gone to work, for Dell have said the same thing, they are a one trick pony, with them, everything is efficiency, and how cheep they can make PCs. So, I am not surprised that Dell is not doing well, when your source of growth is at the expense of taking market share from other pc companies, eventually you to will run out of room to grow with out developing a new source of income.
There’s a rule in marketing that you never pick on anyone smaller than yourself. In 97, Mr. Dell broke that rule.
Karma’s a bitch.
@M
Too damn funny
@John,
If someone slapped you around and belittled you for years and then that person tripped over his shoelaces and spilled his orange crush all over his white shirt, tell me honestly, wouldn’t you laugh….just a little? I thought so.
I don’t hate Dell, I laugh at them.
Same goes for Dell Managed Services (DMS)
I work on a very large acoount with DMS. Dell has a large management turnover rate, they replace people when the customer complains .
They subcontract out all the services to the cheapest provider they can find and the support suffers. The customers management is always telling
me they are nickel and dimed by Dell as they change these low cost providers routinely.
DULL is nailed to M$.
VISTA isn’t enough to inspire anyone – and PC sales aren’t going anywhere until folks have a reason to buy.
APPLE has Leopard in the wings – sales will take off because many PowerPC users will combine the change to intel and upgrade of OS to maximise the value of the upgrade. APPL must be a buy.
I worked for a company that Dell recruited much of their manufacturing talent… a lot of junior manufacturing engineers and engineering aides. Dell made these people senior engineers and directors of their manufacturing apparatus and quadrupled their salaries overnight. I haven’t heard from any of those young engineers lately and I wonder how they are doing now that the Dell years are not so heady. Pressure at the top comes more quickly the higher up you are in the organization. While Dell was recruiting these bright young manufacturing minds it seems they neglected R&D. There is no class in any Industrial Engineering curriculum named Visionary 101. While I’ve heard a lot of Michael Dell’s famed proclamation as to what Steve Jobs should do with Apple (circa Bondi Blue Imac) I’ve yet to hear an apology for this rude utterance. What I have been hearing a lot of begging to sell OS X in his drab boxes. The man is lacking any sense of commercial innovativeness regarding the market place his company dominated. He failed to convince households to embrace his product line even with the Dell guy. He should have taken his company maybe into robotics and industrial computing. This is somewhere that design aesthetics are not as important and he could make more margin on competitors. I wish my former co-workers well in their future exploits and hope they have cashed in their numerous stock options by now. As for the company we once worked for… after they jettisoned me for cheaper labor in Singapore…alas I fear they are no more. Ive moved on to more secure employment and am making a better life for myself having always owned Macs.
Don’t be so hard on Dell. They expaded with the DJ Ditty, didn’t they?
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From John: Typical MDN – kick people when they are down and stir up a bit of hate.
He’d better be wearing a cup because I’m wearing steel-toed boots. Hate is in the eye of the beholder. So is being blind.
Mike Dell would flog Studebakers, but its present customer service is still too good for him.
From Mike: No one looks to journalists for business advice. Thanks.
That’s why the Wall Street Journal tanked in 1889. (For anyone born after 1870, the Wall Street Journal was a short-lived business publication.) You’re welcome.
If Dell had an ounce of conscience remaining for his shareholders (if he had a conscience to begin with), he’d follow his own advice: “What would I do? I’d shut it down and give the money back to the shareholders.”
I love repeating that.
Are you wearing a cup, Dell? Not that I care, because you’re down, where you belong, and here comes another steel-tipped boot.
Magic Word: true
@Real IT World
“The biggest threat to Dell right now isn’t Apple (I wish!) but HP”
Yes. I agree.
Dell will continue to bleed until someone makes an offer and buys them. I reckon that someone might be Lenovo. It would be a good fit, deliver a significant bump to Lenovo’s market share outside Asia, and if they move quickly, deliver them the number 1 spot over HP.
The return of Michael Dull will just make things worst so Dell should just shut down the company and give the money back to the shareholders.
What’s unclear. What part of ‘close down’ don’t you understand. Wait let me get my MacBook out….
Hi there! This post couldn’t be written any better! Looking at this article reminds me of my previous roommate! He constantly kept talking about this. I am going to send this post to him. Pretty sure he’s
going to have a very good read. Many thanks for sharing!