No easy fix for Dell
Dell maintained a lofty perch above the PC market for more than a decade, but its era of overwhelming domination are clearly done. A senior Hewlett-Packard executive, for example, says his company is "displacing Dell in most of the bigger and strategic accounts," a statement that--true or not--would have been unthinkable only a few years ago.
In the face of such fierce competition, Dell has slashed some prices to the bone, offering such one-day specials as a $349 desktop with a 19-inch monitor shipped overnight for free. But price cuts alone aren't enough to revitalize sales, and some analysts have questioned whether Dell's strategy is misguided, obsolete or both.
The bottom line is that Dell trumped its competitors in the early days by selling directly to consumers and businesses, rather than through retail chains, but competitors have gotten just as savvy about the practice. The loss of this edge, combined with complaints about server support and the increasing trend of PC commoditization, could mean that Dell's problems aren't just an isolated rough patch.
Blog community response:
"So, why the continued push on discounting? Is it the GM way to success and increased revenue? Obviously not, and neither are the other players joining in to lead on price alone, each of them focusing on increasing topline growth through offering better designed products better suited to their customers."
--Perspective
"The article focuses on this as a strategic mistake by Dell, but it could just as easily be a failure to execute production improvements or marketing programs that would naturally go along with a price decrease. Dell has consistently been able to find ways around the fact that PCs are moving closer to commodity status all the time, but they seem to be out of ideas at the moment."
--Businesspundit
"Dell, like Microsoft, sells more products to businesses than consumers, which might have much to do with the PC manufacturer's rough quarter. Slower business sales and consumer PC price pressure could be a nasty combination, with respect to revenue and margins."
--Microsoft Monitor
