Michael Dell talks consumers, retail strategy
SAN FRANCISCO--Though he was in town to discuss Dell's new storage products for small and medium-size business customers, company founder and CEO Michael Dell also took time to answer questions about the company's main business, PC sales, which is also an area in which it's recently struggled.
Dell reiterated his company's assertion that there will be more to come of its recent dabblings in selling desktops and notebooks through retail channels.
"We're going to expand to a number of places," he said. "I would expect over the next quarters you'll see several additional key retailers" that will sell Dell products. Retailers like that the company can deliver small lots of PCs to thousands of locations, he said. Though right now the few models sold retail in the U.S. are pre-configured, he said it was "a possibility" that their retail customers might be able to build their PCs to order as well.
So far Dell has announced retail relationships with Wal-Mart and Sam's Club in the U.S., Carphone Warehouse in Europe and Bic Camera in Japan. The Wal-Mart experiment has "gone well," according to vice president of marketing Mark Jarvis, one of the other executives in town for the event. "A number of stores sold out rapidly," he said. They added that though the initial volumes shipped to Wal-Mart were not large, "a full rollout" is coming.
Dell also addressed the struggle to keep up with strong demand for two new notebook models, the XPS M1330, and revamped Inspirons. When asked what customers can look forward to from Dell for the holidays, he remarked, "I think we've excited them a little too much and demand has exceeded supply." He said they would be catching up on the glut of backlogged shipments in "the next few weeks."
On the competition front, Dell said he is "confident we will be able to grow despite consolidation" in the consumer business, referring to Acer's recent acquisition of Gateway. He added that in almost every country except the U.S. his company's presence in the consumer market is only one-tenth of its commercial presence, a difference which will provide Dell with opportunities to grow.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica. 
Second, Apple is eating your lunch right now...seriously. Mac sales are surging while you are floundering. Try a different approach--you have to spend money to make money. Start a new ad campaign, offer rebates and incentives, push innovation, and create a niche for yourself. Apple has less market share than you do, but has a stock price that is nearly 3x what yours is--why?
Apple diversified--pushed innovation, maintained quality, pushed value over price, and maintained the brand image. They created the "i" generation--iPods, iMacs, iPhones, iTv, etc., etc., etc.
Dell = square or rectangular Windows boxes on the cheap....customer service in Bangelore, no frills...lots of shareware. You're getting better at it, getting rid of the trialware and pushing customer service back into the US/North America, but you can be great.
HP gives out free technical support via Chat on it's support site (http://www.hp.com/support/), in or out of warranty, 24hrs a day. Chat is a LOT easier if you outsource overseas because there is no language barrier, and everything is precise--what is typed is what is meant, period. Furthermore, it is much more convenient to "chat" w/ "Bob in Bangelore" while I'm doing other things, than to wait on hold for an hour to be told, "Ok, you reboot now and call me back...bye bye".
Does this mean Macs are the only answer? Oh no, far from it--you've gotta compete w/ Sony, HP, etc., so that's just one competitor of many. However, Apple is the only one who is not only growing, but they are the only one in the market with THEIR own equipment and THEIR own OS--they are not reliant on Microsoft, Linspire, etc. If that isn't just staring you right in the face each and every morning you come to work, or each time you and the Board of Directors get together for a meeting, then you should start looking for a new market because there are enough "me too" products out there; competing at price points can only last so long until you cut your own throats in the marketplace.
My advice: Listen to your customers...they are telling you what 'they' want, and what they are willing to spend money on--they are telling you with the purchases they are making from both your company and other companies. Stop 'telling' them what they want, and start 'making' what they want, and the business will follow.
As for retail, where else does Dell think it can go? Retailers like CompUSA and Circuit City must already have agreements in place with their vendors. Don't think HP wouldn't raise one hell of a stink through their channel if Dell tries to muscle in on retail. Dell missed an opportunity to get into retail when HP was on the skids post Fiorina.
- Miss the old arrogance
- by nicmart September 11, 2007 9:57 AM PDT
- It seems like only yesterday that Mike Dell was offering unsolicited
- Like this Reply to this comment
-
(3 Comments)advice to Apple about how it should conduct its business. Now Dell
looks more like Gateway going down than Apple ascendent.