Comments on: Where Dell went wrong

CNET News.com's Michael Kanellos says the company was overthrown by competition, product commoditization and sheer arrogance.

[Cricketcan2]

Just looking at Dell

I know just how you feel. Its been along time since I have even given Dell a look. Everything they were selling was overpriced. Not by much but, you could get it cheaper somewhere else. I looked at the Canon Rebel XT and bought it out of New York. I was just looking at one of there systems to run Vista Ulimate with. With the price of parts these days I decided I could build one alot cheaper than buy one already put together. I was just looking on TigerDirect and couldn't believe how cheap a good processor was from Intel. Duo Core on top of that for 100. Just reading your article reminded me of what I was thinking yesterday.

[Ian Joyner]

More factors where they went wrong

What makes computing interesting - it's software, not hardware.
Dell is a dull hardware manufacturer. Only two companies have
got the marriage of software and hardware right, Burroughs with
Bob Barton's B5000 and Apple. OK Apple is often seen as being
too hardware centric - but why? Because PC hardware is too
limited and shackled to the design of the IBM PC which was and
still is an uninspiring piece of hardware. Windows too is
shackled to this, but apart from that has problems of its own.
Apple does software as well, which is why it generates
excitement around a competent OS with very good application
software and excellent UI.

Like Bill Gates, Michael Dell seems to resent this and much of his
rationale in business seems to be following his desire to put
Apple out of business - that is not a very good business
strategy. Nor for all those who rubbish Apple in these and
similar comment areas is it a very sensible computing strategy.
Well it's all biting Dell and others back now.

For too long the hardware people have dictated that we buy
machines that they can take a screwdriver to, but now customers
are realising it's the functionality of the software - hence the
popularity of iPod and why OS X is gaining ground.

[pmfjoe]

Perhaps you are missing the point?

This has NOTHING to do with Apple. Apple in reality doesn't compete with PC makers when it comes to hardware, aside from the Ipod which is a peripheral device.

[Jeff Lebowski 63]

Dell's a Lost Cause

I imagine that many Dell investors and Dell fans are hoping that
Mr. Dell can do for Dell what Steve Jobs did for Apple when he
returned. I think that scenario is unlikely for many reasons.

Like most great business successes, luck play a substantial role.
In Dell's case, they were lucky to be in the right place at the right
time. Their enterprise oriented business model came to fruition
about the time of the Windows 95 launch which caused business
to replace all their computers. Then only a few years later, the
ridiculous "Y2K" scare initiated another mass replacement. It's
been all down hill for Dell since then.

Their competitors have matched their prices and copied their
business model. Although there is a steady growth in the PC
sector, individuals and businesses no longer replace computers
every two years like they did in the nineties. And, as another
respondent pointed out, virtually all of Dell's business is PCs
while its competitors can beef up their bottom lines with
products in less cutthroat market segments.

Dell knows all this. Their solution so far has been to resell re-
branded consumer products made by other companies. No
doubt, this strategy came from the same idiot MBAs mentioned
in the article. Implementing this strategy was tacit admission
that the company is incapable of creating its own consumer
products.

That's the rub. They have to diversify their business and become
a consumer electronics company, but they are only good at one
thing: developing and selling IBM PC clones that run third party
software. They haven't a clue on how to develop or market
anything else.

Apple was never taken seriously by enterprise customers. While
it work against them in 1990, their consumer-oriented business
culture and talents is helping transform Apple into a consumer
electronics company.

Maybe Michael Dell can pull it off. I doubt it. But, I'm not buying
any Dell shares.

[jerrysproinger]

Offshoring, offshoring, and offshoring

Dell's customer service is notoriously bad. Ask anybody who has bought a Dell in the past five years. I'll bet when they first sent customer service offshore, somebody got a fat bonus for this. And now somebody is going to have to pay the piper to fix it.

[tundraboy]

I agree. Dell has near-zero product dev't skills.

Because they never sought to develop true R&D capability. All their products have this designed-on-the-back-of-an-envelope look to it. [http://Like that monstrous mutant mega-laptop thing.|http://Like that monstrous mutant mega-laptop thing.] Whatever innovations Dell machines feature were from the component makers and [gulp] Microsoft.

So now when they need to move beyond the commodity end of the market, they don't have anything to sell, they don't know how to design anything to sell, and so they don't have any customers to sell (to).

[NoVista]

A tip for Dell2 ...

Want to offer a real freebieOS?

Try Ubuntu :-)

[Clues]

Michael Dell's advice best taken now

Time for Mr Dell to take his own sage advice to Apple. Shut it down
sell off the assets and give the money back to the shareholders.

That was just a few years ago. Since then Apples value has risen
approximately 35,000% while Dell's has tanked.

No amount of begging Apple to use their operating system is going
to save Dell.

[madmortigan0]

Power to the people...!

We are laughing! SO Dell is going down. That's great. What do we care? We, the people, all of us, we need healthy competetion between the big companies, so we can get the best possible products at the best possible price. We want good hardware at low prices. We'll find the best deals and go for them. We should forget the days when we were proud users of an IBM-AT desktop. Pride is what the companies want us to feel, when using their products. And to pay them lots of money. Forget that!

If only we could do the same thing with operating systems... ! Now, there's a thought!...

[Dandy55]

RE: Power to the people...!

Madmortigan0 wrote:
"Pride is what the companies want us to feel, when using their products. And to pay them lots of money. Forget that!"

Forget that??? Are you so sure? Just look at Apple - they do it quite succesfully. Apple fanboys are as proud as hell, sure that any innovation can be done only by Steve Jobs personally, and ready to pay Apple lots of money for anything that bears Apple logo or name moniker on it - iMac, iPod, iPhone, iWhatever.

[qmuser]

Dell product quality has slipped

I work for a large corporation that has bought Dells for some years. The ones we bought in the late 90s were only replaced when we wanted more power to run newer apps and OS. In 2004 we outfitted a whole building with a basic desktop system, the Dell Optiplex. Within 18 months every Optiplex in the build had the mother board fail, and many other components as well. The mother boards are made with cheap gel capacitors that swell up and stop working in the under-ventilated Optiplex case. Even under ideal situations, gel capacitors burn out in about half the time as the better tantantalum capacitors. The engineers at Dell should know this, so I'm guessing it's planned obsolescence. I'm not planning on getting any more Dells any time soon.

[msc001]

Plenty of places

Design - have you see the Dell desktop with the system unit bolted to the back of a monitor to create a low-profile PC. Who designs this stuff/ Even Gateway has a better design.

No R&D - The difference between HP and Dell is R&D. Guess which company really spends money on R&D and innovation?

Cust. Service - Saving pennies and loosing $$$ on revenue is a surefire way to go to oblivion. Cust Service from India is a joke if you need anything non-trivial and it irks customers.

Lousy Website and hard to track coupons - i have a home office - that is a small business. Unless I track all the various ad's Dell runs from WSJ to the Parade magazine, how do I know what I am getting....I prefer fair-play. The website has gotten even more complex lately.

I gave up on Dell a long time ago when they got in and out of the laptop business twice. My money and recommendations always go to HP/Compaq/IBM. Dell is no better than a white-box.

[Hawkr]

How did Dell fail

Having been a product manager at one of the largest worldwide tech companies, who chose to step out of the US market back in 1998, I can only say we have ourselve to blame. Dell has made many mistakes; Slipping quality, customer care, least common denominator products and so on, but the current state of affairs can be traced back to wanting something for nothing. With that kind of pressure from a customer base it is only a matter of time.

One of Dell's statgeies as they climbed the ladder to number one was to leverage "just in time" production of their finished goods. They did this by leveraging their volumes in the direct market with the various OEMs worldwide. They required their suppliers to keep ownership of this intentory until it was placed in Dells hands. Dell only accepted components for products that had already been sold. This reduced Dells risk and inventory carrying cost and allowed them to provide a superior product at roughly the same price. This also allowed Dell to provide higher cost customer service without risking their profitability.

The problem begins with other channels. When the retail space began to squeeze manufactuters and cost them margins without regard for these manufactures health they ultimately forced most of the competion out of the business. When the number of competitors shrinks so to does the incentive to create new and compelling offerings. The focus becomes soley that of providing the price point demanded.

So now we have a shrinking competitive enviroment and increasing cost pressure at a publically traded company and a host of OEM's in Taiwan who are loosing there "Branded" customers as they drop out of the market or shrink their footprint. These same OEM's are now actively courting the only games in town such as Dell.

At some point, a OEM presented a offer that Dell could not say no to and the road to ruin begins. Computers and components from the lowest bidder.

At the company I worked for it was normal business for the purchasing department to be set goals of 3-5% cost reductions per quater on the components used to manufacture for the US Brand players. The reasoning was that the OEM would lose money at first, but gradully with the cost reduction end up profitable. (This is one of the reasons we see so many products start out good and finish as a piece of unreliable junk). In an earlier post I saw mention of Gel capacitors vs Tantalum. This is one of the great examples of cost reduction. I do not know how many meetings I sat in where I watched this cost reduction happen.

So now the product quality starts to suffer from cost pressure and then support costs go up and margins remain the same. Something has to give. Almost every company I have worked for in the tech sector at some point starts to look at Customer Service as a needed evil and not a company value, when this happens it is just a matter of time. You start to see things like "Pay for Service",reduction in hours of operation and ultimately outsourcing. Sound famliliar.

So to sum up what I see as the failure of DEll. When the public demands the unreasonable and the company says OK then the "End Is Near". Instead of setting the trend, defining what is right and growing intelligently Dell has given in and lost the advantage they had as a leader. Look at other industies and we can see this pattern repeated again and again. Dell started out as the Toyota of the PC world and is now heading for the same place as Ford. Lack of long term planning, bowing to the presure of quarterly earnings reports and refusing to think long term.

[Yukimi Konomi]

You people should try working for Dell, THEN moan...

i recall christmas 96?, just started in sales. they had someting like 190+ calls in queue, avg wait was over an hour and 1/2 and if you didnt have a catalog in hand and know exactly what you wanted to order then all we could do was send you a catalog and move to the next call.

the place was a insane sweatshop and im sure its no better now.

so please, take a minute to remember the poor souls that are in the machine and keep buying hp/ibm products.

put them out of their misery already.

[batavier]

MBA-trained executive

"the average MBA-trained executive sees people like this as a cost sink"

Love it - great way of putting it :)

[batavier]

MBA-trained executive

"the average MBA-trained executive sees people like this as a cost sink"

Love it - great way of putting it :)

[batavier]

No idea why

my comments keep appearing twice, except that at work I'm stuck with a Dell....hmmmm....

[batavier]

What "race"

are peasant woman from Uzbekistan?

[batavier]

What "race"

are peasant woman from Uzbekistan?

[Eugene Warren]

Dell products

I have purchased Dell products for many years. They are excellent. Customer support has deteriorated. When I call for support I am connected to a technichian that does not speak intelligibly and is incompetent. Unless this is corrected Dell will NOT be in my future.

[nicki73]

WHERE DELL WENT WRONG

I think Dell's Customer Service is where Dell went wrong. I spent 16 hours total on the phone trying to get the right memory and products for my computer. Everytime I called they said my serial number was not on file, they could never find my file. They sold me a lithium battery that was for a laptop, not my PC, sent me the wrong memory cards twice and would not give me credit in the amount of $375.00. I was given the dial-tone many times, talked to so rude that I lost my patience more than once. The worst part is they all told me they were not allowed to help me, they had no authorisation. That I believe! They were coached to not give me a refund and to sell quickly. Dell went wrong for the same reason so many do, POOR CUSTOMER RELATIONS!!!!! I mean lets face-it, with a good attitude anything can happen!