Lots of talk about Google and Dell teaming up to add Google stuff onto new Dell PCs. Rumors and predictions abound at the moment including possibilities that this could be a Star Office suite and thus Google's entree into the desktop software suite battle. (Is there one?) Of course the recently debuted Google Pack will probably be a part of any such offering. As I recall, that didn't meet with great gushers of enthusiasm.

Is it just me, but does anyone other than me smell a new slew of CRAPWARE, bogging down new PCs? Michael Parekh seems to hint that way. He says that this might create another "horserace" for control of the desktop. He's probably right. That just means we'll all be struggling along behind the horses figuring out how to clean up the CRAPWARE that comes preinstalled.

UPDATE: Looks like I'm NOT the only one sniffing CRAPWARE.

Posted by Dwight at 07:04 AM | Comments (2)

September 09, 2007

Dell on the defensive

Michael Dell built his computer company in 1984 with his own two hands, literally, crafting custom PCs in his University of Texas dorm room. According to this interesting New York Times piece by Steve Lohr, he's building it again. And it doesn't sound like an envious job.

Over the last few years, Dell, once the gold standard among PC makers, has simply overlooked major growth trends in personal computing. It missed significant shifts in notebook computer sales and the consumer market as a whole, lagged competitors in international sales, and lost the profit edge that it enjoyed from its superior procurement-and-supply network. Hewlett-Packard, having overcome its own woes, passed Dell last year as the largest seller of PCs worldwide.

Dell's ills also extend beyond the nuts-and-bolts of making and marketing PCs. After a yearlong internal investigation, Dell conceded last month that some managers had falsified quarterly results to meet sales targets from 2003 to 2006. The company expects to reduce earnings over those years by $50 million to $150 million, tiny sums compared with the billions of dollars in profits it earned during that same period. (Dell posted annual sales of about $57 billion last year.) Yet the accounting disclosures suggest a corporate culture in which at least some senior managers felt under such pressure that they doctored the numbers; the disclosures have prompted a Securities and Exchange Commission investigation.

"The company was too focused on the short term, and the balance of priorities was way too leaning toward things that deliver short-term results -- that was the major root cause," explains Mr. Dell, dressed for the Texas summer in a short-sleeved polo shirt and jeans.

Dell also fell prey to the classic cycle of growth, arrogance and decline that I outlined two years ago. Success and profits lead to a sense of invulnerability and, in the cutthroat personal technology business, no one lives forever.

Dell turned its business model into a religion, and was determine to stick to it, no matter what. The company ran afoul of a Darwinian truth: Evolve or die. According to the Times story, Michael Dell has shut down the direct-model tent revival and is evangelizing otherwise:

At internal meetings, he repeatedly emphasizes that the Dell model "is not a religion," according to staff members. Moreover, Mr. Dell -- who once ran a company famous for its laserlike devotion to next week rather than next year -- no longer champions short-term goals and fixes. "We're moving the needle in terms of getting focused on the right long-term issues," he says.

But re-engineering the Dell model will be a daunting challenge. "Dell continued to do the same old thing, when it was no longer working," observes David B. Yoffie, a professor at the Harvard Business School. "This is going to be about changing the way they do business at many levels."

"Dell can do it," Mr. Yoffie adds, "but it's going to take a lot more innovation on more fronts than the company has shown in the past."

To throw yet another analogy on the pile, Dell became a direct-model drunkard, and it wasn't until the company hit bottom that it decided to change. Michael Dell himself is providing the intervention.

Of course, the proof as to whether Dell is reformed will come from the experiences its customers have. From the enterprise to the buyers of its lowest-cost systems, Dell has to create delight or risk losing customers.

I am asked daily by people to recommend a PC. They want to know not just specs, but brands. When they ask about Dell these days, I have to say that I don't know if I can recommend them. I've heard too many tales in the last two years of defective computers and horrific tech support. Recently, I've heard only sporadic reports of delightful customer experiences, and occasionally still hear about nightmares.

So let me ask the readers of TechBlog who've bought a Dell in the last 12 months: What's it been like? Were you happy with your purchase? Did you have to use tech support, and if so, what was it like?

From your experience, is Dell making a comeback? After all, your experience is ultimately Dell's bottom line.