Dude, you're getting a dud
Posted
Dec 18 2007, 11:52 AM
by
Robert Walberg
Rating:
Remember when it was cool to own/buy a Dell computer? Not that long ago it was Dell, not Apple, that had the laid back young kid starring in commercials that resonated with consumers. "Dude, it's a Dell," was the stuff of genius. Dell's were cool, they were cheap and they were everywhere.
Yet in little less than five years Dell has gone from cool to ice cold. Its share of the PC market has eroded due to misguided retail practices, poor customer service and outdated design. The company has also lost its price advantage. Despite the cheap prices you see on the company's web site, or in the flyers that arrive in the mail, once you configure the computer to match even the most basic of needs, the price ends up being as high or higher as PCs from Toshiba, Hewlett Packard and Acer.
Quite simply there's nothing that sets the company apart anymore -- at least nothing positive. Its abysmal technical service group certainly set it apart, as waiting on the Dell help desk was an exercise bordering on cruelty. To its credit, Dell's management team has begun to address this issue by adding staff, but once you get a bad reputation it can be very hard to change consumer perceptions. Dell has a lot of making up to do and some blunt talk from its back-in-the-saddle CEO, Michael Dell, just might help remake its image. Let's face it, Apple was left for dead a few years back and look at what the return of Steve Jobs did for that company.
But if Michael Dell is to resurrect his company, it's going to take more than new sales channels. Deciding to make its computers available in retail chains such as Wal-Mart and Best Buy can't hurt its sales effort to consumers, but the fact is that if Dell wants to get margins and earnings headed back in the right direction its going to need to think outside the (CPU) box. If Dell really wants to increase its share of the consumer market, it needs a broader product line. Notebook and desktop computers alone won't cut it -- especially with a younger generation that increasingly turns to smart phones or other handheld devices, such as iPods or gaming consoles, to communicate with friends, play video games, listen to music and surf the net. A recent survey showed that PC sales actually declined in Japan last year. The first such decline in a major market since the PC exploded on the scene over 20 years ago.
In other words, the challenge confronting Dell is huge. Not only does the company need to remake its image in order to win back customers, but it needs to rethink its entire business in order to face the realities of a new age. That's a tall order even for a gritty Texan like Michael Dell. Frankly, until the company provides evidence that it understands the scope of its challenge and starts to deliver consistently stronger sales and earnings growth, this once cool company and its stock will remain a dud.
