- Historically, Dell won the war on PRICE.
- By using massive just-in-time supply chain economics Dell leveraged parts manufacturers against each other to supply the lowest cost components.
- Net 90 terms for suppliers, cash on delivery terms for buyers.
- Rather boring boxes and plastic laptops sporting Intel and Microsoft badges and sponsorship marketing dollars.
- Low risk, low cost computers, also means low innovation, average performance computers.
That’s how Dell built its empire. But the playing field has shifted dramatically. Dell has revoked their public status to become private. And even as they attempt to revive the BRAND, Dell is struggling to stay in business. The grand plan, as envisioned by Michael Dell and his advisors is to change Dell into a services AND computers company. I’m not sure how Dell’s services business is going, but their computers are falling back into boredom, from a short period of innovation in the 2007 – 2009 era.
Today, Lenovo is kicking ass in product development. The newest ThinkPads are a thing of beauty, and the Yoga, well, at least it’s innovative. And HP, well I can’t tell you much about HP, they’re kind of like Dell, boxes, plastic laptops in multicolored cheapness, and higher-priced industry-standard computers. A bit boring, but stable. And of course HP has it’s Printer and ink jet ink cartel to boost bottom line revenue.
So Dell got caught with its pants down, again. A lot of manufacturers can make cheaper computers. So Dell no longer has the price advantage. A lot of manufacturers are making sexier and more elegant computers. And Dell doesn’t have a phone business or a printer business. So, rather than focus on making more kick ass computers, they are doing what the normally do, they are trying to re-org the company for “what’s next.” The only problem is, Dell has no clue what’s next. They’ve laid off all the innovators. They’ve stripped the company back to accountants and project managers. That’s fine if you’re trying to help your bottom line, not so great if you are competing on the global stage with hungrier and more agile companies who have showed up with their own supply chain advantages to eat your lunch.
Unlike Apple, Dell is not sitting on a pile of cash. And unlike Apple, Dell’s next innovation will be the courtesy of one of their contract manufacturers in Taiwan. The same contract manufacturers turning out Asus, Acer, HP, Lenovo, etc.
A quick scan of the three top manufactures websites, on the glide path towards black Friday is quite telling about the company’s plans.
Let’s take the top performer first. Lenovo.
A bit boring. A bit salesy. Looks like web design 1995. And the proud and necessary Intel Inside co-marketing badge.
Next up, HP, what’s the grand old lady of computing got for us?
A nice consumer shot and 50% black Friday offers. It is sort of funny that you’d assume that the women are looking at or taking a selfie on a phablet, but of course HP doesn’t make a phone.
And finally my old employer Dell.
I’m not sure where their design group go the ornaments for Thanksgiving, but I guess the black Friday is leading to Christmas, but it seems a bit early. And look at Dell’s lovely black monolithic box. Enticing? Their top categories below the sales image are telling. SERVICES, SUPPORT, and DEALS.
Dell, for better or worse, has become the company associated with DEALS. And the problem with deals is they can’t get any better week after week. They are not fooling or compelling anyone that wasn’t already in the market for a computer. It’s just what Dell has become. Not the BRAND leader they once were. Not the DESIGN leader they tried to be a few years ago. Not the LOW COST leader of their heyday. But the DEAL brand. The COUPON brand. Dell’s website is so confusing it takes a spreadsheet and several hours to shop the different brands and channels to make sure you’re getting the best deal. And the problem for Dell is, people are punting and going to Best Buy or their competitors.
And stacked up against a hot new Asus laptop a Dell is going to look a bit cheap. Sorry Dell, you’ve got to try harder.
This time the marketing tactics have caught up with them. IF you are always dependent on DEALS and SPECIALS and SALES you’ll never get off the cycle of discounting your products, forever. DELL will have no fewer than 10 different sales in the last 6 weeks of 2014. Any idea which one is going to be the best deal? Do you think Black Friday Deals from Dell are going to be better than their END OF YEAR CLEARANCE. Sorry, Dell tends to shout their sales in all capital letters too. That’s part of the urgency. Dude, you must do this now. It’s your last chance!
Dell is retooling themselves behind the curtain of the new privacy. Good luck to Michael and company. Our fair city has benefited tremendously from the Dellionaire effect. And I hope they have more to offer in 2015 than more of the same, because coupons and deals are for kids, and Dell’s real business problem (80% of their business to be exact) is about big business sales. Dell’s enterprise customers decide Dell’s success of failure in the coming years. And if their products are just plastic boxes from foreign designers they’re going to continue to see their market decrease. And yes, a jump into the services business is a good idea, but what’s the core value of a Dell relationship these days? What does Dell stand for?
DEALS. Dear Dell, if your service business is based on deals and discounts, you’ve got a bigger problem ahead. And you don’t have any first strike advantage this time, there are a lot of companies in the services space.
Good luck Dell, Austin, Texas loves you.
Reference: Market share of PC vendors of PC shipments* worldwide from 2011 to 2014, by quarter – statistica