In the same week that Apple was spotlighted for one billion songs sold on iTunes, BusinessWeek publishes It’s Dell vs. the Dell Way, which spotlights Dell as out of touch and out of favor with the stock market. The big problem of course is that Dell really had one idea and that idea has run its course.
For the past 22 years, Dell has laid waste to mighty rivals with one of the most groundbreaking business innovations of the past half-century: selling technology products directly to customers via the telephone, and later the Internet, instead of going through retail stores or resellers. But now the remaining competitors, such as Hewlett-Packard, have narrowed the gap in productivity and price. That leaves Dell in a tight spot. Rollins and Michael S. Dell, founder and now chairman, must either come up with another breakthrough innovation or face a future of slugging it out on near-equal footing with rivals.
HP and to a lesser extent Gateway have caught up to Dell and consumers are changing their minds now about buying products sight unseen. Apple has been pushing the Apple Stores for years now and giving customers the chance to experience technology is all the fashion these days. Even Sony has their own stores now to sell everything from laptops to wide screen televisions. But I think more than any other technology, the cell phone and the iPod have given consumers this idea that all technology needs to be catered to their individual persona.
Consumers’ buying habits are a reflection of a broader shift in the technology world. People are mesmerized by new digital gear with unique features and style. Commodity technologies, such as plain-vanilla PCs, are passe. That’s a difficult development for Dell. It spends less on research and development ($463 million) than Apple Computer ($534 million), despite being four times Apple’s size.
Somehow Dell changing their biege PC desktops to grey and silver is not enough. If consumers wanted these colors I’m sure Apple would have sold an iMac in these colors already. Clearly that has not happened, and Dell really has no clue what makes for a cool home PC, because if they did their gamer machines would at least have an AMD cpu in them by now.
But the real danger for Dell isn’t Apple’s iMac, it is going to be Levono. I hate to root for a non-US company, but the simple truth is that Levono is going to take the US market by storm and seriously drive some needed competition. HP and Dell will find themselves competing against a new company with enough product lines to match them in multiple segments. The Thinkpad has been a high end laptop for years, but recent announcements show that Levono wants to corner the laptop market on the lower end as well. This will spell big trouble for Dell and HP.