Should I ever decide to compile a list of my “Eternal Laws of Business,” one will surely be: When someone who does one thing well tries to do something else, remember to duck.
Michael Dell made his fortune doing one thing well: Selling computers direct, first to heat-seeking gamers and spreadsheet junkies, then to corporate America, then consumers, and now in global markets. Dell does this as well as anybody, though not as well as it used to.
Dell’s deal with Wal-Mart is not, despite what many think, the first time Austin’s favorite son has tried to sell computers in retail stores. I remember a short-lived deal with Costco about 10 years ago that fizzled because it didn’t work.
Michael Dell has already proven his company has trouble doing more than one thing well. I am not expecting the Wal-Mart deal to do much better than the Costco deal of a decade ago.
Dell has not scaled the business it already has especially well.
With all the company’s segmented Web sites, “value codes,” promotions, etc., I never feel as though I am getting the best deal that’s available. I don’t mind big customers getting volume pricing, but Dell gives every indication that someone else ordering precisely what I am ordering—at that very instant—is getting a better price.
It also bugs me that Dell as started promoting “North America-based” technical support as a benefit with some products and warranty plans. Is this just another way of saying that Dell’s regular tech support—wherever it comes from—isn’t very good? In which case, why can't Dell solve that problem for all its customers?
It looks like Dell believes only North Americans can provide good support, which sounds almost racist. But, what if Dell were to pay a “world wage” in which all workers around the world were paid the same dollar equivalent for the same work? My bet is that if Dell were to pay its overseas workers the same dollars (and benefits) they offer in North America that they could provide better service there than here.
Or course, Wal-Mart gets away with paying third-world wages right here in the states. Not literally, but close enough that the world’s largest retailer pairing with Dell doesn’t generate lots of warm fuzzies. There was a time when a Wal-Mart deal would have sullied Dell’s reputation. That it doesn’t says much about how far Dell, and the rest of the PC business, has fallen.
Dell’s biggest challenge is what happens when you’re so big that there’s nowhere to go, at least temporarily, but down. Dell is trying to fight this decline off by getting closer and closer to traditional retail. Is the corollary to that Dell getting farther and farther from decent margins?
God help them if they start talking about opening Dell storefronts, like the ones Gateway had right up to the moment the retail overhead almost sunk the company.
At some point, Dell grew too big and now is paying the price of growth it can’t sustain. Instead of getting into new channels that it doesn’t know to pick of the slack, I think the company should take its knocks and improve its image among its bread-and-butter customers.
Michael Dell and I are both from Texas, and we have a saying down there. It’s “dance with the one who brung you” and it’s precisely what I think Michael Dell should do. Wal-Mart may already be a lost cause.
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This is the first in what I hope will be a long series of weekly columns for IBT. For those who know me from CNET, eWEEK, or someplace else, I’m happy to be with you again. For the new IBT global readership, I’m pleased to be part of your online newspaper and look forward to hearing from you.