Where Does Dell Go After Losing 3Par? 169
crimeandpunishment writes "It was the big deal Dell wanted in a big way. But now that it has lost out to Hewlett-Packard in the bidding war it started for 3Par, where does Dell go in its effort to diversify its business and move into the higher-profit area of selling technology to other companies? The company faces significant challenges, largely due to its lower-end focus, and because many of its competitors beat Dell into branching out. One analyst says, 'People see [Dell] as box-pushers'."
I really hope Dell Execs read this message (Score:2, Insightful)
pretty sure stopping demoralizing dell employees (Score:3, Insightful)
Re:how about out of business? (Score:5, Insightful)
Hmm, where have I heard that one before?
Maybe they'll get lucky and invent the next great... um... portable music player? No, that didn't work... PDA? No, that worked, but the market disappeared into smartphones... Smartphone? No, beat to the punch 4 or 5 times over... Printers? Tablets? TVs? No, no, and no.
Dell's problem isn't that competitors beat it into branching out. Dell's tried branching out tons of times. Dell's problem is its founding business model - mass-assemble PCs using standardization and volume to bring costs down - doesn't work on any of the new electronics markets. And even the things that went well were crippled by bad design, bad materials, or just blame bad timing. (For instance, their multi-function displays are nice... but who wants to carry around a multi-function display with their laptop?)
Dell needs to go back to what made them great (Score:5, Insightful)
Let's put it this way:
Apple charges a lot more money for its products and they still sell a lot of them. It's not the price that makes Apple successful.
Dell built its business on customer support and service. While it's quality has more often been pretty good, it has remained more or less on par with its competitors. What makes them better is their support and service accessibility.
Sad thing is they started sending all their call centers out of the U.S. and they wonder why they started losing business? "Everyone else is doing it" was the wrong answer in the case of Dell. I remember when the change was announced. Many business customers started leaving Dell immediately before Dell did an about face on it. Still... they did it anyway... just slowly and quietly.
So, "so-so" to good quality, and a pretty decent online database for machines and a not-difficult means of getting device drivers and such.
If Dell wants to rally, they need to bring their support BACK to the U.S. That will be the only way they will be able to differentiate themselves. And if they cost a bit more, I don't think people will mind so much.
Not worth it (Score:3, Insightful)
3Par is not worth it, HP is just being bully and want to get rid of the HD partnership so they can push their own storage.
For Dell and their customers this is a relief as they would have burned a lot of their cash reserves, now HP have. 3Par was impressive yesterday tomorrow somebody else will show how storage should be done.
Re:how about out of business? (Score:5, Insightful)
Dell's problem is its founding business model - mass-assemble PCs using standardization and volume to bring costs down - doesn't work on any of the new electronics markets.
As I see it, they either need to embrace their role as a builder of boxes and switch to a dividend rather than growth company - or they need to stop selling low-margin shit. How much do they make on a $400 laptop? Why do that to themselves? If they are afraid that their store will not be a "one stop shop", then make the store a separate corporation and sell cheap shit from other companies - only put the "Dell" badge on high-margin - and preferably high-quality - merchandise.
Out of curiosity... (Score:3, Insightful)
The former seems like a largely perceptual problem. Earth to investors, not every industry segment can double its profit every quarter forever, and if it can, it is probably a scam. Civilizations are built on largely low-margin commodities. Cement, steel, sulfuric acid, corn, potatoes, x86s. Go find a Ponzi scheme if you can't deal with that.
The latter, though, seems like a real issue for Dell, one that could seriously impact their mid to long-term viability.
Re:What ever happened to do one thing and do it we (Score:3, Insightful)
No. Their shareholders demand that Dell produce an ever increasing value to the company - forever and ever. They have to get bigger or the stock value will decline and the CEO's options will not be worth enough.
Re:What ever happened to do one thing and do it we (Score:5, Insightful)
They're making billions as box pushers, isn't that good enough?
If they paid dividends, maybe.
Since they don't, they are expected to grow. And grow they have not.
Technically, they've roughly doubled their revenue in the last 10 years, but their net income has been flat or declining.
If you are an investor, you have other choices in the growth game - like competitor Apple with their 10x revenue growth and corresponding net income growth. Or HP with their 3x revenue growth and significant net income growth.
They are being out-grown by their competitors. If they aren't in that game anymore, then they need to issue a dividend and compete for retiree money.
Wall street has no problem with low margin ... (Score:3, Insightful)
Is no longer capable of satisfying the bloated expectations of parasitic wall-streeters because it basically just produces an unsexy commodity in quantity, like steel or potatoes.
Wall street has no problem with low margin commodity type companies. They just expect them to describe themselves as one and to act like one, not to pretend that they are still a growth company when all that differentiated them has come to pass.
Re:Dell needs to go back to what made them great (Score:3, Insightful)
Re:how about out of business? (Score:5, Insightful)
Here's the problem: Wall Street doesn't like companies that make a profit and pay a dividend. In today's upside-down growth-obsessed "free market", it doesn't really matter what companies make or sell. The only thing that matters is the accumulation of cash so they can buy other companies. There are even bidding wars in leveraged buyouts. Think about that for a second. And a Department of Justice that has never met a merger or takeover they didn't like.
Apple has 40 billion in cash. Stock price is in the stratosphere. P/E of 19.23(ttm). They still don't pay dividends.
We've got companies who are trading at 3 times earnings, booking huge profits and still not paying a dividend. Then we've got companies trading at 25 times earnings, booking huge profits, and still not paying dividends. Companies aren't using that cash to start new projects, or build new plants or hire people or pay dividends. They're just accumulating. If they did pay dividends, it would mean some of that cash that's sitting in corporate mattresses would actually end up in the economy. But that's too "long-term" of a play for the captains of industry There are actually companies whose capitalization is less than their cash on hand. So they're capitalization is 30 billion and their cash on hand is 35 billion. They get taken over and the new buyers realize a 5 billion gain before the ink is dry on the sales contract. Paying dividends has become a signal that you're not "growth oriented" enough, that you're not "aggressive" enough. In other words, that you're paying attention to your core business instead of looking to buy or merge with your competitors and suppliers.
Short term thinking and "free market" fantasies have mutated big business into something that only benefits the number of people you can fit around a conference table. Profits are up, but for most working people, income and quality of life are down. How long you think that's going to last, and what will our society look like after another decade of that trend?
Nobody is "beat to the punch" on phones (Score:1, Insightful)
I would have hard time getting excited over a Dell-branded smartphone (or a Dell-branded anything else) but that's just prejudice. Smartphones have barely started happening, and nobody has been "beat to the punch" yet. There's only phone on the market which doesn't suck in a certain drastic, crippling in-your-face way (that phone is Nokia's N900), and that's just one one point of view, not to mention that "doesn't suck" is hardly a ringing endorsement. One "doesn't suck" on the market leaves plenty of room for someone to come along with "good" or even "kick ass."
Shit, you don't even need to get fancy/expensive with the manufacturing; right now most phones' problems have to do with the software. Most of the different phones' hardware all looks similar anyway and time makes a fool of anyone (and I'm not just talking about customers, I mean manufacturers too) who pays extra for the latest and greatest. Lowball it -- make the cheapest possible (within reason) hardware (surely Dell can pull that off!) -- and they just have to preload some carefully-chosen software which'll cost 'em nothing or nearly so. Just think about what users need instead of what carriers, governments, and "strategic partners" want, and you can be a leader. The users are still waiting.
There's so much remaining potential in smartphones that it can still be anyone's game. We still don't know who is going to come out with the first good phone, but there's no reason it couldn't be Dell, if they were to try.
Not only Dell ... (Score:3, Insightful)
One analyst says, 'People see [Dell] as box-pushers'.
Those of us who have been engineers for a while are disheartened to see Hewlett-Packard in the same light.. Dell has always been Dell, but HP was once truly a company worthy of respect.
Re:Dell needs to go back to what made them great (Score:3, Insightful)
The vast majority of people are still not technical. They learn new tricks here and there. They learn the meaning of a few buzz words. But when it comes to support, they simply need it and will pay to not have to deal with someone in a foreign nation with a difficult accent. (Hey India... wanna take over? Stop speaking Hindi!!) And seriously, people will pay a lot of money in order to not have to learn something new. This is why the geek squad is so popular with so many.
Re:how about out of business? (Score:3, Insightful)
By family income and wealth. Compared to before 1980.
The cost of things at Wal-Mart doesn't really have any impact on quality of life. In fact, you could say that the lower the cost of things at Wal-Mart, the lower the quality of life.
There's no question that we are worse off than previous generations, whether or not you "reign in"(sic) Wall Street.
In 1956, a single breadwinner, earning the average wage, could expect to put a couple of kids through college and own a nice single-family home and provide health care to all the members of his family, even buying a new car every 5 years, all without having to use a credit card. More so, after 25 or 30 years, they could expect to have paid off their house entirely and have a comfortable retirement. Today, that's simply not possible.
Please don't try to measure quality of life by how many people have big-screen TVs.
Your reckoning would be dead wrong.
Re:The Problem with Dell (Score:3, Insightful)
Dell takes parts and puts them in a box.
Somewhere there ought to be a place for HP or Dell or both to get out of the race to the bottom and actually produce high quality hardware with first class customer service, at a price ~30-40% above what the no-service no-name brand of the day charges.
Telephone support I could live without. But both HP and Dell's websites make me ill. There seems to be a problem out there where as soon as marketing gets in charge of a web site they water it down, take all the useful information out, and make it impossible to use to get anything done.
And service manual? Can anyone say service manual? Or a way to easily find and purchase important spare parts like fans? As opposed to "accessories"? Or information about which chipsets are used in a certain model, so you can check hardware compatibility?
Sun used to be pretty good (borderline excellent) in this area, but Oracle is killing that off in a hurry. Oracle's website and visible level of support is far worse than Sun's in any case. Oracle apparently does not want to be a small and medium business market provider of anything.