*NEWS*THE NEW DELL ENDS IT’S FIRST YEAR

[Anonymous]

The New Dell Ends its First Year
Dell’s
efforts to reinvent itself this year through a dramatic break from its
direct-sales model, expanded services and new enterprise offerings have
shown positive early results, but some users have lingering concerns
about supply chain management and support — long-time issues for the
company.

Incentive for Change
Weathering an accounting
scandal and a slump in profit, founder Michael Dell reclaimed the helm
of the company after CEO Kevin Rollins resigned in January. Dell
quickly replaced top managers and in May announced plans to lay off 10
percent of the company’s workforce.For years, Dell was the top PC
vendor in the world, an acknowledged master of logistics in a business
where margins can be razor-thin. It was efficient enough to keep prices
low to ward off competition without suffering big setbacks in profits.
But by 2006, when Hewlett-Packard unseated Dell as global PC leader,
that was no longer the case.Dell’s plans to regain its former dominance
have resounded in the market. The company’s third-quarter results,
announced two weeks ago, showed profit increasing year over year, and
record revenue of US$15.65 billion. During the company’s earnings call,
Michael Dell said the company will put products on more retail shelves
worldwide while also helping business customers “simplify IT” and
reduce maintenance costs via customized hardware, software and
services.The company has also moved to put accounting issues behind it,
recently completing an internal investigation and restating its
financial results from fiscal 2003 to the first quarter of 2007.

New Efforts, Outreach
The
company has been making an effort to build relationships with customers
and partners and deliver products that are easier to deploy and manage,
said Charles King, principal analyst at Pund-IT.In November, Dell
introduced a two-tier channel program designed to give partners better
access to Dell’s training, marketing, certification and online
resources. The program will provide a better chance for Dell to
interact and understand its partners’ needs, the company said.”The
company seems to recognize that it has bridges to enhance with
customers and partners in the channel. It’s not something that’s going
to change overnight,” King said.After years of success selling PCs
directly to users, the consumer business’ direct-sales business model
hit a wall as component prices fell, Pund-IT’s King said. The strategy
to simplify IT is a play at small- and medium-size business and
enterprises that will help Dell deliver better returns in the long term
than its lower-margin direct consumer business, analysts said.

Next Challenges: Supply, Support
However,
some customers continue to have concerns about the company’s support
and supply chain issues.Dell is having supply shortages and can’t get
its servers and OptiPlex desktops to individuals and small businesses
in a timely manner, said Josh Kaplan, who runs a franchise of computer
support firm Rescuecom and purchases parts and interacts with Dell on
behalf of customers.”You can acquire all the technology you want, but
Dell will send hardware out blindly,” Kaplan said. It will be a
challenge for Dell to deliver what it calls “IT in a box” — its terms
for packages of products and services — to SMBs and enterprises,
Kaplan said. Dell has traditionally delivered mostly standardized
systems, Kaplan said. While Dell has built systems-to-order by letting
users select from a menu of options, it does not have in-depth
experience offering customers services over the lifecycle of products,
he said.Jeremy Cole, owner of Proven Scaling, a small consulting firm
with offices in the U.S. and U.K., said Dell has internal staffing
issues that affect its support services.”Dell’s sales structure is
really strange. They tend to bounce your company around to a new
account representative every few months, who are wildly differing in
experience, intelligence, and understanding of the Dell sales system,”
Cole said.

Customers Urge: Open Up!
Cole is satisfied with
Dell equipment, but said the company needs to show more support for
open-source applications and the Linux OS. “It’s clear that Dell cares
about Linux, in that all their server-class hardware is well-supported
by the Linux kernel and they have many people dedicated to making sure
that’s the case. However, it’s not good enough just to boot,” Cole
said.Though generally positive about Dell’s support, Jason Dunn, who
runs Thoughts Media, which publishes Web sites for technology
enthusiasts, couldn’t resolve certain LCD monitor problems with Dell
offshore support representatives. He had good experiences with Dell’s
PC and HDTV support representatives, so the experience varies, Dunn
said.Other users have had a good experience with Dell’s strategy to
simplify IT. Dell’s efforts have paid dividends for Bikeworld.com, a
medium-size retail business in San Antonio, which saved money by
cutting its internal IT person. The company uses Dell systems with
Microsoft Dynamics Retail Management System, connected to multiple
offices via a VPN (virtual private network).”Businesses are in a
belt-tightening mode. You can’t have extra people on payroll,” said
Whit Snell, general partner at Bikeworld.com. Bikeworld has resolved IT
problems with Dell remotely and has a contact readily available to help
with problems.Dell officials were not available for comment on support
issues.

New Deals, Partnerships
Overall, Dell is trying to be
more proactive and helpful, said Kurt Scherf, vice president and
principal analyst at Parks Associates. Dell’s new enterprise support
services to simplify IT, like remote management services, could, if
successful, trickle into the consumer segment, which could benefit
end-users, Scherf said.Dell this year has tied up with retailers like
Staples, Wal-Mart and Best Buy to distribute PCs, something competitors
HP and Acer have been successful at. But if Dell wants to make sure its
customers aren’t tempted by HP or Lenovo in the retail market, fixing
problems that some users report about its support infrastructure has to
be on top of the company’s to-do list, Pund-IT’s King said.Building out
retail partnerships changes the consumer-facing relationships for Dell,
which could lead to positive changes in the company’s support and
services. The results are a work in progress, King said.

Signs of Progress
Balancing
out its business model, Dell is showing signs that renewed efforts in
the higher-end business sector are catching on, with third-quarter
revenue growing in the server and storage markets. The enterprise
market provides better margins than retail, and the remote management
services market is growing, King said. Dell is trying to address that
through acquisitions and by creating a services organization and
specialized products targeted at professionals and businesses.The
company this year acquired SAN (storage area network) vendor EqualLogic
and managed services companies Everdream and Silverback. It announced a
deal with Sun to offer the company’s Solaris OS.Dell has been pushing
hard to improve its systems management portfolio, especially remote
desktop management capabilities that could help simplify complex IT
infrastructures. In October, the company announced On-Demand Desktop
Streaming, a server-based platform that streams the OS, applications
and data to diskless desktop clients over a Gigabit Ethernet network.By
offering design improvements and bundling software and services like
remote management, Dell is trying to get the focus off of price and
moving to build the framework for a new business model for the
enterprise, said John Spooner, senior analyst at Technology Business
Research.Dell’s reinvention should come as no surprise as Michael Dell
is on a mission to reconstruct his company, Pund-IT’s King said. “It
must have been hard for Dell to see a company he built falter,” King
said. He is putting money in the right spots, and competitors like HP
and IBM will do well to keep a close eye on Dell, King said.

[Author]

December 19, 2007 at 4:04 PM