*NEWS*DELL WANTS TO BOOTS FLAGGING SALES

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*NEWS*DELL WANTS TO BOOTS FLAGGING SALES

 user 2006-06-06 at 12:31:00 pm Views: 58
  • #15732

    Dell hopes customer service can boost flagging sales
    As
    its commanding lead over Hewlett-Packard (HP) dissolves, Dell has
    turned to customer service to rescue its flagging PC sales.Dell service
    agents can now troubleshoot customers’ PCs and solve common problems
    using a broadband Internet link instead of a personal visit, company
    leaders announced Friday.This “DellConnect” service could save the
    company time and money, compared to the cost of dispatching technicians
    in vans to solve customer complaints. Dell is also spending US$100
    million to hire more workers in its sales and call-center
    facilities.The moves mark a new way for Dell to distinguish itself in
    the market, since it can no longer point to a distinct price advantage
    over its rivals.Dell accounts for 18.1 percent of worldwide PC
    shipments, compared to 16.4 percent for HP and 6.4 percent for Lenovo,
    according to a first quarter analysis by IDC.That balance could soon
    begin to shift. Lenovo announced Wednesday that it planned to cut
    retail prices in order to gain market share. And HP reported May 16
    that it had a successful first quarter, posting net income of US$1.5
    billion compared to US$1 billion in the same period last year.Two days
    later, Dell leaders admitted they had been slashing their own prices in
    an effort to stay ahead of HP. That led to weak earnings, as Dell
    reported first-quarter profit of US$762 million, far short of the
    US$934 million it had earned in the same period last year.In response,
    Dell Chief Executive Officer Kevin Rollins made two big changes. He
    announced that Dell would start selling servers with chips from
    Advanced Micro Devices, breaking its long-time devotion to
    Intel.Rollins also promised investors he would spend US$100 million on
    customer service. The announcement of this Web-based tech support is
    part of that effort. The service is not completely new; Dell will
    expand its existing “TechConnect” service from covering only U.S.
    consumers to including consumers and small-businesses worldwide.In
    other spending, Dell has increased employment from 1,000 to 4,500 at
    its Nashville, Tennessee, production, sales and call-center facilities.
    The company has also invested in 10 new or expanded global call
    centers, located in Oklahoma City; Edmonton, Alberta; Manila; and
    Halle, Germany.Together, those efforts have already reduced customer
    hold times by 50 percent, Dell claims.These efforts may not be enough,
    analysts say.”Dell is almost operating in a commodity environment; I
    don’t see how they differentiate their product from anyone else’s. And
    I’m not sure that improving their service offering is going to help,
    because it’s something that customers already expect,” said Michael
    Church, a portfolio manager with Church Capital Management in Yardley,
    Pennsylvania.