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 user 2007-12-19 at 4:04:00 pm Views: 73
  • #20956

    The New Dell Ends its First Year
    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

    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
    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
    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

    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
    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.