Innovators vs Copiers: HP vs Dell 392
eaglemoon writes ""The days of engineering-led technology companies are coming to an end," Mr. Dell declared. The NY Times outlines a modern version of a classic innovation theory. Who gets to win in the marketplace - the innovators who invest in R&D like crazy or those that just take cost out of standard products? The current fight between Dell and HP over the printer business is a great natural experiment in verifying this theory." The article does a good job of stating what the real contest is - it's the different theories of corporate structure that's being tested.
Innovators Rule (Score:5, Interesting)
VC input (Score:5, Interesting)
HP invents? (Score:3, Interesting)
HP's test equipment is nice, and HP printers are great. I actually liked Compaq's x86 servers, and hated Compaq's non-business desktops. Never liked HP desktops, never seen much in the way of HP servers outside of the HP-UX systems. Hockey-PUX is wacked, I'd prefer Solaris or IRIX.
Toss the Dell servers in the trash where they belong, give me a used Compaq server over a new Dell rackmount turd any day. I guess Dell desktops are okay, but you really get what you pay for.
I'm not quite sure why Dell is so popular. Poor Gateway, why are they failing when Dell manages to ship such low grade product and run such poor customer service. And where did Austin, Northgate and Swan go.
Three Phases of Competition (Score:5, Interesting)
A company needs to pick which phase it will focus on in and stick to that. If HP wants to be an innovation company, they need to know when to bail out of a market with no innovation left (like printers).
If true, new use for patents... (Score:5, Interesting)
It's the mentality of the Dell's that are hurting us. Innovation is required. Yet, to compete with the Dell's, innovation (and R&D) often suffer because R&D costs money. The companies that truly innovate, that really study and work hard with R&D, will have a harder time in our current greed-driven, shareholder value is the only goal mentality market place. Why? Because the R&D takes money from profits, making margins smaller. Therefore, the copycats (Dell) have better margins because the ride the coat tails of the innovator, without having the spend the money to innovate.
Cyclical Business Models (Score:3, Interesting)
Dell is one of the last great US manufacturers -- everyone else has contracted everything out and become a drop-shipper.
If you look at the great manufacturing businesses of the past, you'll see that once demand starts to get quenched, the business dies. Dell has a need to push out huge amounts of product to make up for the deflationary PC industry... which is a strategy that will eventually catch up.
Re:Then who will innovate? (Score:4, Interesting)
There are at least 2 companies that will innovate. IBM and Apple are all about it. And in many ways for years they have come up with many of the computing advancements that a few years later show up for the rest of the market.
One little thing ... (Score:3, Interesting)
However, one thing I noticed many years ago, when Dell first became known, was that they built their PC cases with simple one-screw-and-open panels pretty much by default. This was a stark constrast to the cases you'd get from any other PC maker. What a joy to be able to easily access the innards of the PC. I think a lot of companies make cases this way now. I'm not sure that Dell started it, but they were the first I'd seen do it and Compaq and HP definitely were *not* at that time ...
apples and oranges... (Score:5, Interesting)
Dell has sold printers for a long time. As far as I can tell, they target buyers who like to buy everything through one web site. The peripherals they sell are nothing special, and the prices aren't that good, but it's easy and convenient to buy everything with one click.
People who want the best are usually willing to shop around for it. Hopefully HP won't be run out of business if Dell is successful in undermining their market, and the next time I want a good, dependable printer I won't have to buy a re-branded Lexmark or some other similar junk.
Classic balance of power (Score:3, Interesting)
Michael Dell says that his company is not a technology company, it's a logistics service provider. He's right, of course. Logistics become a key issue when products become commodities. Ironically, the frantic race to hardware performance only stresses the critical importance of the logistics.
Re:Innovators Rule (Score:3, Interesting)
Re:Thank God I've still got my LaserJet III (Score:3, Interesting)
I'm still happily using a IID so I can save paper by printing on both sides.
Re:When you're a commodity-oriented company... (Score:2, Interesting)
Re:missing something here.... (Score:5, Interesting)
Japanese automobile makers led in the development of fuel-efficient, low-polluting engines. Look at how long it took GM, Ford, and Chrysler to sell cars with engines that had 3 or the now standard 4 valves per cylinder.
Japanese automobile makers took American quality control approaches, and actually applied them. And made better cars.
My next car (my current ride has an American brand, was built in Kansas City, but was based on a european design; I've had it for 7 years, and it was 9 months old when I bought it. 150,000 not-so-trouble-free miles.) will be built in Kentucky or Ohio.
Works for a while (Score:2, Interesting)
If you don't innovate you don't control your destiny, Other people do. In Dell's case, Micron, Microsoft, Intel, Maxtor and or Seagate could toss Dell onto the ashheap of history before you could say boo. Dell does little but package their products and put a sticker on them.
That being said a fair comparison between an innovator and a copier in the computer business would be Dell and IBM. Its pretty clear how innovation pays off big time for Big Blue. Its clear how copying is paying off now for Dell, Tommorow is another day.
HP vs Dell Business Model (Score:2, Interesting)
The HP/Compaq business-grade machines are light years ahead of that Dell trash. Better construction, better components, better design.
-Just my $.02.
Inkjet printers are dead (Score:4, Interesting)
So I threw out my last POS inkjet printer years ago, and got a real laserprinter (HP LaserJet 4000TN) instead. The pinnacle of b&w printing. Fast. Stunning quality. Toner cartridges so large that one will last me around 10 years at my current rate of consumption.
And colour? If I want that, I put it on a floppy and get it printed at the photoshop down the street. 60c canadian (about 40c US) for a 4x6 printed on real kodak photo paper, by a real dye sublimation printer that costs as much as a fancy car.
Re:This is why Dell (Score:4, Interesting)
The fault? A bug in Dell's RAID card firmware that would cause the card to eventually destroy the data beyond repair... A bug of the type that would NEVER get out the door in a HP or IBM product...
Don't be so sure. A few years ago my research group got a couple of brand new, top of the line RS6000 workstations. Set them up, ported the various apps and started running.
Oops, they fell off the network. Hmm. Only way to get it back was to reboot. They promptly fell off the network again. Anytime you tried to move a big file between machines they'd die.
IBM had removed a hardware check for malformed packets in the latest and greatest ethernet cards. Hey- they had software correction in the firmware, that would work fine. Except that nobody had actually bothered to test it, and it didn't work in some cases.
I agree IBM is better than some of the competition, but I don't trust anyone.
Re:One little thing ... (Score:4, Interesting)
IBM had handles on some of their systems, and they were ridiculed because that must have meant that they needed to be carried in to service...
Dell wasn't the first, but it sure was a kick in the butt to the other manufacturers.
Re:Innovators? (Score:4, Interesting)
For instance, the HP Laserjet 3330mfp. It's a multifunction device just like everyone else's. Only... you can throw an IP print server on it, and make ALL of its functions available to everyone on your network. Oh, and ALL of its functions work simultaneously. So one of your users can be faxing through the unit while another is scanning from the glass and a third is printing.
In a world full of USB-only multifunction devices where you're lucky if you can share the printer function peer-to-peer due to proprietary "status monitor/sender" panels and such (Canon L6000 for instance CANNOT be redirected), this product is astonishingly innovative.
I should state that I am an HP-authorized warranty repair tech. I don't work for HP, but I do service their gear.
Comment removed (Score:5, Interesting)
Re:missing something here.... (Score:2, Interesting)
Re:And whose technology will they copy? (Score:2, Interesting)
Well, Dell would have to innovate itself, otherwise the market would because stagnant, and Dell would sell no more gear. But wouldn't it be interesting, if when Dell is forced to innovate itself, another cheap knock off company starts a-fresh (Dell 2) and starts copying Dell's ideas? What would it do then? It couldn't stop innovating, because there is still no-one to copy, and this would mean death for the company. Yet, they are being undercut by "Dell 2".
And so the vicious circle would continue.
(Apple and HP's falling apart being the prerequisite of course...)
Let's not get cocky, Mr. Dell (Score:5, Interesting)
Disclaimer: I've got an MBA ('m also a programemr).
Dell's quote is this: "The days of engineering-led technology companies are coming to an end."
It looks like the basic opinion on this here at /. has broken down into two camps:
Fact is, both of those are right. It is shortsighted; but within the short-run time frame -- and the business sphere HP and Dell are operating in right now -- he's exactly right. Hell, HP knows it, too -- that's why they're in trouble and know it.
As the article points out, there are two types of companies: innovators and copycats. In the short run, the copycats will always eat the innovator's lunch. Naturally. They've got lower start-up costs, lower R & D costs, lower overhead all around. Thus, they undercut the innovator's price and outsell them.
This trend is accelerated when quality becomes fairly consistent accross the board. That is, when the copycats are still ramping up, their quality is poor. Thus, in the old days you would hear, "Spend the money for the HP -- brand X is cheap but sucks." You don't usually hear that, anymore, regarding printers. Sucks for HP.
But here's the kicker: when the Next Big Thing comes around, who will it come from? Dell or HP? Yep, HP. Innovators will survive not by getting pulled in to a lowest-price mud-fight -- no, they'll survive by innovating their way out of trouble. In fifteen years, do you think HP or Dell still be here? My money's on HP. Dell's a great commodity company: pretty good boxes, cheap. So was Tandy, and where are they?
It's the same thing with IBM. IBM has been a leader in nearly every single office productivity market they've competed in for, what, like 50 years? Typewriters, word processors, servers, PC's, etc. Big Blue has out-lived nearly every competitor who was at one time undercutting their market. Why? Because they innovated into the next Era -- and the copycats got caught in a mass extinction.
It's evolution on a corporate scale, baby. Those that adapt to the changing market, survive. Those that don't, don't. HP and IBM change the marketplace. Dell just hangs on and hopes they don't change it too much.
So Mr. Dell's right, for now, and doomed, eventually.
Re:apples and oranges... (Score:5, Interesting)
I don't think that will be a problem. Dell is another middleman. I have an HP722 and Laserjet III. My wife bought a new DEL computer and the companion all in one printer. The cartridges for both are about the same price. I can get the HP carts with no postage and no wait just down the street. S&H makes the dell carts cost more. The DEL carts are about 1/4 the size of the HP carts. The DEL carts don't mention anywhere (website included) what the estimated yield or amount of ink is. It's obvious to anyone replacing a printer that the DEL with the itty bitty carts is no bargan. My HP 722 printer and Laserjet is on the local network using a Hawking printservers (great investment!). The DEL printer is now just a scanner for the wife's computer. We have no plans on replacing the cartridges when they expire. (added bonus, the HP black cart is easly refilled). The DEL all in one could not be used as a replacement for the HP inkjet on my network because it has drivers for WIN 2K and WIN XP only. That means it is incompatible with both our laptops, and 2 other PC's on the network. None of them run the required OS. DELL printers are not a high volume (or moderate volume) cost effective printing solution. DELL printers may be OK for the lady of the house to print the occasional E-mail, and scan a baby photo, but little else. More cost effective printing can be found almost anywhere else. DELL is not competitive in printing value.
Unless HP goes for smaller carts at higher prices, they have no worries from DELL.
Re:When you're a commodity-oriented company... (Score:3, Interesting)
What would grocery stores do if people stopped farming? Michael Dell is arguing for the seperation between innovation and manufacturing not the end of innovation. Sort of like MIP's model for CPUs vs. Intel's. Not that I agree (MIPS and Intel being a case in point) but....
Re:When you're a commodity-oriented company... (Score:5, Interesting)
This reminds me a lot of IBM and their IBM Compatible PC days. It's exactly what Dell is doing is what allowed others like Compaq to grow into the PC market. They took what was compatible to the IBM sys arch and built around it. Eventually IBM started playing the engineering-led game where they wouldn't release specs until they had their IBM PCs on the market then the PC-Compatibles could go after it. Innovators are kind of setting themselves up for competition like this when they're keeping the innovations a secret. Back to Compaq, for a while they innovated the items that were sold with their PCs but just like Dell they pushed it back on the MFGs to do the R&D.
Look where Compaq is now. In the belly of the beast that said Dell isn't doing anything. It's just distributing other people's products.. That's what Ms Fiorina said and that is exactly what Compaq was before HP bought them up.
Mr Dell watch out. Your company might be next.
Re:Dell *DOES* innovate! (Score:4, Interesting)
I think Dell is just as concerned about performance as cost, it's just that Dell is a management company and HP is (was?) an R&D/engineering company.
Most interesting thing of all to me is that the two compete in the same market while coming from such totally different business plans.
Re:Tough times (Score:3, Interesting)
Dell printer starts to run low on ink/toner. Poof! Windows comes up, ink/toner low, with a direct link to Dell's website to buy another pack. It could even be built into the driver interface so you give your credit card info, and it automatically orders when it goes low.
I don't have a Dell anything, so forgive me if they already do this.
Re:Three Phases of Competition (Score:3, Interesting)
At best the inclusion of wireless in a printer is "differentiation". HP didn't invent wireless networks. The wire or lack thereof is not the main purpose of a printer, so at most, it's a reason to pick one printer over another one that both do the main thing I want (print) well.
What is really ironic (Score:3, Interesting)
What we are seeing is an industry that is rapidly becoming as bad as the US auto industry in the 60's and 70's: crank out the crap then walk away from the customer as fast as possible.
My prediction is that there is a great opportunity here for true innovators who care about great products to step in and blow them out of the water.
The next great business model will not be created by monkeying Dell or HP. Look at how the US auto industry was gutted in the 70's and 80's.
Re:When you're a commodity-oriented company... (Score:5, Interesting)
I have used some other cheap printers, most of them end up in the trash can after 9 months, it is cheaper than trying to fix them. Every HP we have used has lasted a long time and we have had few problems, all we do is switch ink cartridges. I have no doubt Dell will be cheap, but I doubt they will have the same quality as HP. In the end, they will probably end up in the trash bin. Cheap crap doesn't inspire customer loyalty.
That is the bottom line for me, not whether one innovates or not. I really don't care who makes the product as long as it works and works well under demanding circumstances and the print out looks good. That is why HP is the leader IMHO.
Not exactly fair to MS and Dell (Score:3, Interesting)
This is where intellectual-property protections come in. In the absence of any such, some copycat would soon (this "soon" will be important later) undercut the innovator and destroy him in the market. But in markets where there is protection for the innovator (specifically patents), the innovator gets a 17 year monopoly which he can use to rake in the dough and recoup his investment.
Some things are not patentable, and go directly into the public domain. The aspects of UI design which MS battled Apple over turned out (per a judge) to be so. The feature list of a word processing program (many of these features, yes, innovated by MS) is the same. Woe betide Open Office were it not so, eh? Are they parasites? Certainly not in the way you suggest above. For these non-protected features, the only protection the innovator has is time-to-market, and reputation. This is often sufficient.
MS and Dell are not leeches. It's more like "standing on the shoulders of giants".
There is room in the market for innovators and for commodotizers. Are you, personally, willing to pay more for identical non-Dell products? Is your company? Do note that Dell has valid, paid-for licenses for all the (relevant) technology they use. The "innovators" Dell is "leeching" off of don't seem to be concerned.
Re:One little thing ... (Score:3, Interesting)
So IBM hired temp workers to come in and assemble the printers manually. What they discovered was that parts that had been designed for automated assembly made it even easier for humans to put them together. It even made it easier for the printers to be repaired in the field. Their SE's could order a new print head, platen, interface card, etc., and just snap it in place, resulting in faster time-to-repair.
Chip H.
Re: Printers aren't innovision driven. (Score:2, Interesting)
Eventually everyone has a printer which is at the limit of the existing technology. Since it is not (according to that quote) profitable to research more printers Dell's printer business will dry up leaving them with just the odd repair or replacement to go on.
The printer business, at least as it concerns inkjets is very different from other components. With the other components you mentioned, it's a one time purchase. Once it's the component's sold, you don't make any further money off it, and you actually start to eat up the profit a bit as the component ages due to support costs. There, you have to innovate, because your money comes from having people buying new technology. When it comes to printers though, the real money's in the supplies. Even if nobody ever buys another printer, they'd still have a revenue stream via the cartridges -- and usually with considerably higher margins than on the printers themselves.
Re:Retail/VAR vs Online (Score:3, Interesting)
Regarding PC line R&D, laptops are still hard. They are the last bastion of high-QA client side systems. Get something wrong with the HDD mount and your AFR (annualized failure rate) goes from 20% to 60%, and there go your profits and customer happiness. Servers are the other area. But even there, Intel likes to help. Indeed, one way to view Dell is the execution arm of Intel's R&D.
"Dude! You're getting a Lexmark!" (Score:3, Interesting)
Re:missing something here.... (Score:1, Interesting)
Well, it might be, but I'd still like to know how I did...
Kansas City = Ford plant, made/makes Contours, F-150s, Escapes, and Mazda Tributes, among others.
European design = Ford Mondeo (Europe) = Ford Contour (US)
Not-so-trouble-free miles = 2.5 liter V6 & automatic transmission. Probably the second worst Ford engine ever, the worst being their 3.8 liter V6. (The 2.0 liter I4 and 5 speed manual in the US version of this car are rock solid, still available in the Focus.)
Had it for 7 years from when it was 9 months = 1996 or 1997 model.
Problems?
Ford 2.5 liter V6 (and the 3.8 liter V6, too) known for faulty head gaskets.
Automatics in Contours known for torque converter problems.
Blower motor resistor pack: notoriously irritating little problem in all Contour/Mondeo cars.
Warped brake rotors: not uncommon.
O2 sensor: if it hasn't been replaced in 150k miles, you got the "golden sample" of Ford O2 sensors.
Handling? Yup, Contours have this in spades.
Invisible to police? Who's gonna pick on a little 4 door domestic compact sedan?
(For maximum score, I should have included a water pump replacement or two on the list, as the 2.5 V6 has a crappy water pump as well.)