Dell Abandons Its Customization Roots 372
LiveFreeOrDieInTheGo writes "Dell intends to scale back its build-to-order service model, while increasing sales of prepackaged systems. The goal: $3B USD savings by 2011. The downside: customers expect Dell to build-to-order. The deeper downside: Dell will outsource more production and assembly."
Outsource more manufacturing? (Score:5, Informative)
Dell already outsources just about all their manufacturing. All that will happen here is that now they can streamline the supply pipeline because they only ship x different configs instead of 100x. Less work at the (already) outsourced supplier/contract manufacturer, less work on the order fulfillment side.
How it's going to save 3 billion, I don't know. I think they're aiming a little high. Expect support to be outsourced to even crappier Indian call centers....
Expensive options (Score:5, Informative)
My experience is that customizing a Dell always costs an arm and three legs. Upgrading RAM costs twice what it would to buy retail, and please don't tell me that a 320 GB hard drive costs $100 more than a lowly $160 GB model. They make money hand over fist when small/medium business purchase customized machines (I've seen co-workers add on $1000 in not-so-necessary option), but the company has a much harder time with price-sensitive customers. I've purchased three Dells for home use over the past six years, and in each case I waited until they offered an extremely good deal and bought a minimally configured system and added my own memory, second hard drive and video card.
Dell has been losing ground against other manufacturers, and one often sees off-the-shelf machines at Best Buy that offer better value and immediate availability. Part of the reason is that more and more buyers are opting for notebook PCs that are made in China alongside machines from HP, Acer and countless other competitors. In essence, Dell adds an extra layer of complexity to their manufacturing process by allowing customization of these laptops to occur once they arrive in North America. In the meantime, Acer is able to ship preconfigured systems directly to retail outlets without additional expense. The days of the big beige box are coming to an end, and much of Dell's business advantage centered on getting people to buy overpriced (and often unnecessary) upgrades that simply aren't feasible in a notebook form factor.
Re:Deeper Downside? (Score:3, Informative)
I read an interesting story awhile back about Schwinn bicycles. From what I read, Schwinn had various techniques that they used in assembling their bicycles that made them more reliable. But they were losing sales to cheaper foreign-made bicycles which weren't as reliable but were considerably cheaper.
Well, they moved their assembly to China. They went over and taught Chinese workers their techniques for making making a reliable bicycle. So now they had less expensive bicycles which were just as reliable.
Until the bicycle factory took these techniques and started producing their own bicycles using those techniques and competing against Schwinn.
So even if you "specialize at a different part of the supply chain," the stuff still has to be assembled and whatever unique knowledge you have brought to the product will be taken by your competitors.
Re:Outsourcing Gets a Bad Rap, Race to the Top (Score:2, Informative)
Granted, I could always buy the 8 dollar drill from The Dollar Tree store that starts smoking and grinds to a halt after the first 3 times I use it or I could go across the border into Tijuana and buy gasoline that makes my car sputter and spew smoke.
The problem occurs because companies don't EVER outsource with the idea of quality in mind, they always outsource with the idea of saving a couple of bucks. Left to their own devices, they will always go for the lowest cost solution. The result in this case will be shitty parts, bad quality and absolutely nowhere to turn when you have the inevitable problem with your purchase.
Alienware != Dell (Score:4, Informative)
My wife recently bought a nice (though low-end, by Alienware standards) desktop computer from them. Though the ordering screens are similar (as well they should be - Dell's web-based ordering is rather slick), and credit for both companies is through Dell Financial Services, the similarities ends there.
The Alienware case is a regular ATX case, with a regular ATX backplate and regular ATX mounting holes, and is large enough to accept bloody any motherboard, whereas Dell uses a strange-ish quasi-Micro ATX design without a removable backplate. The motherboard itself is an off-the-shelf model (Foxconn, in this case), not some weird Dell special. The front panel connectors (including those for the large number of fancy LEDs) are compatible with regular ATX boards, instead of Dell's non-standard monolithic connector. There's a plethora of drive bays, with all of the hardware needed to use them included, whereas Dell seems to take great joy in including only as much hardware as is needed to assemble that particular system (on the low end of things, at least - Dimension 2350 and 2400 machines have provision to hold a number of 3.5" hard drives, but there's only enough hardware included to mount exactly one. The other bays are physically absent.). The price was very reasonable - about $100 more than equivalent parts from Newegg.
We had weird issues with the Alienware's extra LEDs on day 1. Called tech support, and without waiting in queue got a real human (in America!), who spoke real American English, had a real name, and who actually had at least half a clue. They sent a new part, which didn't fix the problem. Called back, again immediately got a real human, who dispatched both more parts and a warm body to install them. Problem solved.
And, sure, it'd have been better if the system didn't need any service, but I did feel pretty good about the whole process. It seemed that Alienware wanted to solve my problem, instead of just force me to jump through hoops.
Meanwhile, I loathe to call Dell support. One of the hinges on my laptop broke (which was reasonable enough after 2 years of hard use), and I had to wait for 20 minutes before some girl in Bangalore came on the line who only wanted to talk to me about reinstalling Windows XP. I had to fight with her for about 15 more minutes in order to get transferred to someone with enough clue to understand the simple problem and dispatch parts. And this with their premium support package!
So, yeah: They're the same company in that they're owned by the same people. But that heterogeneous ownership doesn't mean that they're at all similar in operation or quality.
Re:In other news... (Score:4, Informative)
I think the reason these numbskulls get the big packages is because they are slick enough to be able to legally prove they did their jobs carrying out the will of the majority of the board of directors. Pass the blame, collect the buck. In the few instances where I had inside information on the departure of upper management, the concensus was that it was cheaper to pay them to leave than to force them out. A protracted legal battle airing the dirty laundry is bad for stock value.