Dell Abandons Its Customization Roots

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."

Re:In other news...

[Sepiraph]

There is actually some truth to that, I actually did find my last Dell laptop to be quite dull. Based on my own personal experiences in owning my last 3 laptops from Dell, HP and Lenovo. I'd say HP's design is by far much better than the other two, and I wonder if that's one of the reasons why it took over Dell's lead in the PC market.

Re:In other news...

[Sanat]

Getting Carly out of HP improved a host of areas within HP including morale. Of course a 21 million dollar severance package didn't hurt her too much.

HP is back to producing again instead of in-fighting.

.

Re:Wow

[Kadin2048]

> But I remember all the old Dell commercials - the main thing they had going for them was customization.

I think the point is that those were the old Dell commercials. If you look at ones today, they're all about price. Features and price, admittedly, but price is the biggest thing.

This is a reflection of the market for PCs. When they represented a substantial capital investment, you wanted to tailor them to your particular needs, and avoid paying for anything you didn't absolutely need. That made customization and U.S.-based assembly locations worthwhile. Now, people don't want that as much. The PC, as a unit, has become increasingly commoditized. I bet a lot of buyers today don't even look at specs; they just buy "a computer" and make a lot of assumptions about what they'll be able to do with it. (Assumptions that are actually pretty safe if you don't plan on doing much beyond typical consumerish tasks with it.)

As a result, the goal is no longer "build me a PC to my exact specifications," it's "build me as much PC as possible for $500". Or $300, or $250. I suspect before too long it'll be $99.

That doesn't favor having a lot of assembly points close to consumers; it favors doing all your assembly in a quasi-slave-labor camp somewhere, to better keep costs down, and then shipping tons and tons of identical boxes in bulk to wherever the consumers are. 'Who cares if it's not exactly what you want? It's $500 and it's more power/features/speed than you'll probably need, so just buy it,' is the message.

It's easy to blame Dell here, but it's buyers of technology that are driving it. Not enough people want essentially bespoke computers (or the ones that do aren't buying them from Dell), and Dell is going to eliminate the facilities that provide that service.

Re:Deeper Downside?

[Kadin2048]

Well, if you want to talk about 15 years down the road you might as well mention that in 15 years all the demand from our outsourcing will make the Chinese as well off as us, forcing them to charge as much, canceling out any benefit of outsourcing there.

Not a chance; not with the population they have. Maybe in a century, but fifteen years? That's ridiculous. There are millions upon millions of people in China (and India, and quite a few other places) who have grown up and are used to far cheaper standards of living than the average person in the U.S. That translates into dramatically lower labor costs for the foreseeable future, since they're going to be willing to work for less. Someone who remembers life in a mud-and-thatch hut on a rice paddy is probably going to have a markedly different bar for 'success' than someone who grew up in the U.S.'s heyday and expects to be able to do better than that.

You're a little capitalist, and you don't even realize it. Want all the jobs to stay in our country? That's greed; the same thing driving those shareholders to make more money. Unfortunately, whining doesn't get much done, so we'll all have to work really hard and offer some kind of advantage to keep the jobs. It's called "competing".

That's a great thought but it's a little lacking in substance. What do you propose the U.S. ought to specialize in? I'm quite honestly interested, and I've asked this question over and over to a lot of fairly intelligent people and have yet to get a satisfactory answer back. I'm not sure there is one. Do we try to go the Neal Stephenson route? Music, movies, microcode, and pizza? Other parts of the world are chipping into 'software' already, and there's no reason to think that we have some kind of automatic, natural, competitive advantage in any of those.

About the only thing we do have here in the U.S., at least at the moment, is a hell of a consumer market. Until we figure out exactly how we're going to keep ourselves going, I don't think it's necessarily illogical to want to carefully manage access to the one thing of value we have left. I'm not proposing or advocating for complete isolationism, just a careful analysis of exactly who we're allowing access, and to which markets, and what the effects are.

More bluntly, I don't see any reason why the U.S. ought to open any market to foreign competition unless there's a clear indication that opening it results in a net benefit to the United States. Now, it may be that fully-open markets are the best (or least-worst) policy for Americans in general, but I haven't seen any of the politicians pushing for open markets really going out of their way to demonstrate this. And from where I'm sitting, it looks a lot like we're just letting ourselves go bankrupt on imports without much of a thought towards the long-term sustainability of this situation.

Even if by restricting imports it increased the cost of non-essential goods to consumers, but in doing so bought us a few more years or decades of solvency in which to work on our comparative advantage (or for the Chinese and other developing markets to bring their labor force's standards of living, and thus costs, closer to par), I can't see why that would necessarily be bad.

National governments have a mandate to serve the best interests of the people they represent. If free trade and open borders are demonstrably the best path, I'd be more supportive, but right now they look suspiciously like a path that leads off a cliff.

Ron Garriques/Motorola Connection?

[Anonymous Coward]

Many former and current Motorolans will wonder if this has anything to do with Ron Garriques [dell.com] joining Dell. Maybe he'll run Dell into the ground just like he did at Motorola.

Re:Wow

[Swampash]

The market is steadily moving towards laptops. And laptops are harder to custom-build.

Not only that; people want to see, touch, and hold laptops before making a purchase decision.

I'll leave the conclusion up to the reader.

Re:Wow

[Anonymous Coward]

Amen to Kadin2048 whoever you are. I work in the computers department of a popular retail store, and what you have said I see and almost have to argue against 40 hours a week with customers when trying to give them a tailored, customized fit for their needs. It is very true that PEOPLE ONLY CARE ABOUT THE PRICE. Instead of "What's the best computer to fit my lifestyle?", a lot of the questions and comments I get are, "What's the best deal on the best computer you got?", or "Why spend over $500 when it's going to be outdated tomorrow?", or "I don't care what it does or doesn't do or what it has or hasn't got, I just like the price." or "Computers are pretty much disposable nowadays anyway. So why pay more?" and etc, etc, etc.

In this non-tech-savvy society that we live in, I can understand that people are hesitant to make a "large" purchase on something they know very little about, i.e., the specs of a computer. However, the biggest obstacle I think computer companies face is the fear consumers have: the fear of their next or first computer purchase being a waste of their money. I think everyone of us has had or know someone who has had a bad experience purchasing a computer. Be it because of the poor customer service we received before our purchase or the product itself after we purchased it. And no doubt no one wants to waste their money, but it happens to everyone of us everyday be it knowingly or unknowingly. Instead consumers rely on a "good brand" second (which there is no such thing by the way. I hear, read, and see negative things about every brand where I work. In fact on more than one occasion, I've even seen Apple computers returned to my store. Believe it or not.) and a "good price" first and foremost, which is any computer within their means. So, I'm not surprised Dell is making this move. Why pay more for a customized option when you can get the same or nearly the same and more for less?

Buying a computer has now become like buying a pair of socks to your everyday consumer. In their mind: Who cares if the more expensive socks are the best fit for my lifestyle? I'll try to stretch and make an eMachines or Compaq Presario pair play video games, stream and download video, photos, and music for my family of 4 or more because it fits my wallet right now before I'll even think about purchasing the Dell pair. Absolutely no fault of Dell's on this move folks, we've got ourselves to blame for this one.

Oh, and by the way, we also sell Dell computers at the retail where I work too. Thank you and have a blessed day.

Re:Anti-Foreign Bias

[Anonymous Coward]

Americans are not anti-foreign. We're anti-getting-screwed.

Outsourcing drops the prices against domestic producers, just enough to put them out of business, then the price drop holds steady. In other words, the labor costs drop say 70% while the product cost drops maybe 10%.

The American (and other consumers) are getting comepletely ripped of by this kind of outsourcing. It's the outsourcer that makes a damn fortune of this scheme.

If things have to be outsourced from US production, I'd rather see more of a free market for external production. Rather than sending everything to China, increasingly things are going to India. India is rapidly expanding their free economic zones.

That's when we'll start seeing real drops at the store...when China and India are competing for production.

I consider Dell a Corporate Welfare Whore. Many government institutions allow purchases from Dell only. I think that is very wrong...it's anti-free market.

And your comment that Americans have the highest standard of living in the world is ludicrous. Which "America" are you talking about? The masses of homeless people wandering the streets of our large cities? The millions of people languishing in prisons for non-violent offenses? Or the "people" living in the Bill Gates mansion?

Japan and several European countries have a much higher overall quality of living than the USA. Longer, less stressful lives, better care for the elderly, better general care for the citizenry. What about Bahrain?

Every non-american in the world is on a bashing spree against the US, but we don't have it as good as you think. Probably never did.

Re:Outsourcing Gets a Bad Rap, Race to the Top

[XorNand]

I work across the street from Comerica Park. Not everyone from Detroit is still deluded into believing that a life-long career in manufacturing is still viable. If fact, I would say that the bulk of the people here have learned that first hand. My father was a tool and die maker and while he really enjoyed his trade and made decent money, he warned me as a young child not to follow in his footsteps. Every year he watched CNC machines take over more of what he used to do by hand. He quit after 25 years and went into real estate. Shortly thereafter, even the CNC machines disappeared as his former employer folded as the work moved to Mexico. It hurts, but thus is the way of progress.

Not really, no

[TeXMaster]

Most of my family, me included, bought customized Dell laptops online. I was first, in 2002, then my father followed (different model), then a couple of cousins of mine, then my sisters and finally my mother. Overall, I think we bought no less than ten laptops from Dell, as private users. And although some of us bought models that other relatives had bought already, we didn't really care about being able to touch and hold the laptops before making the decision: customizability when buying online, on the other hand, was an extremely important point.

For example, I finally went with Dell because it was the only one that offered, in Italy, the option to buy a laptop with an American keyboard instead of an Italian keyboard, with an English version of the O/S instead of the localized one, and with a European electrical plug instead of the Italian one.

My laptop has served me rather well in these 6 years, despite my very rought handling, and requiring a bare minimum of upgrades and replacements (new cooling fans, more RAM, a new hard disk).

Now I'm starting to look around for a new system, and I found out that Dell doesn't offer any of the customization options I chose Dell for in the first place. When I bought my mom's laptop, it was extremely difficult to find a system that offered XP instead o Vista, now they are completely gone. I can't choose the O/S language, I can't choose the keyboard layout, and I can't choose the plugs. I'm going to look elsewhere, most definitely. A Lenovo, probably.

Re:Deeper Downside?

[A beautiful mind]

The problem is unions and government regulations. Try firing someone. You have a union to deal with. Try building something really innovative, say a nice new nuclear power plant.

The unions in the USA are famously _weak_. Their wings have been clipped from the start. If you want to see how real unions look like, just take a look at Germany or France. It is widely known that France doesn't have a single nuclear power plant due to the tree hugging hippies, government regulations and unions, that is why their electricity needs are satisfied in 70% from the nuclear source.

It seems you're advocating deunionization without knowing what it actually means.

Deunionization as an economic measure means that you plan to solve fundamental problems in the economy by worsening the bargaining power of the lower and middle class, in effect worsening their conditions. Instead of outsourcing, this is bringing conditions from China to the developed world. Newsflash: if an industry fails because it cannot survive unless it has unacceptable working conditions, then that is a good thing.

Re:Deeper Downside?

[vidarh]

Yeah, that's why everyone is unemployed in Europe. And of course we don't have 20-30 days a year of paid vacation depending on country (wtf makes people in the US accept 10?!?), or working hours typically set at 37.5 (less in some countries) either.

Oh, and all our companies are close to bankruptcy, and no executives and shareholders ever manage to take out huge bonuses and dividends..

Seriously, unions are why you don't still have 12+ hour working days in the US and most of the rest of the world. It took decades of campaigning, strikes that often were illegal and bloodshed when police struck down on strikers for the US unions to get employers to accept the 8 hour working day.

It's a paradox that the rest of the world can thank US unions for the 8 hour day, when your unions have been reduced to festering corpses, and that May Day was established as an international day for the working class to demonstrate directly in response and support of the US unions, while the US working class was quickly subverted into accepting the watered down Labor day.

A huge part of the improvements in working conditions in the latter half of the 1800's and well into the 1900's were a direct result of strong unions in the US.

Now is the time to create a computer line

[WindBourne]

More and more virus are showing up in computers and parts coming from China. This includes hard disks, bios, and even in chips (including several ASICs, which indicates a more systemic approach is happening; i.e. it is not just a single hired contractor that was able to slip it in). Somebody who creates a manufacturing line that does not utilize these infected parts would go far with western govs. And if done in an automated fashion, it could be much lower cost than what is coming from China.

I suspect that said company could even take over companies like HP and Dell by focusing on Customer Service, in addition, to having lower costs and a SECURED system.

Re:In other news...

[SkyDude]

When the company the CEO is heading does well, the CEO gets the credit. When the company the CEO is heading goes down the tubes, there's an excuse like "bad economic climate", "piracy" or something else.

You couldn't have hit it more on the head if you had a laser guiding you. That's precisely the BS a former employer of mine fed the staff. Then, when the company nearly went bankrupt, she sold it off. And of course, she had the hot ticket in her purse - an MBA. Two months later she was back at work for another company in the same industry, in a similar position.

Heh... I guess I'm more cynical or something.

Naw, you're just telling it like it is. If I had mod points today, you'd get most of them.

Re:In other news...

[couchslug]

It may matter more who they serve. Companies and workers have always been expendable one way or the other.
If enough of the right people make money during a CEOs tenure, there is no reason not to use him or her elsewhere.
Companies can be used as throwaways in a larger war (SCO) or be sucked dry and discarded. Those with enough money can always whip up a new company if needed.

Of course, since companies and workers don't matter, that eliminates any reason for worker loyalty. Scam what you can and fuck them before they fuck you.