Dell To Sell Its Computer Factories 249
Anti-Globalism sends us to a Wall Street Journal for a report that Dell plans to sell its factories in an effort to revamp its production model. Quoting:
"Dell's plants are still regarded as efficient at churning out desktop PCs. But within the industry, company-owned factories aren't considered the least expensive way to produce laptops, which have been the main driver of growth lately and are complex and labor-intensive to assemble. Rivals such as Hewlett-Packard Co. years ago shifted to contract manufacturers -- companies that provide production services to others -- to build their portable computers. H-P builds "less than half" of its PCs in facilities it owns, wrote Tony Prophet, H-P's senior vice president for PC supply chain, in an e-mail. Contract manufacturers can generally produce computers more cheaply because their entire operations are narrowly focused on finding efficiencies in manufacturing, as opposed to large firms like Dell, which must also balance marketing and other considerations."
The one surprise in the article... (Score:4, Informative)
The company owns factories in Texas, Tennessee, North Carolina, Florida, Ireland, India, China, Brazil, Malaysia and Lodz, Poland
I was surprised that they still did manufacturing in the states. I didn't really expect that any PC makers still did.
Lessons not learned (Score:4, Informative)
That's brilliant! Just the way to sell fewer desktops!
Dell has had huuuuuge problems [direct2dell.com] fulfilling laptop orders because of supply chain problems. So making their desktops the same (bad) way they make their laptops only makes cents. I mean... sense...
Re:Quality control (Score:3, Informative)
You make a point, but you've missed the larger picture. I am a Dell employee and I can tell you the future of the company is not manufacturing PCs or notebooks, but rather offering services-after-the sale for the machines built by contract manufacturers.
Looking back on Dell (Score:5, Informative)
CEO Michael Dell, October 2007, on being asked what he'd do if he were CEO of Apple:
Since then DELL stock has gone up by 72%... while AAPL has gone up 3080%.
Dell's basic problem [daringfireball.net] has been known for a while. They don't do anything unique. They were one of the first to "get" just-in-time custom manufacturing and they rode that horse for a long time, but everything they do, others can do better -- and apparently do.
Innovation, if it can be sustained, always wins over efficiency, because innovative hardware and software design can empower users by orders of magnitude, while efficiency gains approach an ideal asymptotically.
Re:Apple (Score:5, Informative)
All of Apple's parts are Foxconn, except the intel processors, and $somebody's hard drives.
Congratulations, you have parts made from the bottom-of-the-barrel of the shittiest components maker, Foxconn. Nobody would touch that with a 10-foot poll when they have Gigabyte.
Apple cuts its costs to make a profit, too. Or you thought an iMac really costs 1000$ to make?
Re:Made in China (Score:1, Informative)
What happens when the exploding cost of oil makes it too expensive to ship computers back and fourth from china? Could we see a grand resurgence of electronic manufacturing jobs in North America? Perhaps Mexico will become the manufacturing powerhouse for us that china is now.
China is also undergoing some good inflation numbers. It can only remain competitive for a short future. A lot of manufacturing companies are already moving to some other, cheaper, locations.
Re:Price, the only consideration? (Score:1, Informative)
As opposed to 12-16 old workers being exploited by prostitution rings out or street beggars. I see you managed to slip in your quotes from the Communist Manifesto. Factories and businesses give people a choice at obtaining levels of income that you seem to want to deny them because of your selfish views on some imaginary evil.
Re:Made in China (Score:5, Informative)
It takes more fuel to truck something from LA to Chicago than it does to ship it from China to LA. No doubt trains improve on trucks quite a bit, but fuel costs aren't particularly onerous for objects that regularly retail for $100/pound (maybe worry about it when you see bananas go for $5 a pound instead of $0.70).
Re:Looking back on Dell (Score:3, Informative)
Re:Made in China (Score:4, Informative)
What happens when the exploding cost of oil makes it too expensive to ship computers back and fourth from china? Could we see a grand resurgence of electronic manufacturing jobs in North America? Perhaps Mexico will become the manufacturing powerhouse for us that china is now.
Well, except most of the components already come from Asia somewhere, and most computers aren't put in 10lbs steel cases anymore. The future is likely to be laptops (already past 50% I think?), netbooks (Atom has been selling wildly past expectations) and nettops which are "fast enough" desktops for most people. All of these are compact and light, if we couldn't afford to ship those you wouldn't be able to ship most household gadgets. And even if all of that wasn't true you're looking at cheap cases and assembly building, not high-tech industry. And even if that wasn't true, I think the increased wages means you'd see more standardization and robot assembly, so job for some automation engineers but not many jobs. The days when you had half a dozen expansion cards to get RAID/sound/network/USB/firewire/SATA/eSATA are long over. The new Atom boards even have the processor soldered on. Most parts of the computer are so cheap, you just want it assembled with a minimum of overhead - a higher tier standard computer will often give you the upgrade you wanted *and* overall be a better computer for the same price as making a custom build.
Coming soon DeRR computers. (Score:1, Informative)
Pity, in order of preference... when recommending companies
Desktops:
Apple, Dell, Sony, HP, then the crap like LG, and gateway emachines.
Laptops:
Toshiba, IBM, Apple, Dell, Sony, HP, then the crap like LG (*shudder*) and emachines/gateway.
Generally chinese and korean brands get a thumbs down for build quality, usually on the level of major thumbs down.
Asus and Gigabyte are the best motherboard brands if you are building something yourself, avoid MSI, biostar, or any company that doesn't update their BIOS once a year. New CPU's come out dammit.
MSI boards are found in eMachines, go figure.
The thing is, Dell slit it's own throat with outsourcing outside north america the tech support.
What kind of company do you have when both your product and your support are not in the country. What incentive is there for the outsourced company to just steal the designs (like China does with the iPod/iPhone ) and make counterfeit copies, or even make their own brand? Sure, they might not be re-importable back to the US if they still say Dell on it.
If you're going to outsource, first outsource to countries that aren't expensive to ship from and have equal intellectual property protection. Not India and China where the counterfeits flow freely in the streets. The main reason the counterfeits are not as prevalent in the US is that it's illegal to import, and it's hard to do a border run when there's 8000 miles of ocean or in the way. The bigger the counterfeit item, the less likely it gets here. Though go ask the US NSA how many counterfeit cisco routers they are running.
Re:Made in China (Score:4, Informative)
container ships run on "bunker" fuel which is basically the nastiest cheapest stuff that will burn. They're dirty cheap to operate and they're typically subsidized by host country to boot. So the Chinese government, Korean government, etc make it cheaper in the interest of trade.
Frankly, I'm surprised Dell has been assembling computers in the US for this long. Don't tell me they "build" them here that's a load of nonsense. The parts have been made in China and Taiwan for ages it's just the final assembly that was happening in the US. In fact, the shipping cost difference is likely ZERO because all the parts were coming from Asia anyway.
Anyway, Dell has been doing a lot of cost cutting recently. They've outsourced their IT to India and now they're moving all of their assembly to China.
The worst part is that Dell doesn't even offer good prices anymore. I'm seeing better prices from small US companies with more flexibility then anything out of dell.
So to hell with them. They'll ride on their names for a few years and then they'll be another dried out company like the rest of them.
Re:On behalf of the People's Republic of China... (Score:5, Informative)
Once a few big countries decide they don't want to continue propping up the dollar, high rates won't do anything but highlight what a house of cards American wealth really is. High rates are meaningless if you can't get a return on your money invested. It's like the value of a Picasso paining that is proven to be a fake, when everyone thought it was legit it was worth millions, and as soon as they lose that faith it is worth a few hundred at best. The only thing that has changed is peoples perception. The move of the world to the Euro is an international vote of "no confidence" in the USA; perceptions are changing. When US debt become worthless paper backed by nothing, the purchasing power of the dollar (also backed by nothing) will follow. Most of our wealth is based on the global perception of value in America, the last several years have destroyed our image of strength, our image of morality, and our image of educated competence. Without that high value on the American brand, we are rapidly becoming a middle of the pack industrialized nation, and the size of our expenditures will soon have to reflect that.
I've worked on Dells for a contract manufacturer (Score:3, Informative)
Eight years ago, I was working for Celestica, a Canadian company, building Dell servers. They were outsourcing heavily even then.
Interestingly, given the slant of the above article, we were also building HP servers.
A little observation about the difference in the two companies and their style (or, more to the point, what they were willing to pay for): HP servers were shorts-tested, power-up functional tested, built into boxes, temporary HD's installed, a full OS install done, the boxes run for 2 hours, turned off, the OS *reinstalled* and a complete functional test done, and shipped out.
In contrast, the Dells were shorts-tested, and 1 out of 3 were power-up functional tested, and after that they were shipped out to the company that turned them into complete systems.
It's possible that the next company down the line did a full burn-in functional test. But HP did that, too, in addition to the burn-in functional test we did.