Forgot your password?
typodupeerror
Businesses Hardware News

Dell To Sell Its Computer Factories 249

Posted by Soulskill
from the dude-you're-getting-a-new-business-model dept.
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."
This discussion has been archived. No new comments can be posted.

Dell To Sell Its Computer Factories

Comments Filter:
  • Made in China (Score:5, Insightful)

    by edfardos (863920) on Saturday September 06, 2008 @11:24AM (#24900861)
    ...as opposed to large firms like Dell, which must also balance marketing and other considerations [like environmental health, worker safety, taxes, social security, living wages]. Just send it to China! --edfardos
    • Re:Made in China (Score:5, Insightful)

      by Anonymous Coward on Saturday September 06, 2008 @11:40AM (#24900999)

      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.

      • Re: (Score:3, Insightful)

        THe problem with that is the infrastructure. Building an assembly plant, or even a plant for some of the mechanical parts like the cases, wouldn't be too hard. But creating the infrastructure here to build all the electronic parts can't happen overnight.
      • Re:Made in China (Score:5, Informative)

        by maxume (22995) on Saturday September 06, 2008 @12:32PM (#24901383)

        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).

        • With fuel prices rising, shipping from China isn't as attractive as it used to be. For larger, heavier parts, some manufacturing that was sent overseas is coming back because shipping costs are rising. Also there is the time-to-market issue. Shipping from China to LA takes months whereas LA to Chicago takes a few days.
      • Re:Made in China (Score:4, Informative)

        by Kjella (173770) on Saturday September 06, 2008 @12:45PM (#24901477) Homepage

        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.

        • That's nothing new though. I realise not everybody was on the ITX scene before intel landed its fat ass squarely 50km in the wrong direction, but soldered CPUs are nothing new.

          I think all the C3, C7, Geode, and now Nano boards have the CPU soldered. They've always had to support pretty much everything, sometimes in tiny packages where everything is in just two parts (see: VX700/VX800).

          PicoITX is an interesting standard, especially if it can be brought down in price or start shipping with the Nano. NanoITX w

      • Re:Made in China (Score:4, Insightful)

        by u38cg (607297) <calum@callingthetune.co.uk> on Saturday September 06, 2008 @12:50PM (#24901515) Homepage
        Actually, it's already happening to a certain extent. Industries with spare capacity in America have suddenly found that China's shipping costs have dulled her competitive edge somewhat.
      • by morcego (260031)

        HP seems to agree with you.

        I live in Brazil, and the last HP notebook I've bought was built here in Brazil by Foxconn (if I recall, I don't have it here with me).

        Making stuff in China is much cheaper than here in Brazil, but with you factor in transportation, import taxes etc, sometimes it is cheaper to build it somewhere else, even if you are still using contractors.

      • Re:Made in China (Score:4, Informative)

        by Anonymous Coward on Saturday September 06, 2008 @01:14PM (#24901697)

        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.

      • As we ship our work elsewhere, so goes our wealth. Had we been smart, we WOULD have helped Mexico long ago. Even with NAFTA, we could have brought their standards of living way up, and solved some of our major problems along the way (illegal aliens come to mind).

        My guess is that in the next year or so, America's consumption will drop by 10% or more. The good news is that if EU forces China to keep to their word concerning tariffs and freeing their yuan (it is based on a fake purse), then the dollar will p
      • Re:Made in China (Score:4, Interesting)

        by phantomfive (622387) on Saturday September 06, 2008 @02:19PM (#24902375) Journal
        It is already happening with some things (at least it was a couple months ago). WSJ ran an article about it.

        They said that for things like flowers for florists, that now typically get flown in from Chile, are right on the edge of being unfeasible because of the high cost of oil. Also, the US steel industry has gotten a boost since steel is so heavy.

        For something like computers, or ipods, on the other hand, which have such a high value/weight ratio, it will be a long time before shipping is not cost effective.
      • 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.

        The WSJ article speculates that the plants would continue to produce parts for Dell, but that Dell would sell the plants and outsource their manufacturing to the new owners of the plants.

        Basically, Dell wants to say "We're tired of this headache, somebody come in and run this for us for less money than we spend ourselves."

        In this event, there is no change of trnasportation routes, just who hires the managers and employees at the factories.

    • by billcopc (196330)

      Having worked there (briefly), I was under the impression that the laptops were already being farmed out to Flextronics and Foxconn, and Dell staff only did minor customizations to the pre-assembled product (accessories, upgrades etc).

      The way I see it, either this press release is some weird CYA bullshit, or Dell lied to its employees about its manufacturing processes (but what for?). Either way, something's fishy.

  • Quality control (Score:5, Interesting)

    by bhtooefr (649901) <bhtooefr@bhtoLISPoefr.org minus language> on Saturday September 06, 2008 @11:25AM (#24900875) Homepage Journal

    While it may be cheaper to outsource production of your primary product, quality control might not be as good.

    Besides, it seems kinda wrong that a company that manufactures computers is outsourcing manufacturing of computers.

    • Re: (Score:3, Informative)

      by Anonymous Coward

      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.

      • by Colin Smith (2679) on Saturday September 06, 2008 @12:29PM (#24901359)

        They don't provide the services directly, they don't manufacture the hardware directly. They are now simply a middle man hoping to cream off some cash.

        Can't think of a good reason to buy directly from them now.

         

      • by Znork (31774)

        That's perfectly fine. In the longer term though, don't be surprised when the contract manufacturers take over the aftersales business as well.

        Retreats upwards in the foodchain, to the more 'profitable' or 'brand value' segments is a standard for corporations who've gotten too heavy to compete. Ultimately they tend to get bought by their more nimble competition.

      • by BlowChunx (168122)

        Wow, never would've thought that Dell would be in the same business as RedHat...(that would be "we sell services" model).

        At least in the case of RedHat, the underlying software is better.

    • Re:Quality control (Score:5, Insightful)

      by falcon5768 (629591) <Falcon5768@comca ... t minus caffeine> on Saturday September 06, 2008 @11:57AM (#24901123) Journal
      Dells quality control was never its strong suit to begin with. I cant even begin to tell you how many computers we got from them with miss-seated boards, loose connections, or faulty drives or boards. Granted they where warrantee repaired, but the only reason we kept buying was both cost (they where the cheapest bid) and because my boss has a blind hated of Apple products and refused to continue on with our contract with Apple when he was hired despite complaints from our staff.

      If that was supposed to be GOOD quality control that we experienced... I would hate to see what poor is.

      • Re: (Score:3, Interesting)

        by linzeal (197905)
        Exactly, United States used to be the envy of the world for the quality of its manufacturing and it is now the laughing stock from cars to computers from heavy trucks to heavy hadron colliders. The idea that any country can survive in this modern age selling services to other people that sell services to people that work retail is insane. 70% of our country's economy is based upon it and it can't last.
    • Re: (Score:2, Offtopic)

      by Warbothong (905464)

      Sounds like Dell really are embracing Linux. They're moving their manufacturing into a specialised daemon, doing one thing and doing it well.

      It was inevitable, since they've been treating their components as files for years (they are kept in a "notebook" afterall) :P

    • Businessweek had an interesting article about outsourcing that I can't find right now. One of the advantages of outsourcing was the lower cost. However loss of control was one of the disadvantages. This could lead to quality control problems as well as intellectual property problems. When the a company outsources production to another, it can't guarantee that its trade secrets are protected during the contract and especially after the contract ends.
      • Loss of control (Score:5, Insightful)

        by swb (14022) on Saturday September 06, 2008 @12:13PM (#24901243)

        Doesn't this eventually lead to the contract manufacturer refusing to build Dell's designs [and does Dell even design their own laptops?] because the designs don't fit into the manufacturer's efficiency models?

        Somehow this seems like it will eventually turn Dell into a company just reselling whatever laptop designs/models the manufacturer can make the most efficiently.

        As for Dell's intellectual property? I'm sure it can be protected by their manufacturer, provided they sign a long-term deal and help the local party boss with whatever his needs are.

        • Core Competence (Score:3, Interesting)

          by mcrbids (148650)

          Every company needs to identify its core competence, and never, ever give that up or outsource it. On the flip side, every company should seriously consider outsourcing anything that isn't part of their core competence.

          If you are a custom-software company, you had better be able to deliver custom software. You hire the programmers, you have good quality equipment for them to use, you have a good marketing team to generate demand for your programming team, etc.

          But anything not directly related to custom sof

    • by andy1307 (656570)
      This is inevitable. Americans want juiced up laptops for under 1000$. TANSTAAFL..
    • Re: (Score:3, Interesting)

      by timeOday (582209)

      Besides, it seems kinda wrong that a company that manufactures computers is outsourcing manufacturing of computers.

      "American" companies like Nike and Levi's don't actually do anything except decide which Chinese products to buy, then import and market them (at huge markups of course). Guess Dell's just getting with the times.

      But yeah, it does seem kinda wrong. Like, what what value are we really adding here.

  • "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." - So Are Marketing and Other (Design, Reliability, QC? ) considerations no longer important?
    • by jrumney (197329) on Saturday September 06, 2008 @11:37AM (#24900975) Homepage

      "Contract manufacturers can generally produce computers more cheaply because their entire operations are narrowly focused on finding efficiencies in manufacturing..."

      Efficiencies like employing 12 year olds to work 16 hour days in the factory, and other practices that are difficult for a US brand-name company to get away with without distancing themselves through outsourcing.

      • by janrinok (846318) on Saturday September 06, 2008 @01:02PM (#24901599)
        Not all Asian manufacturers use child labour. They can also make big savings by not having to pay the same wage as would be required in the USA, but an acceptable one for local labour nonetheless. They also can make efficiencies elsewhere, perhaps in fuel costs or in the price of raw materials, or simply by economies of scale. Have you also noticed how many immigrants arrive in western countries almost penniless and yet, within a year or two, are running a thriving business? Yes they work long hours but that is by choice, because they want to benefit from the fruits of their labour. Nobody is forcing them to work longer hours than perhaps you or I might be prepared to do, but that doesn't mean that they are wrong to do so. Yes, western countries will lose jobs but it is not always child labour or sweatshops that are to blame. Sometimes we just want too much money for too little work and, when the market can no longer bear that demand, then the jobs will move somewhere where the workforce is more accommodating.
    • by Crazy Taco (1083423) on Saturday September 06, 2008 @11:54AM (#24901101)

      "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." - So Are Marketing and Other (Design, Reliability, QC? ) considerations no longer important?

      This is simply incompetence, or idiocy, I'm not sure which...

      I work for a very large food company that has about 40-50 manufacturing facilities worldwide. These facilities make almost all of our products. We make millions upon millions of items every day... in the facility I work in, we make something like 1.5 million items a day, just by ourselves. In an average grocery store, we manufacture around 500 distinct products, to say nothing of the variety of goods we provide to food service establishments such as hospitals, restaurants, hotels, military bases, etc.

      In the current bad economic climate, our stock price is rising rapidly. Why? Analysts attribute it to our ability to find efficiencies in manufacturing and operations. We don't look at finding efficiencies as an impossible burden to be outsourced to others; we instead look at it as an opportunity to increase profits without having to raise costs on consumers (which is especially important in this economic climate). And we've gotten quite good at it over the years, despite the fact that, perhaps even more than Dell, we do spend a lot of time and energy on marketing, sales, finance, coupons, and everything else. I can guarantee you that you see a lot more of our commercials each year than Dell's.

      So I think Dell is really being incompetent here. Instead of looking for savings and learning to make its operations efficient, it is going for the quick fix of contracting out. But my guess is that it will contract out to a number of different facilities throughout the nation or world, and while each of those facilities will be good at focusing on itself, they will not have the advantage of seeing learnings from ALL the facilities across the organization, and they will miss things. I know our plants keep tabs on each other and call each other all the time to see how some project or other went. Typically one plant will take the plunge on some experimental idea, and the rest will be watching to see if it works out, which is a lot better than siloed contract plants potentially trying the same failed idea at each facility due to lack of communication. Had Dell kept manufacturing, it would have had the advantage of seeing the whole organization, and they could potentially have saved more in the long run by manufacturing everything themselves, but instead they are taking the incompetent way out. Frankly, I'm glad I work for a company with better leadership than them.

      • by xenocide2 (231786) on Saturday September 06, 2008 @12:45PM (#24901481) Homepage

        Last I checked, Two Scoops was still in production after ten years, and the margins terrible. In contrast, computer equipment moves rapidly. This is most apparent in chip fabrication, but also in final computer assembly. The fact is, you can't spend the time wringing out production efficiencies in a product with a 3 year life span. Especially when assembly is such a small part of the cost anyways, it just doesn't make sense to focus on that rather than reducing part costs.

        Coase's theorem is the relevant economic concept, about when firms choose to hire employees (do it themselves) versus go to the market. And there are ton of contract manufacturers driving prices down. By letting these guys focus on the cost of operating their plants (which plenty run several of), Dell can focus on financing and marketing and pricing features you and I want, rather than pursue slim improvements in margins that are the staple of commodity manufacturing.

        The truth is, Dell pursued production too much, at the expense of margins. [marketwatch.com] By selling off the factories, they can move the balance between share of sales and prices much faster. Just order less and let the contract manufacturer deal with what to do with the downtime.

      • Agree (Score:3, Interesting)

        by WillRobinson (159226)

        I have seen the same in the semiconductor industry. I was automating Asia during the 80's and 90's. They were quietly spending billions.

        I always wondered why the American companies in the US for the most part, couldn't get their act together on production efficiencies. They opted to send manufacturing overseas.

        While I understand the overhead costs here were higher, I feel it was so they could "scale down" easier.

        For me, it was ok while we were building the supporting manufacturing equipment here, but how lo

      • Re: (Score:3, Interesting)

        by hey! (33014)

        Different markets, different companies, different efficiencies.

        As competent laptops near the two figure mark in dollars, manufacturing is increasingly turning out commodity items. That means margins get small. That's what killed the PDA industry: it wasn't convergence per se. Convergence makes sense for some users and not others, but it makes sense for all producers. Rather than adapting to selling $49 PDAs, they escaped into the highly controlled and artificial world of mobile phone sales.

        The problem

      • Well, it works for Apple, and they seem to be successful (and popular!). Why not Dell?

        You're right of course, such things will eventually come back and hurt the company long term (I mean, their contractors are effectively becoming their competition in their local markets---think of Lenovo---unless you're into corp IT consulting, nobody even hears ``IBM'' these days---they seem to be doing ok financially though).

        • The reason this is bad for Dell is that Dell's core business model is providing machines with a custom configuration, not 3 different configs and screw you if you want something different. I'm not sure how much this will hurt them at the consumer level, but most of Dell's business is large orders for offices. Businesses are not going to like it if a sales manager has to say 'we can't do that anymore'.

      • Too Many Chiefs (Score:2, Insightful)

        by ISoldat53 (977164)
        Much of what you say is so correct. Dell gets more and more vice presidents every year. Most of whom were consultants that more senior VPs hired to solve a problem. Getting anything done requires consultants, VPs and a year of studies. By the time they are able to make a choice the problem has changed and Dell has to hire another group of consultants to work on how the problem has changed. Nobody stops to ask the people, who have been around for a while and were responsible for Dell's success, how to solve
    • by LurkerXXX (667952)

      That entire piece was nothing but PR spin so they can excuse the outsourcing to 3rd world countries to make their computers. Other places under other people's control, where they don't have to pay a decent wage, have a decent work environment, or be environmentally friendly.

      Right now Dell has to do marketing to sell it's computers (duh).
      It will still have to do the vary same marketing of it's computers after it outsources its manufacturing (duh).
      Meanwhile, dell currently owns the factory. The factory does

    • by perlchild (582235)

      They're not "unimportant" they're being efficientized. Which means neglected except in market where the customer explicitly refuses to buy if they're not included/is willing to pay extra for them.

  • Apple (Score:2, Insightful)

    by Kohath (38547)

    While Dell and HP try to make cheap computers that aren't broken, Aplle will continue to make good computers that aren't cheap. Apple has been gaining marketshare from these guys steadily for a long time now.

    • Re:Apple (Score:5, Informative)

      by Jorophose (1062218) on Saturday September 06, 2008 @11:39AM (#24900991)

      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?

      • Absolutely right (Score:5, Insightful)

        by Crazy Taco (1083423) on Saturday September 06, 2008 @12:07PM (#24901193)

        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.

        Absolutely right. No one who has built computers for any length of time feels comfortable putting a Foxconn board in over the alternatives. Not saying a Gigabyte board or an Asus board will never go bad (I've had them go out on me before), but just hop over to newegg, search for motherboards, filter to those manufactured by foxconn, and just take a look at the number of stars (or eggs) they get. Then go in and look at the comments, and take a look at how many have died within a few months, or were just DOA.

        I bet Apple daily ships boards back to Foxconn by the truckload as they show up dead on arrival and fail QA, but you've got to know that a lot of those 1-3 months of life boards are getting through. Have fun with Apple products!

        And as a side note, if Apple products are so awesome, explain the whole iPod battery fiasco a few years back where iPod batteries were all dying shortly after the warranty, and Apple was just telling everyone to go buy a new iPod. Or go look at all the forums full of people complaining about how their iPod shuffle just randomly bricked itself one day (orange and green flashing light issue), sometimes due to the new version of iTunes, and sometimes just because. And how Apple's solution again was to tell everyone to go buy a new Shuffle. I had one of those, and I basically said, "Screw the crappy, short lived Apple products with no support, I'm buying a Zune." As All State might say, "I was NOT in good hands", and I was not about to be taken by Apple again.

        • pot kettle black (Score:4, Interesting)

          by je ne sais quoi (987177) on Saturday September 06, 2008 @12:31PM (#24901369)
          You honestly thought that by buying a Zune you would avoid cheap products and poor QA/QC? Just seven stories below this one on the main page is one about how the MS decided to ship a bunch of defective Xboxes just so they could get their console out before Sony's. Your post was informative and interesting, and then you go and spoil it all at the end by claiming that you've avoided this whole mess by buying a Zune.
        • Re: (Score:3, Insightful)

          by Wingsy (761354)
          So..... if Apple products are NOT so awesome, tell me why their customer satisfaction ratings simply blow away all others. Seems you had one Apple product with a short lifespan and thereby assume that all their products are the same. Even with your evidence from Apple's forums (where you don't expect to see a post from everyone who had no problems), your statements aren't supported by the experience of the vast majority of Apple's customers. Enjoy your Zune.
          • if Apple products are NOT so awesome, tell me why their customer satisfaction ratings simply blow away all others.

            OMG is that the macbook air??!? I so want it!!! It's so gorgeous!!! Mac is so pretty!!

          • by dafoomie (521507)

            So..... if Apple products are NOT so awesome, tell me why their customer satisfaction ratings simply blow away all others.

            Brilliant marketing, and they don't sell Vista. Their products fail about as much as anyone else that sells hardware contracted out to China.

        • by russotto (537200)

          I bet Apple daily ships boards back to Foxconn by the truckload as they show up dead on arrival and fail QA, but you've got to know that a lot of those 1-3 months of life boards are getting through. Have fun with Apple products!

          Except, well, they aren't. Lots of complaining about Apple products (iMac LCDs, for instance), but 1-3 month main board lifespans aren't among them. So either Foxconn has a higher-quality line for Apple products, Apple supervises Foxconn better than they supervise themselves, or th

      • Ironically I've owned a lot of FoxConn boards over the years in all sorts of PCs and the one Gigabyte board I bought was completely defective. Then the second I one I bought a few years later was also defective. Its interesting how one person's perspective can be completely different on quality huh?
    • Re: (Score:3, Insightful)

      by cowscows (103644)

      While some of this is undoubtedly the "cool" factor that Apple has grown with the iPod/iPhone, I think another piece of the puzzle is that except for gaming, the pace of hardware cycles is pretty much irrelevant these days. In the late 90's/early 2000's, you could buy a new computer every two years and really feel the speed difference, even if you only used it for basic stuff like email/web browsing/word processing. Close to a decade later, email/web browsing/word processing/etc. are still what 99% of com

    • Re: (Score:2, Insightful)

      by daninbusiness (815223)
      While Apple has been notably very successful over the past 10 years, all (nearly all?) of their manufacturing is done through contract manufacturers. It is entirely possible that the same factories in Taiwan and mainland China build dell laptops and apple laptops on the same day. Given that Apple consistently charges more for its product than Dell (or others in the consumer PC space), it's likely that they spec out some higher-grade parts in their systems & may be more involved in QC. My point is, alt
      • by Kohath (38547)

        Apple's success is not primarily because of their manufacturing. Everyone knows that.

        A lot of people on this board seem to think there's some benefit in intentionally missing the point when someone posts something. I don't know what the benefit is supposed to be though.

    • Apple's failure rate is 13% in the first year, same as Dell.

      Try again.

  • DELL's Indecision (Score:4, Interesting)

    by bogaboga (793279) on Saturday September 06, 2008 @11:28AM (#24900893)

    ...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...

    To me, this is the crux of the matter. Dells indecision tells it all. I have had close interaction with folks at DELL and what strikes me, is their apparent indecision when it comes to matters that require immediate attention.

    I cannot be convinced that with all the "spying" that goes on withing the PC and Notebook markets, DELL did not know that HP was outsourcing and saving a bunch. They knew but did nothing!

    To make matters worse, HP produces better hardware as compared to DELL, in my opinion. So they must be doing something better than DELL.

  • by damn_registrars (1103043) <damn.registrars@gmail.com> on Saturday September 06, 2008 @11:28AM (#24900897) Homepage Journal
    For those who haven't yet chosen to RTFA:

    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.

    • by 77Punker (673758)

      The North Carolina factory just went online a year or two ago after my (former) home state gave them millions of dollars in incentives (corporate welfare) to move in.

      Glad to get away from that goddamn buncha crooks. Now I live in Arizona where I'm so far unaware of systematic political crime like that, aside from Sheriff Joe Arpaio.

      I guess life's a bitch somehow no matter where you live, except maybe Iceland.

    • Re: (Score:2, Funny)

      by ricera10 (932325)
      Didn't you see the commercials with the guy ordering a computer? None of the people in the factory were nationalities that are frequently outsourced to.
    • It's cheap now, because your dollar is not that great, it's close to where they are, and the people are trained/educated. So why not?

  • When did HP start getting written as H-P?

    I'm trying to figure out why Dell seems to be the most popular office brand. Could it be they simply suck less than the others? Inertia?

    Dell's driver downloads are pretty good, although it would be better to get the exact drivers for the service tag, rather than guess if it has a given video chip or option NIC upgrade.

    • by Culture20 (968837)

      I'm trying to figure out why Dell seems to be the most popular office brand.

      I liked them for seemingly pointless reasons:

      1. The serial numbers were always short
      2. You could access the serial numbers from the BIOS in DOS
      3. More than a few parts (fans, power supplies, RAM) used to work across several generations of the same line.

      Points 1&2 meant our office could image a machine and have the serial number added to the windows machine name quickly with ghostwalk. No thinking or mistyping; reimage then put in place (or reverse for many installations).

  • Lessons not learned (Score:4, Informative)

    by OpenYourEyes (563714) on Saturday September 06, 2008 @11:32AM (#24900927)

    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...

  • by Anonymous Coward

    Very soon this country will lose all its production capability, if the trend of outsourcing everything to MF Asia continues.
    Such process, it's becoming a pain to watch.

  • by mysidia (191772) on Saturday September 06, 2008 @11:33AM (#24900945)

    Dells' factories were in the US, where they had to obey all sorts of US regulations that are expensive to obey; like OSHA rules, making it cost-ineffective to have US factories.

    By having a contractor do it instead; Dell can avoid the negative political implications of having to say "they're sending their manufacturing overseas". Instead it will be a matter of a private contractor further outsourcing their work later, and Dell will be insulated from the necessary ramifications of their decision to minimize short-term immediate cost at the expense of control & being a good corporate citizen.

    Which will give them some protection against legislation, human rights groups, etc, and various issues that normally occur when a company simply builds factories offshore and shuts down US factories.

    Their contractors can have the laptops assembled cheaply offshore then shipped to the US.

    Although the quality of the workmanship may diminish dramatically (and Dell laptops will be more prone to certain defects such as say perhaps HP laptops), the cost will be much less for them, when they can pay the labor-intensive laptop assemblers the equivalent of US $0.05 an hour instead of having to meet US federal minimum wage.

    Cost savings are unlikely to be passed directly to consumers, so pure profit.

    At least in the short term, rather clear why they would see it as a clear win.

    • Explains the number of HP laptops I've seen with failed wireless cards. I live in a small college town. The coffee shop I work out of sees a lot of laptops and the number of times I've seen students with HP laptops about 6 - 9 months old digging out a USB wireless card is amazing. Repeatedly, people will come in, suddenly can't get on, and I'll see it's an HP laptop. Sure enough, the wifi card is bad and apparently they're part of the motherboard and can't be replaced, like a mini-pci.

      I don't know about


    • At least in the short term, rather clear why they would see it as a clear win.

      When I was working in government IT (as a contractor) we were required to buy US manufactured equipment. Dells were very easy to get approved. Apple and others were not.

      Once this change of manufacturing source makes it to the government approved purchasing lists, Dell may find that they're no longer the preferred vendor to the government.
  • by Iftekhar25 (802052) on Saturday September 06, 2008 @11:33AM (#24900947) Homepage

    I work for a print publishing firm, and we've been experiencing a recent surge in customers, because publishers are starting to focus on their core competency, which is content generation. The "other" business of printing, quality control, packaging, and distribution is now being out-sourced to other companies who specialize in squeezing the last dollar of efficiency out of this (manufacturing it cheaply, transporting it somewhere cheap to be processed, then ship it out everywhere else), and whose entire purpose in life is to efficiently produce, and distribute printed matter.

    I'm sure Dell has complete control of the design of their hardware, where every nut and bolt goes. And the specifications will no doubt be very detailed, if my experience in the print industry's any indication.

    It's just a matter of letting the organization that does something very well do it, rather than trying to do everything in-house.

    • Re: (Score:3, Insightful)

      by zippthorne (748122)

      No, that's the good kind of outsourcing: in any business, it's often advantageous to pay someone else to do the things you just need done, so you can focus all your effort on the business you're actually in. You end up paying less, because even with the premium of hiring out, the outside company is probably more efficient than you would've been, what with it being their primary focus, and all.

      But if your publishing firm outsourced it's publishing, then there remains the question, "what do you do again?" Y

    • by whoever57 (658626)

      I'm sure Dell has complete control of the design of their hardware, where every nut and bolt goes. And the specifications will no doubt be very detailed, if my experience in the print industry's any indication.

      Design separated from manufacturing is not a good recipe for improving quality or driving down cost. My guess is that over time the design expertise will migrate to the outsourced factories.

      • My guess is that over time the design expertise will migrate to the outsourced factories.

        As it has in IBM and Lenovo case.

    • by AncientPC (951874)

      Disclaimer: I work for an Asian supplier (not Foxconn) that provides parts for Dell/HP/Apple computers.

      What Dell is doing here is simply reducing in-house manufacturing and focusing on computer design. This is essentially what Apple does and what AMD is doing by selling its fabs.

      There is (relatively) little profit margin in manufacturing. This is why IBM sold its Lenovo division and got out of the desktop/laptop market. Factories have high fixed costs (manufacturing equipment, etc) and depends on volume

      • by timeOday (582209)

        What Dell is doing here is simply reducing in-house manufacturing and focusing on computer design.

        Good luck with that, Dell, because your computers have never been renowned (or purchased) for their design. You're not Apple.

  • Looking back on Dell (Score:5, Informative)

    by jamie (78724) Works for Slashdot <jamie@slashdot.org> on Saturday September 06, 2008 @11:38AM (#24900981) Journal

    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.

    • by TheRaven64 (641858) on Saturday September 06, 2008 @11:49AM (#24901063) Journal
      I know not being able to RTFA is a requirement for Slashdot editors, but the first paragraph of that article says the quote was from 1997, not 2007. They didn't shut Apple down after that, instead they paid NeXT $300m to take over the brand. NeXT has done a lot of really great stuff since taking over Apple, but don't kid yourself that the Apple of today has anything to do with the Apple of 1997.
      • Re: (Score:3, Informative)

        by jamie (78724) Works for Slashdot
        Oops sorry, I typoed 2007 when I meant 1997.
      • Re: (Score:3, Insightful)

        by UnknowingFool (672806)

        Apple bought NeXT in 1996 which was part of their larger strategy for the OS. The classic MacOS could not be upgraded; it had to be replaced with a new OS. Apple had spent years developing Copland but it was unworkable as a solution. NeXT was their answer for this. This is when Steve came back to Apple.

        But when he came back, the people realized why they needed Steve. He had a larger strategic vision for Apple more than their current CEO. The comeback of Apple has been tied to Steve Jobs good or bad.

  • Yep, if the laptops are made in China you can use workers that make $80 to $150 a month.

    And as a free bonus, you might get one of the 1,000+ fingers a day that are chopped off in industrial accidents every day.

    Way to save a buck, Dell!

    • Re: (Score:3, Insightful)

      by andy1307 (656570)
      Way to save a buck, Dell!

      The American consumer has no qualms about buying from companies that manufacture overseas as long as they get their electronics cheaper.

  • Recipe for success (Score:5, Insightful)

    by Anonymous Coward on Saturday September 06, 2008 @11:46AM (#24901041)

    1. Take everything that made you successful.
    2. Throw it away.

    Well, I mean, Dell became number 1 in PCs due thanks to a model where you could configure your PC in the web, get it built in good time with a guaranteed level of quality and receive it at your home/office.

    First they started adding physical stores to the mix. That's perhaps not too bad, but certainly adds problems of inventory that previously were unknown.

    Now they are trying to make themselves virtually indistinguishable from other providers by selling the one piece of their company that made them different, their make-to-order factories.

    I suppose that's just one more example of clueless executives applying the reduce-costs recipe because that's the thing they learned in their MBA's. Because that's the easy thing to do, because the costs are written and can be studied. I suppose you need some kind of inventive mind to think ways about adding to the income column, instead of subtracting from the costs one. But what do I know? After all, they make fatter salaries than I do.

    • by Kjella (173770)

      1. Take everything that made you successful.
      2. Throw it away.

      IBM doesn't sell much typewriters anymore, knowing when to reinvent yourself is also part of business. One thing is if you're being outcompeted, that's one thing but is Dell really being outcompeted on custom builds? Or is the much simpler truth that customers don't have the big need for custom builds anymore? Has in reality Dell become just another of the big standard assemblers selling standard models in volume? And if that's true, where do they go from there? Is there a way to go from there? To use one o

      • by SashaMan (263632)

        Mod parent up. Dell rose to prominence in an era of "beige box" PCs where the value of any PC could pretty much be explained as the sum total of a list of its parts. Now, especially with the business switching to laptops, people want to be able to touch and try out a computer before they buy it, and not having any physical presence was killing Dell while Apple and HP were cleaning up. Also, in the early 90s, no one really cared what a PC looked like. Today's "Apple premium" shows that people are willing to

    • I think like anything else, have the degree/accredation means nothing. If you really put enough work into it, anyone with a 'high enough' IQ can be a doctor, lawyer or MBA. It doesn't mean that you have the people skills, ability/talent or the intelligence to use the knowledge productively or beneficially afterwards. Some doctors choose to use the same diagnoses time after time if they don't know what their patients have. MBAs were repeatedly critized on the mini-Microsoft blog for their management strategi

  • by tjstork (137384) <todd@bandrowsky.gmail@com> on Saturday September 06, 2008 @11:48AM (#24901053) Homepage Journal

    Is that contract manufacturers supposedly offer efficiencies because they don't have to listen to Dell's marketing considerations. It would seem to me, then, that Dell's marketing considerations would need to change and all this really is is a low wage subsidy of a fundamentally flawed business.

    I'm really sick of MBA's getting American companies out of manufacturing because they lack the engineering knowledge and are too lazy to make it work. If there a company really well led by an MBA? I mean, President Bush has an MBA... look how well he's done.

    • Re: (Score:3, Interesting)

      by mgbastard (612419)

      Is that contract manufacturers supposedly offer efficiencies because they don't have to listen to Dell's marketing considerations. It would seem to me, then, that Dell's marketing considerations would need to change and all this really is is a low wage subsidy of a fundamentally flawed business.

      I'm really sick of MBA's getting American companies out of manufacturing because they lack the engineering knowledge and are too lazy to make it work. If there a company really well led by an MBA? I mean, President B

  • What about Apple? (Score:3, Insightful)

    by bxwatso (1059160) on Saturday September 06, 2008 @12:55PM (#24901545)
    IIRC, Apple builds its hardware using contract manufacturers in China and other countries outside the US.

    Since Apple is pure, clean, and everything /. loves and admires, how can Dell be wrong for following their lead?
    • Re: (Score:3, Interesting)

      by plasmacutter (901737)

      since when did I think that was a good idea for apple?

      since their switch to intel, apple's quality has slipped to the point where i'm wondering where my next machine will come from.

      Is there any manufacturer who actually tailors their products to a semi-professional niche?

  • How will you build you Hackintosh today?

  • by thewiz (24994) on Saturday September 06, 2008 @04:02PM (#24903601)

    Right now, the U.S. government is one of the largest purchasers of Dell hardware. It used to be IBM they purchased from until IBM sold its PC division to Lenovo. Now the government won't buy Lenovo because their afraid that the machines might be compromised to spy on the user. If Dell moves their factories overseas there's a good chance that the government may stop buying.

  • by smellsofbikes (890263) on Sunday September 07, 2008 @12:55AM (#24907757) Journal

    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.

"One Architecture, One OS" also translates as "One Egg, One Basket".

Working...