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Dell Rethinking the Direct-Sales Market 278

Dell has always sold directly to consumers via their web site and phone operations; it's a basic element of their business. Chairman and chief executive Michael Dell is now conceding that the company may need to rethink basic practices by considering alternative methods of selling their products. While initially no specifics are given, the thought seems to be than eventually the company will begin working with a retail chain. "Dell's direct model came under pressure as the market for PCs shifted to notebooks from desktops last year. It is harder to custom configure notebook computers, so they had to be manufactured in advance, which lost Dell some of its cost advantage. In addition, consumers were showing a preference for touching and feeling a notebook PC before buying it."
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Dell Rethinking the Direct-Sales Market

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  • by xactuary ( 746078 ) on Sunday April 29, 2007 @07:36PM (#18922241)
    CostCo. I used to find Dell PCs in CostCo, but not for a while now. Dell should have a permanent pile of lower-end boxen on display whenever I walk into the place. Power users will always need to interact with the sales process I suppose.

  • by tomocoo ( 699236 ) on Sunday April 29, 2007 @07:40PM (#18922269)
    Let's not forget the fact that while Dell laptops are oftentimes nice machines, their enclosures are hideous, clunky pieces of plastic that can't hold a candle to Thinkpads or Macbooks.
  • seems worse (Score:5, Insightful)

    by Original Replica ( 908688 ) on Sunday April 29, 2007 @07:40PM (#18922273) Journal
    How do you stock up to date hardware in brick and mortar stores? I never buy from physical stores because everything is lagging 3 months behind in price and technology.
  • by Glowing Fish ( 155236 ) on Sunday April 29, 2007 @07:48PM (#18922319) Homepage
    It is harder to custom configure notebook computers, so they had to be manufactured in advance

    I think that this might have to do with the shift to the laptop market. A shift that I am not convinced is permanent. And if the shift to the laptop is permanent, there will have to be changes.
    This might seem like an overly harsh judgement, but to me the major reason for adopting laptops is sex appeal. Most people who want laptops seem to be impressed by how sleek they look, and by how cool it is to hang around in a coffee shop with a laptop. I know there are plenty of people who need laptops for their jobs, but I still think the majority of people are looking at them as an accessory. And most of these people don't know what they are getting into, because after a year or so, when the proprietary screen cracks, or the proprietary power supply goes dead, or any of the other little pieces no longer work, people are very surprised that they have to spend time and money searching for a replacement.

    I think that as the laptop market matures, and people have this happen, there may be some demand to standardize laptop parts. This will change both how easy it is to custom make laptops, amongst other things.
  • by Anonymous Coward on Sunday April 29, 2007 @07:55PM (#18922361)
    My wife is an absolute novice to PCs. Heretofore, she used a WebTV unit,
    and the prospect of "migrating" to a PC was very daunting to her. Plus,
    the fact that she's an inveterate skinflint, she was very reluctant to
    spend a lot of money on a laptop for herself.

    We shopped at the Apple store in Town Center, Boca Raton, and while we
    liked their product line very much, we felt that it was too expensive.

    We visited the Dell kiosk in the same mall and got a (slightly) lower price,
    for equivalent hardware and Windows XP, making sure that it would be upgradeable
    to Vista (allegedly).

    We then went to a local Staples, and ended up buying an HP laptop with the
    same processor, memory and disk capacity as the Dell, with Windows XP, for
    about 35% less than what the twit in the Dell kiosk quoted us, which appeared
    to be basically the same price I'd obtained the evening before over the net
    from the DellDirect web site.

    This all took place between Thanksgiving and Christmas.

    I used my EPP discount on the HP website and bought myself a nice(r) HP laptop
    as well.

    Now, we all know the games that are played during the Christmas buying season,
    but this, IMNSHO, ranks as about as ridiculous as it gets. It didn't surprise us
    when the industry reports started oozing out in late January and into February
    showing that HP had trounced Dell during the Christmas season. They lost on price,
    and their reputation in the Consumer Reports ratings didn't help, either.

    (Parenthetically, I wanted to be able to get my wife an Apple, but she didn't
    want to see $2k plunked down on a 15" 1.73GHz Intel laptop that she might not be
    able to learn how to use. Apple's features and look-and-feel were stupendous, and
    they deserve a lot of credit - it's a beautiful product, but it costs too damned much!!)

    BTW, the laptop that I bought for myself was made in (P.R.)China, and I was able to
    track its journey from the factory near Shanghai to my front door via FedEx's web site.
    Kind of mind blowing for this computer industry (DEC-CPQ-HPQ) retiree...

    There is something wrong with Dell's business model and/or cost structure and Mikey
    needs to fix it yesterday if he's to have a credible chance of turning Dell Computer around.
  • by hey! ( 33014 ) on Sunday April 29, 2007 @07:56PM (#18922371) Homepage Journal
    No, the reason laptops are popular with employees is that you can work any time you want.

    The reason laptops are popular with employers is that you can work any time they want.

    The reason that desktops used to be popular is that they used to much cheaper, and they were easier to repair which is important when computers are expensive. Neither of these apply so much. It is quite practical to replace laptop every two years or so, which is about right given technology cycles driving hardware requirements, and the fact that you've been working every waking moment.

  • Yeah, super idea (Score:1, Insightful)

    by Anonymous Coward on Sunday April 29, 2007 @07:57PM (#18922381)
    Creating a retail chain? Didn't Gateway do this (and fail soon thereafter)?
  • by Anonymous Coward on Sunday April 29, 2007 @08:07PM (#18922419)
    but it costs too damned much

    No it doesn't. Apple's stock price just shot through $100, they are making 35% profit on them.
    If people weren't buying macs, Apple would be going out of business.
    It may be they cost too damned much for you, ever heard the expression 'buy cheap buy twice' ?

  • Yes, they are hard to repair, but so what?
    So I've had to pay a guy $150 for different repairs, where if I'd been using a desktop, I would have done it myself.

    So it's difficult to upgrade the CPU when something better comes along. (Socket? We don't need no stinkin' socket.)

    So it's difficult replace the optical media drive if it breaks, or if I just want to be able to burn dual-layer DVDs instead of just CD-Rs. And forget about getting the right faceplate...

    About the only upgrades I've been able to perform on my laptop without assistance are replacing the battery, adding RAM, and adding a miniPCI wireless A/B/G card. And the laptop didn't have an antenna in it, so I'm going to need to get in touch with a friend who knows how to add one.

    Laptops are a PITA for anyone who's tasted the power of self-service.
  • Re:seems worse (Score:5, Insightful)

    by Jherek Carnelian ( 831679 ) on Sunday April 29, 2007 @08:22PM (#18922527)

    How do you stock up to date hardware in brick and mortar stores? I never buy from physical stores because everything is lagging 3 months behind in price and technology.
    Thus putting you somewhere near the 99th percentile of the general pool of home PC purchasers. For everyone else, they won't even notice the difference. That's one reason why HP has been kicking Dell's ass in the home pc market recently.
  • Re:Dell's slide... (Score:4, Insightful)

    by bilbus ( 999819 ) on Sunday April 29, 2007 @08:25PM (#18922547)
    Bullshit, dell is just as good as anyone else ... they use the same components as hp and ibm. Hell everything has broadcom now. I have never had a problem with a dell .. that was not easly fixed. As for service you do know EVERY maker outsources their support to local repair shops. So if you have a problem its the local serivce shop thats to blame, talk to your rep and get that fixed. I like dell because i can call one person/team to order, ask questions or get support. Try that with IBM. With Toshiba if you bought it from a store you need to find your paperwork before anyone will help you. With HP you can get support from them directly but you need to buy from resellers .. and dell's prices are almost always better. As for the earler poster ... dell has been a little behind in invoation, but the ultra highend server market is not where dell wants to be. Their servers are aimed at the low to mid range markets ($1,000-$20,000). If you want a ultra high end server IBM/HP is the leader. As for linux ... are you kidding me there is NO market for linux on the desktop. As for servers why would they preinstall linux for you, you are going to format and install your choice on there anyhow, you can get the servers with no os installed.
  • by Harmonious Botch ( 921977 ) * on Sunday April 29, 2007 @08:45PM (#18922655) Homepage Journal
    Personally, I could hardly care less what it looks like.

    What matters is: is it easy to use? Can I use the mouse with my thumbs? Is the screen readable in sunlight? Is the 'enter' key big enough that I can't miss it? Does it have a caps lock light so that I don't shout inadvertently? Does it have a fast processor? And lots of RAM? Oh, and does it have Linux?
    Give me all of that for a reasonable price and it can look like a dog turd for all I care.
  • Re:Dell's slide... (Score:5, Insightful)

    by Jeff DeMaagd ( 2015 ) on Sunday April 29, 2007 @09:08PM (#18922809) Homepage Journal
    Bullshit, dell is just as good as anyone else ... they use the same components as hp and ibm. Hell everything has broadcom now.

    Using the same chips alone doesn't mean that the entire systems have comparable build quality, if that's what you are implying.
  • Yep (Score:1, Insightful)

    by Anonymous Coward on Sunday April 29, 2007 @09:12PM (#18922825)
    As another poster commented, Dell is just as crappy as the others; and vice versa. In that regard they have changed. Dell was, for a while, a lot better. The idea was that you could buy a Dell online or by phone or mail and you would have no problems. If people think they will have problems they want someone local to scream at. The only way Dell could sell the way they did was by making a product so good people would trust their quality completely.

    Not only has Dell's quality slipped, their service has become really miserable. I was thinking about buying a notebook from them so I did some Googling. There were lots of horror stories. It would take months before people could get permission to return machines with obvious hardware problems. Naturally, I gave up on the idea of buying a Dell. I bought a used Thinkpad instead.
  • by CastrTroy ( 595695 ) on Sunday April 29, 2007 @09:19PM (#18922863) Homepage
    Anecdotes are nice aren't they. I like yours too. However, I think more people have similar usage patterns to me more than you. I check email, do some programming, browse the web, edit some photos, write up documents, manage my finanaces, and play a few simple games. None of those require high powered computers. And while I see the need for having very powerful computers for tasks such as HD video editing, I think that 90% of the general computing population could do without that much computing power, because nothing they do requires that much power. So while I see why you may need to upgrade every 6 months, I don't see why the average computer user would have to upgrade more than once every 4-5 years. I admit, I stretched my last computer a bit, because I didn't have much money for a new one.
  • by petrus4 ( 213815 ) on Sunday April 29, 2007 @09:35PM (#18922947) Homepage Journal
    ...and probably never will.

    I am on a disability support pension, and get around $500 AUD for hardware upgrades, once every 12 months. There is a local (relatively small) computer repair place near where I live, which I go to every year. Because I went there last year, and am almost certain to go there next year, the guy there realises that although it isn't much, my money is a relatively sure thing for him. Not only that, I've managed to get him some additional business from other family members at times as well.

    Due to the above however, I am able to get a new case, motherboard, processor, and ram from him for that $500 (maybe $580) each year. This also means that I can buy a box one year, and a monitor the next, at the rate that I can afford it.

    If I went to one of the chain stores here and asked for a Dell, I wouldn't be quoted a price of much less than $2,000, and the only way I could hope to pay for that would be on credit, which being on a pension I probably wouldn't be able to get. Due to the precarious nature of my financial situation I also wouldn't want it, even if they were willing to give it to me.

    Dell (and the other big OEMs) are a bad thing, in my mind. In addition to the inflexibility on price, I've known a couple of other people who've bought complete systems and been given faulty hardware; I myself got burned on that score the one time I was able to do it. Not only that, Microsoft's monopoly only really exists because of people like Michael Dell; his profit margin per unit is so small that they are able to bully him in terms of the price of Windows, and dictate that people pay such things as the "Microsoft tax," as well as making it as difficult as it is for other operating systems (such as Linux) to enter the market.

    I realise that for some people, technical knowledge and other reasons prevent them from going to the little guy and buying parts; but if you can do it, I advocate it. Not only will it be cheaper in most instances, in my experience you have less chance of getting faulty hardware, and you also don't end up supporting one of the big corporate behemoths that I know people on Slashdot hate so much. ;) It's a win all around.
  • by eebra82 ( 907996 ) on Sunday April 29, 2007 @10:22PM (#18923279) Homepage
    I am sorry to hear about your disability and what it means to your economy, but without sounding too harsh, you are not the reference customer Dell is going for.

    Dell isn't the cheapest alternative you can get, but there is more to it than just price. For example, a lot of people care more about the on-site support and such. And I really can't say they are that expensive either. Surely, a pre-configured computer is almost always cheaper, it is rarely everything you want.

    You say that Dell and other big OEM:s are a bad thing. I have to disagree there. Without them, we would have fewer industry standards and we would probably end up having regional settings to everything. At least these giants push to unify hardware. Also, they do bring a lot of competition to the table, which is always a good thing for the customer. A zillion small retail chains around the world would also eventually turn into a few after some time, simply because one would eventually do better than the other, buy the latter one and continue with its expansion. That's how it works.

    My company has been buying computers from Dell for years. I don't know how your friends would end up with faulty hardware like that, but it is a rarity here. Of course computers fuck up every now and then, but Apple's batteries explode, the Volvo cars get tire dents and your shoe laces will be torn eventually.
  • by moosesocks ( 264553 ) on Sunday April 29, 2007 @10:38PM (#18923341) Homepage
    IBM decided on a minimalist design, and went with it for 15 years, and so far it's served them very very well. If you look at trends in industrial design, it's pretty obvious that minimalism and sleek likes have been a "safe" choice for the past few decades. If your design is simple, there are very few elements of it that can appear dated with time.

    Likewise, the build-quality of IBM's enslosures tends to be among the best in the business. The type of plastic they use combined with the rubberized coating holds up very well to wear and tear. Over time, this has only gotten better as they've improved upon the plastic formulation and reinforced the laptop chasis with a Titanium frame.

    Pick up a Dell laptop with one hand. It's heavy and you can feel it creaking under its own weight. Do the same with an IBM or Apple machine, and you'll feel the difference instantly.

    Dells haven't always been crap. Every now and then a legitimately good design slips through. A while ago, I had a Latitude LS [bobjohnson.com], which was an early PIII machine. It was an ultraportable, and weighed even less than my 12" Powerbook (due to its lack of optical drive, which also made it super-thin). The frame and external enclosure were both made of a durable scratch-resistant metal, and it still looks just as good as my Apple. Why Dell chose to abandon this design and continue to produce laptops based upon the Latitude C-chasis (from the early PII days, and still used in some form today) is beyond me.

    It's basically the same reason why you can tell the difference between a Benz and a Trabant [wikipedia.org].
  • by dosquatch ( 924618 ) on Sunday April 29, 2007 @11:26PM (#18923647) Journal

    The Thinkpads have _never_ looked modern, never hideously ugly, but never particularly attractive either.

    But - and I consider this the more important point - they are built like tanks.

    I've provided support for quite a lot of Dell machines. I even reccommend them if for the budget-minded, They perform well, and (if you stay away from the Inspiron line) they hold up fairly well... but they just don't feel that durable. If I'm going to invest in a machine, I'd just as soon buy something that I know is built really, really well, and not only does the Thinkpad feel like that machine, I have reason to believe that it is actually that well... having seen one survive being backed over by a salesman and be none the worse for wear (note that I do NOT advocate repeating this experiment with anything less than a toughbook)

    Looks be damned, I'll take the machine that I know will live to die of old age rather than wear and tear.

"For a male and female to live continuously together is... biologically speaking, an extremely unnatural condition." -- Robert Briffault