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The Almighty Buck Hardware

Dell Abandons Its Customization Roots 372

LiveFreeOrDieInTheGo writes "Dell intends to scale back its build-to-order service model, while increasing sales of prepackaged systems. The goal: $3B USD savings by 2011. The downside: customers expect Dell to build-to-order. The deeper downside: Dell will outsource more production and assembly."
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Dell Abandons Its Customization Roots

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  • by kpainter ( 901021 ) on Saturday April 05, 2008 @09:09PM (#22976508)
    Dell changes its name to "Dull"
    • Re: (Score:2, Interesting)

      by Sepiraph ( 1162995 )
      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: (Score:3, Interesting)

        by Sanat ( 702 )
        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.

        • by timmarhy ( 659436 ) on Saturday April 05, 2008 @10:36PM (#22977012)
          she was a terrible ceo, and it's amazing how many of these clowns are out there, jumping from CEO position to position picking up huge packages and leaving a trail of distruction behind them.

          stonemasons, i swear it has to be something of that kind that allows completely useless people to run these companys.

          • by loteck ( 533317 ) on Saturday April 05, 2008 @11:01PM (#22977116) Homepage
            I think you meant Freemasons [wikipedia.org], not stonemasons [wikipedia.org], unless you are cursing HP for their conspiracies to create beautiful sculptures and pretty stone engravings.
          • by HungSoLow ( 809760 ) on Saturday April 05, 2008 @11:33PM (#22977278)
            No no no... it's the stonecutters! Now known as the Ancient Mystic Society of No Homers.

            "Who holds back the electric car?
            Who makes Carly Fiorina a CEO?
            We do! We do!"
          • by zippthorne ( 748122 ) on Sunday April 06, 2008 @01:21AM (#22977766) Journal
            I think it's a kind of hero worship. "Corporate Saviors," I believe they were called in the 80s or 90s.

            It's a kind of narcissism to believe that it takes these special people to run your company, you have to get just the right person, someone who's done it before, even if they were a spectacular failure. Besides, look at the severance packages.. the companies must have believed in them to offer them that much...

            But it's not all that different from the idea of the box-office superstar. As if only a few people making $20million a picture are capable of making good films. Precisely when it's just the opposite: a movie star will get people in the seats opening night, and maybe save a poor film, but a good movie will get people in the seats five weeks later and establish the body puppets associated with it as "movie stars."

            Anyway, my point is that there are talented, capable people waiting in the wings in every field, and you might just be able to get great performance *and* save on salaries by expanding the scope of your talent search. I hope you're listening, shareholders meetings and Hollywood producers.
        • Re:In other news... (Score:4, Informative)

          by aurispector ( 530273 ) on Sunday April 06, 2008 @08:28AM (#22979078)
          Heh. Carly was a complete idiot. Didn't one of the Hewletts (or maybe it was a Packard) fight her tooth and nail from the board or directors? She practically kills the R&D dept - one of HP's crown jewels, then she wanted to sell cross branded Ipods. Perhaps she thought she was running Walmart?

          I think the reason these numbskulls get the big packages is because they are slick enough to be able to legally prove they did their jobs carrying out the will of the majority of the board of directors. Pass the blame, collect the buck. In the few instances where I had inside information on the departure of upper management, the concensus was that it was cheaper to pay them to leave than to force them out. A protracted legal battle airing the dirty laundry is bad for stock value.
    • When asked (by himself) Fake Steve Jobs says If I owned Dell I'd shut the place down and give the money back to the shareholders. [blogspot.com]
    • Re: (Score:3, Insightful)

      by NecroPuppy ( 222648 )
      Not really.

      The Dell brand is primarily going to be 'standard' home user and the corporate market. There's not a huge amount of customization needed there.

      For the gamer who wants to customize a system, but not build it from scratch, there's the Dell subsidiary Alienware.
  • by Anonymous Coward on Saturday April 05, 2008 @09:16PM (#22976554)
    I'm a fan of Dell kit, but when HP hae beaten you in sales for 6 successive quarters - as stated in the article - limiting the amount of customizing may save you cash, but it isn't going to get more people buying your kit is it?

    The 'fix' doesn't seem to be the solution to the highlighted problem... sure it'll save you money in the short term, but no gains in share there at all. Less customization is never going to make a punter go "oh, I'll buy that because it's not as customizable".

    Add to that the outsourcing of manufacture and it all looks like a world of hurt waiting to happen.

    • Less customization is never going to make a punter go "oh, I'll buy that because it's not as customizable".
      What if Dell passes along some of that $3B in savings?
  • Hardly. (Score:5, Insightful)

    by Creepy Crawler ( 680178 ) on Saturday April 05, 2008 @09:16PM (#22976558)
    When companies seek to recover these kinds of profits, they cut something more important.

    Their reputation.

    Most likely, they will move their call centers out of India and into a lower paying 3rd world country. The lower techs will be given even less latitude to help fix problems. Along with that, they will reduce access (and numbers) of higher up support, along with "new policies" of the 'not our fault' game.

    They will obviously cut their unprofitable programs, such as their IdeaStorms website, all Linux support for low and middle tiers, along with the cheaper customizable options. They will leave customizing available for the higher packages, as all businesses cater to the big spenders.

    Yes, our system is based upon a race to the bottom, but depending how you get there means if you survive or not. That really depends on how their deals with Microsoft go, as they are parasites upon MS.
    • Our system isn't a race to the bottom. It is a race to what people want. People want computers at the cheapest possible price and they do not care about tech centers or even support.

      Outsourcing is a good thing for the economy, not a bad thing. If Ford did not outsource, for example, it would have to make everything from the drills for the oil, the refineries for the gasoline, the machines to make the steel and the chips and the plastic, really, recreate the entire economy and in doing so lose the efficiencies that come with shared costs. We can lament outsourcing of some function at a company, to make ourselves feel good, but, if there were no outsourcing, there would be no cars, no tvs, computers, or any of the millions of products, in all their choice and complexity, because those products would not exist without outsourcing.

      We ourselves, each and everyone one of us, outsource all of the time. Go ahead can say Dell is terrible because they outsourced a call center to India or the Philippines, but we outsource every time we use a stapler or a printer, or for that matter, even a computer. How many developers recommend using MySql or Postgres or even Linux over some solution developed in-house. That is outsourcing too, and without that outsourcing, it is very likely that there would be less jobs and more economic stagnation. Few products have the margin or merit to justify the creation of a custom database server or operating system solely for them.

      In that vein, outsourcing a call center might actually result in -better- customer service. If a place in India has 200,000 people answering the phones, they are going to get the economies of scale that even Dell could not possibly get.

      Outsourcing actually -creates- opportunity. Any time you see more than one company engaged in a similar practice, that is an opportunity for a product or a service than can be outsourced to someone else, and that person might as well be you. If outsourcing did not exist, then, there would be no opportunity, the companies that could have benefited from outsourcing would stagnate, and products would remain more expensive, rather than less.

      Bottom line is, outsourcing is a good deal, rather than a bad once, and the dramatic increase in the standard of living in much of the world - from the skyscrapers in China, the surge of wealth in India, to the internet of south korea and the massive works in Dubai, the world is getting richer and better off for it. Even in the USA, where outsourcing has been the subject of much debate, everyone has benefited from outsourcing.
      • by Creepy Crawler ( 680178 ) on Saturday April 05, 2008 @10:05PM (#22976858)
        Ok then. Take for example our current manufacturing situation... We are hemorrhaging jobs from all markets for the manufacturing of goods. Instead, those jobs first went to Mexico. They ended up being too expensive, and the deals with China were brokered.

        Along with China, India was also brought forth as a manufacturing country. Now, it appears they are too expensive, and our companies are off for cheaper places. Now, it is not arguable that China and India benefit from our presence. They do, however, is it advantageous that we put ourselves at a distance in terms to create?

        I know where the USA wants to go towards: the brain of the world. Intellectual Property Capitol. Except they do this by selling off what got us here: our very industry to create. How would we do a Manhattan Project without every country knowing now? Buy this kit from this country, that kit from that country...
        • Re: (Score:3, Insightful)

          by homer_s ( 799572 )
          Finally, someone speaks the truth about the damage outsourcing does.My city (woodridge,il) is hemorrhaging jobs because we outsource everything.

          We outsource car production, computer production, etc. Heck, we don't even make our own offshore drilling rigs to drill for oil so we can get petroleum that we can use to make plastic to make little spoons.

          It wasn't always like this. A couple of hundred years ago, we manufactured almost everything we needed right here. Everyone was employed.
          In fact, there
      • by homer_s ( 799572 )
        You seem to suggest that division of work is good. That productivity gains due to specialization is good for the economy.

        Next thing you know, you'll suggest that people trade only when it benefits them and hence the local economy.

        We don't take kindly to economic truths and common sense around here.

      • by hemp ( 36945 )
        If Ford did not outsource, for example, it would have to make everything from the drills for the oil, the refineries for the gasoline, the machines to make the steel and the chips and the plastic, really, recreate the entire economy and in doing so lose the efficiencies that come with shared costs.

        That would make Ford a vertical monopoly. That is not allowed in the US. To take your example to its furthest conclusion - Ford would require only Ford brand tires on each Ford car wheel, Ford brand motor oil in
      • by Jeff DeMaagd ( 2015 ) on Saturday April 05, 2008 @11:07PM (#22977158) Homepage Journal
        We ourselves, each and everyone one of us, outsource all of the time. Go ahead can say Dell is terrible because they outsourced a call center to India or the Philippines, but we outsource every time we use a stapler or a printer, or for that matter, even a computer

        Poppycock. It's one thing to outsource things that aren't your core business, I mean, those not in the stapler business shouldn't be making staplers. But if you're in the stapler business and you outsource the manufacturing, assembly, and support of staplers, then exactly what IS your business? What opportunity does that get you? You've mostly switched the business from being a manufacturer to a distributor. Assuming the distribution hasn't been outsourced. Maybe Dell is becoming just a retailer. All this sounds like is getting rid of your business and painting yourself into a corner.
      • Re: (Score:2, Insightful)

        by timeOday ( 582209 )

        Outsourcing is a good thing for the economy, not a bad thing. If Ford did not outsource, for example, it would have to make everything from the drills for the oil, the refineries for the gasoline, the machines to make the steel and the chips and the plastic, really, recreate the entire economy and in doing so lose the efficiencies that come with shared costs. We can lament outsourcing of some function at a company, to make ourselves feel good, but, if there were no outsourcing, there would be no cars, no tv

        • Re: (Score:3, Insightful)

          by Otter ( 3800 )
          You can't defend outsourcing by redefining it. Nobody concerned about outsourcing is referring to domestic trade, that's a total straw man!

          Use "offshoring" to refer to "foreign trade, especially between vastly unequal economies". That's not what "outsourcing" means, and it's silly to accuse people of redefining a word they're using correctly.

        • Re: (Score:3, Interesting)

          by XorNand ( 517466 ) *
          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
      • by TheNucleon ( 865817 ) on Saturday April 05, 2008 @11:45PM (#22977334)
        Some of us - those whose jobs have not yet gone overseas - have benefitted from outsourcing in the short term. But in the long term, we annihilate our internal industries, bleed talent and capabilities, and become accustomed to an unsustainable lifestyle. It will all eventually tank, as it is beginning to do now. The dollar is headed from hero to zero, and once there, the currency and lifestyle disparities between us and our outsourcing vendors (that got us all of this near-free stuff) will be gone.

        I'm sorry, but I respectfully disagree with you. Outsourcing is a very bad deal. While it has the allure of temporarily deflating the cost of goods and services, it is, in the end, a direct assault on the lower and middle class. Because companies can now outsource to other nations without such pesky problems as labor laws or a living wage, we are quickly seeing the working class gains of the last few decades evaporate.

    • Re: (Score:3, Insightful)

      by Kjella ( 173770 )
      Look, the business plan of "you can have any color you want, as long as it's black" may have been brillant and inventive when Ford did it, but the rest of the world has caught on to that. Most businesses have something they make volume on, and something related (which they wouldn't get without volume) they make margins on. Cutting out all the other things and try to only make money on volume is fighting for pennies per computer, they're hardly the only ones capable of setting up an efficient assembly line t
  • I think I may be looking to move to HP or IBM. While the last time I ordered HP, it was a room full of boxes for five servers and some drive shelves, I do believe they went into the custom built model in the last few years.... Hmmm..
    • I think I may be looking to move to ... IBM.

      Ahem... IBM doesn't make PCs anymore.
    • by binaryspiral ( 784263 ) on Saturday April 05, 2008 @10:58PM (#22977098)
      You should have been looking into alternatives years ago.

      Anyone can build and sell a server - supporting it is where the company wins or loses.

      I call IBM at 3am when a server up and dies. Tech is onsite in two hours, new parts arrive 45 mins later... a bad power regulator fried all 16 sticks of ram. They didn't have enough on hand, so three other couriers were dispatch from two other states with more than enough ram to get the server up and running.

      Three hours later the box was back up.

      Dell - will argue to the enth degree about predicted drive failures alarms from their raid controllers... we just call them dead now so they'll send replacements. The drives take about two days to show up which is about enough time for the drive to finally fail.
  • Ubuntu is just another disk image like windows xp, or vista.

  • by Anonymous Coward on Saturday April 05, 2008 @09:19PM (#22976576)
    Are you high?

    Dell already outsources just about all their manufacturing. All that will happen here is that now they can streamline the supply pipeline because they only ship x different configs instead of 100x. Less work at the (already) outsourced supplier/contract manufacturer, less work on the order fulfillment side.

    How it's going to save 3 billion, I don't know. I think they're aiming a little high. Expect support to be outsourced to even crappier Indian call centers....

    • The article actually says

      Dell will also outsource more PC manufacturing to partners, he said.
      That sounds to me more like they're going to let other companies manufacture their stuff for them. Like you said, Dell already outsources all of their manufacturing, so this just sounds like a shift rather than "DEY TUUK ERR JAAAHBS"
  • by FoolsGold ( 1139759 ) on Saturday April 05, 2008 @09:19PM (#22976578)
    Be thankful there isn't a deeper deeper downside!
  • by UrgleHoth ( 50415 ) on Saturday April 05, 2008 @09:27PM (#22976632) Homepage
    I work for a small (about 100 person) company with a heterogeneous environment (Linux, OS X, Windows). In the past few years the IT team has settled on Dell for quick turnaround of ordering customized systems and consistency (the devil you know). They order Dell laptops, desktops and servers. It has pretty much turned into a "Dell house." The quick turnaround on customized orders is extremely important to meet developer needs. If Dell makes custom ordering take longer or involves increased hassle, I would bet that our IT management would start looking into other vendors.
    • Agreed. We purchase 200-300 Dell servers a month. If we weren't able to customize them anymore (which would mean we'd be wasting our time swapping components after they arrived all the same), we'd find another vendor (as others have pointed out, HP or IBM). Alienware may want to move into the server space, as they're use to high margins as it is (custom, high end desktops) and their customization they currently do with desktops/laptops could easily be extended to a server platform.
      • Alienware? You know they were bought by Dell back in 06, right?
        • I wasn't aware. That's depressing =( I checked their website before posting my comment, and didn't see any sign they were owned by Dell.
      • by drix ( 4602 )
        Presumably you would experience the same problems with Alienware, seeing as Dell owns them [slashdot.org].
        • Alienware != Dell (Score:4, Informative)

          by adolf ( 21054 ) <flodadolf@gmail.com> on Sunday April 06, 2008 @01:22AM (#22977772) Journal
          Alienware is owned by Dell, but that doesn't mean that they act like Dell.

          My wife recently bought a nice (though low-end, by Alienware standards) desktop computer from them. Though the ordering screens are similar (as well they should be - Dell's web-based ordering is rather slick), and credit for both companies is through Dell Financial Services, the similarities ends there.

          The Alienware case is a regular ATX case, with a regular ATX backplate and regular ATX mounting holes, and is large enough to accept bloody any motherboard, whereas Dell uses a strange-ish quasi-Micro ATX design without a removable backplate. The motherboard itself is an off-the-shelf model (Foxconn, in this case), not some weird Dell special. The front panel connectors (including those for the large number of fancy LEDs) are compatible with regular ATX boards, instead of Dell's non-standard monolithic connector. There's a plethora of drive bays, with all of the hardware needed to use them included, whereas Dell seems to take great joy in including only as much hardware as is needed to assemble that particular system (on the low end of things, at least - Dimension 2350 and 2400 machines have provision to hold a number of 3.5" hard drives, but there's only enough hardware included to mount exactly one. The other bays are physically absent.). The price was very reasonable - about $100 more than equivalent parts from Newegg.

          We had weird issues with the Alienware's extra LEDs on day 1. Called tech support, and without waiting in queue got a real human (in America!), who spoke real American English, had a real name, and who actually had at least half a clue. They sent a new part, which didn't fix the problem. Called back, again immediately got a real human, who dispatched both more parts and a warm body to install them. Problem solved.

          And, sure, it'd have been better if the system didn't need any service, but I did feel pretty good about the whole process. It seemed that Alienware wanted to solve my problem, instead of just force me to jump through hoops.

          Meanwhile, I loathe to call Dell support. One of the hinges on my laptop broke (which was reasonable enough after 2 years of hard use), and I had to wait for 20 minutes before some girl in Bangalore came on the line who only wanted to talk to me about reinstalling Windows XP. I had to fight with her for about 15 more minutes in order to get transferred to someone with enough clue to understand the simple problem and dispatch parts. And this with their premium support package!

          So, yeah: They're the same company in that they're owned by the same people. But that heterogeneous ownership doesn't mean that they're at all similar in operation or quality.

  • by timotten ( 5411 ) on Saturday April 05, 2008 @09:33PM (#22976658) Homepage

    1. We will cease customizations through our "Dell Home" program but will continue with it in our "Dell Large Business" program.

    2. We will cease customizations for our "Dimension" line but continue customizations for our "Optiplex" and "PowerEdge" lines.

    2. We will continue supporting some customizations (e.g. RAM and HD) but cease support for other customizations (e.g. anti-virus software).

    3. We will increase the price on customized models and decrease the price on prepackaged models in order to reshape demand.
  • It's roots (Score:5, Funny)

    by brainstyle ( 752879 ) on Saturday April 05, 2008 @09:33PM (#22976674)
    Ahem. [angryflower.com]
  • So, remind me again what I can now get from Dell that I couldn't get from any other manufacturer? Nothing? Oh well then I might just take my business elsewhere. Hrmph!
  • Anti-Foreign Bias (Score:3, Insightful)

    by NEOtaku17 ( 679902 ) on Saturday April 05, 2008 @09:47PM (#22976756) Homepage
    "The deeper downside: Dell will outsource more production and assembly."

    Which will result in lower prices which is good for consumers. How is this the deeper downside? Why are Americans, which have one of the highest standards of living in the world, more deserving of these jobs than people in other countries?
    • Which will result in lower prices which is good for consumers. How is this the deeper downside? Why are Americans, which have one of the highest standards of living in the world, more deserving of these jobs than people in other countries?

      I think he was talking about the downside as it applies to the build quality, not the economy. But I agree with you in general - when people talk about slashing gov. sponsored R&D funding, I ask a very complex simple question: why are janitors in America paid many, m

    • by homer_s ( 799572 )
      Because Americans do not want cheaper goods and services. They want full employment.
      Even if such employment makes everything more expensive and results in Americans working longer hours.
      Remember, only evil economists say that productivity gains make everyone richer. The truth is, slogging away for 20 hours a day is what people really want.
  • not everybody buying a PC is a first time buyer, take me & lots of others, i recently bought a new LCD monitor (wide screen) that can do 1680x1050 and i don't need another monitor, i already have a decent keyboard & mouse, if anything all i want is a new motherboard & CPU combo, but sometimes i dont want to build my own but a new tower with a great motherboard & CPU sounds great providing the motherboard has a Linux compatible chipset (especially ethernet and audio) and upgradeable - PCIe is
  • Expensive options (Score:5, Informative)

    by Dzimas ( 547818 ) on Saturday April 05, 2008 @10:13PM (#22976896)

    My experience is that customizing a Dell always costs an arm and three legs. Upgrading RAM costs twice what it would to buy retail, and please don't tell me that a 320 GB hard drive costs $100 more than a lowly $160 GB model. They make money hand over fist when small/medium business purchase customized machines (I've seen co-workers add on $1000 in not-so-necessary option), but the company has a much harder time with price-sensitive customers. I've purchased three Dells for home use over the past six years, and in each case I waited until they offered an extremely good deal and bought a minimally configured system and added my own memory, second hard drive and video card.

    Dell has been losing ground against other manufacturers, and one often sees off-the-shelf machines at Best Buy that offer better value and immediate availability. Part of the reason is that more and more buyers are opting for notebook PCs that are made in China alongside machines from HP, Acer and countless other competitors. In essence, Dell adds an extra layer of complexity to their manufacturing process by allowing customization of these laptops to occur once they arrive in North America. In the meantime, Acer is able to ship preconfigured systems directly to retail outlets without additional expense. The days of the big beige box are coming to an end, and much of Dell's business advantage centered on getting people to buy overpriced (and often unnecessary) upgrades that simply aren't feasible in a notebook form factor.

  • I've bought several Dell's in the past, and been happy with the driver support and things

    My latest purchase is about a year-old Inspiron E1705 with a GeForce 7900GS, C2D, 2GB RAM.

    Every Single pre-selected system I've ever seen of theirs doesn't work for me. I have strange needs - I don't need a 600GB hard-drive, that's what my GigE is for. I don't need a whopping-huge screen because I need a faster processor. I don't need 3GB ram installed because I need a faster processor.

    Basically, I order a system
  • Does anyone here get the same feeling that the submission is flamebait? Why is outsourcing production and assembly a necessarily bad thing, again?
  • by nick_davison ( 217681 ) on Sunday April 06, 2008 @03:19AM (#22978170)

    "The goal: $3B USD savings by 2011."
    If all you're after are cost reductions, Dell could save 100% of their annual costs by simply closing up and going out of business.

    Profit, remaining the difference between income and costs however, isn't as simple as "reduce costs, increase profit"... you stop selling things, you stop getting the income too.

    Speaking as a manager who purchases regularly... Dell's god awful love of non standard components to try and drive customers back to them for upgrades is next to inexcusable. I tolerate it because office machines can be bought to the spec I need without cracking the case. To now be told, "Oh? You need a high end processor and ram but don't care about the rest of the system? Sorry, that only comes in our high end system and you now have to pay for media burners, graphics cards, hard drives and Vista Ultimate that you don't want."... Especially when I can't buy a lower end system and swap out the processor because the old motherboard won't support it and can't swap out the motherboard because the case uses non standard connectors and fan mounts... I'm going to be going straight to the competition.

    So, yes, Dell will cut $3B in costs. Part of that will be the costs of all the systems they used to sell to me. Along with the profits on those systems too. Assuming the same holds true for others, they successfully cut off their $4-5B nose to spite their $3B face.
  • by WindBourne ( 631190 ) on Sunday April 06, 2008 @08:46AM (#22979162) Journal
    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.

Recent investments will yield a slight profit.