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May 8, 2006
I Speak Dell
Dell blew up in after-hours tonight, announcing it would miss first-quarter earnings and that it was taking down the forecast. CEO Kevin Rollins had the following opaque offering by way of explanation:"During Q1 we continued to execute on our strategy to reinvigorate growth by making investments in our support infrastructure and product quality and by accelerating pricing adjustments. We are committed to delivering industry leading value to our customers, which ultimately results in industry leading growth for the company."I know what you're thinking. You're thinking, What the hell does that mean? I speak Dell, so here is my translation:
During Q1 we tried to fix our support problems in hopes that would spike growth in the crummy PC market, but that didn't work so we tried to save the quarter by cutting prices earlier and more than expected. Trouble is, those bastards at HP cut prices too, which made us drop prices further. Now we're left with losing money on PC sales and trying to make it up on volume.
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If you are losing money on per-unit sales, how do you make it up on volume? With each unit sold, you lose more...
Dell's problem is that they mass manufacture a commodity product, which means that they have no margin for error.
Makes Steve Jobs and Apple look like a genius in comparison. Say what you want about Apple, you can't call them commodity box makers.
As a Dell user, I saw the horrible deterioration in the company's customer service over a year ago, and put up a note about it at the fool.com discussion board. That was a distant early warning signal that the stock was either going south or at least not going north. Alas, I didn't short it.
So this explains why, after twelve years of buying Dell products for my own business and some personal acquaintances, I was finally the recipient of a "Customer Satisfaction Survey" today. When I effectively responded that their phone system and access to support/service personnel was a nightmare, they got into deeper enquiries on these issues.
Interesting....
I have been in PC graphics since 84. I have used and loved Dell since 1998. Have 3 systems, and 1 retired. Best support I ever had. But things are changing. I cannot understand through the accents of tech support any longer. They cannot even read their support docs correctly. I purchased a Alienware laptop in December, found out Dell bought that. I needed a warranty repair, so Alienware sent out a tech. He said they are doing Dell, Alienware and Sony. No certified repairs anymore? Not good, “Dudes”.
I think we are seeing why becoming too big does not work. Go back to your roots Dell! You saved so much in India support, so where is the pay back in that? Bad support will kill your legacy reputation as sure as a sunrise. Too big and fat to think anymore about the customer? Then we bid you farewell.
That was funny. Dell seems quite similar to Gateway-ese.