Dell must be listening to the PCs-for-home-entertainment buzz. They are building “luxury” computers now, for luxury prices. While the XPS series is old news for gamers, the PC giant is now pushing it for more widespread appeal. I’ll venture a guess as to what this means: pay an extra $500 for a Dell that reminds us of a chrome-plated, steroid-filled Mac Mini.
Dell has built an empire on cheap computers and cutting corners when possible. The business is widely recognized as a model for streamlining and cost cutting. Over the past couple decades, the company has become almost as ubiquitous as Microsoft and Intel. The PC market is saturated with Dells. Even in the office here, I’m staring at one. But it’s not high standards that have brought Dell to the forefront of PC manufacturers.
Cheap sells Dells.
I could delve into how I feel about Dell’s second rate hardware, their proprietary system parts, their borderline spyware, and notorious (lack of) customer service. But I’ll save that for later.
For now, suffice it to say that even though Dell has become a household name, it is practically a computer builder’s arch nemesis. Widespread does not mean high quality. Dell is the Nike running shoe sitting next to a NuBalance. It is the Tylenol pill sitting next to a bottle of codeine. If a computer hobbyist is shopping for an expensive PC, I’d put my money on them not even visiting Dell.com out of curiosity. So why would Dell even try to increase their high-end offerings?
There are reasons, but one stands out. The company’s stock has been taking a solid nosedive (and is continuing even now) since the first day of August. It was trading around $41, and is now significantly below $33, a 20% drop. You might ask why. After all, Dell’s sales in the second quarter of 2005 were 15% above last year, and made an amazing $13.4 billion in sales. Sounds like a real powerhouse, doesn’t it?
However, Dell had projected 16-18% increase in sales, and this was the first time in years that they failed to meet their projections. Dell blamed the loss on discounts it offered. The solution to stabilizing their stock is easy, if you imagine a board room of Dell executives in “oh shit” mode: take two parts existing product, add one part hype, stir until average consumer is confused, place in black metal box, and bake until stock rises.
That’s right. The answer for making up for sagging and disappointing growth: pump up the bling bling. Hey, Apples look cool and they sell. Alienware too. For a company whose computers look significantly stupider than the budget eMachines T Series, the idea of dressing up the PC must sound like a turn key solution.
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