Dell: to Hell and Back Again? - Changes Needed
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A great deal of speculation surrounds Dell's growth into the server and storage markets but its ultimate success may lie in reversing its years of cost cutting.
Dell's greatest strength still lies in its negative cash flow cycle, which allows it a great deal of latitude in producing complete computer systems at incredibly low cost. A significant investment is required in improving its after-sale support and more generous basic warranty. In an attempt to understand its customers and restore their faith, Dell must take back control of its outsourced call centers. Within the dynamic of employing outsourced contractors, the call center requires call volume to achieve profitability. The inverse result of this is the lack of satisfactory first-time resolution for the customer because multiple callbacks to resolve the same issue are encouraged rather than discouraged in order for the call center to, itself, make higher revenues, because they are paid by the call not the issue.
Invariably this does mean significant time and money must be spent to bring these call centers back to North America rather than abroad. However, the international call centers provide the existing infrastructure for continued growth in the emerging world, and with Dell's ability to produce these same computer systems without the same amount of long distance shipping from its Asia-based suppliers, it can make a real push into the emerging world with low-cost computer systems with a customer base untouched by the negative publicity it has generated in the North American market.
Alienware, on the other hand, needs to take further advantage of the Dell efficiency model, but rather than provide the same off-the-shelf component production that Dell traditionally does, it needs to focus on innovation and product development. By using Alienware as its own research and development arm, Dell can gain unparalleled knowledge of these technologies first hand for later implementation into their primary systems. Allow Alienware to be true to its longstanding loyal customer base by continuing to provide true "bleeding edge" equipment meant to attract the more sophisticated consumer that is unlikely to purchase a regular Dell system.
Dell has the ability to rebound and rebuild from these multiple debacles, but Michael Dell is not Steve Jobs. The presentation of Dell as some sort of messiah for the manufacturing giant is a misconception as Dell is not an innovator but rather an improver. He clearly proved that he can develop manufacturing methods to within a razor's edge of perfect efficiency, but Dell Computers Inc is not known as a leading edge innovator in design and in bringing new ideas to market. Rather they are known for taking an existing product and producing it in unparalleled capacities and scale.
Dell's best bet is in what he knows best: build the cheapest computer possible with strong after-sale support and reestablish the relationship with the general purchasing public that has been damaged in the past several years.
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