Dell Reconsidering Direct Model. Dell Retail?

[MacRumors]

The New York Times reports on a recent memo sent by Michael Dell to Dell's 80,000 employees.

In the memo, Dell suggested that they would be restructuring beyond the "direct sales" model. From the article:

It is the first time that Mr. Dell or any other senior executive has publicly conceded that the business model that was crucial to the company’s success could — and should — be altered. Until now, the company responded with an adamant no when Wall Street analysts or customers asked whether the company would consider other ways of selling.

This is a significant shift in strategy for Dell which was built on a low-overhead direct-sales model. In fact, Apple's own retail expansion in 2001 was seen as a risky move at the time:

...when Apple first launched its retail initiative amid a declining PC market and other failing electronics retailers, most notably Gateway's stores, it was viewed as a risky move.

Meanwhile, the tide has turned in the past 10 years, as many will remember that Michael Dell had said in 1997 when asked what could be done to fix Apple (who was losing marketshare and money at the time):

"What would I do? I'd shut [Apple] down and give the money back to the shareholders," Michael Dell said before a crowd of several thousand IT executives.

[arn]

btw, for historical sake.

Looks like Thread #2 on this forum was about the Apple Retail store rumors at the time:

http://forums.macrumors.com/showthread.php?t=2

arn

[TheBobcat]

Dell used to be seen as a quality computer manufacturer that made superior products, at least in the eyes of the public. If you wanted a good computer, you called up Dell and had them make you one based on what you told them your needs were. After all, it was a big investment.

However, today's PC is a commodity. Cheap bargain PCs with relatively decent specs are commonplace, and Dell has lost its edge to compete with the average person. Not to mention the fact that Dell has basically flushed its perception of good customer service and quality products down the crapper over the past few years.

If it weren't for volume and corporate sales, Dell would be in trouble. If Dell follows suit with Gateway and sticks their PCs into big-box retailers like Best Buy, they will further slip into the just-another-PC category and lose any remaining sense of identity that they have. Why should consumers take the time to order a Dell and have it shipped to them when they can go buy the latest HP special at Best Buy cheaper? What makes them any different?

And I don't know about you guys, but I exactly wouldn't be breaking down the doors to view all of Dell's great offerings in their own retail store.

Personally, if it was running Dell, I'd shut it down and give the money back to the shareholders.

[aswitcher]

FYI Dell in Australia have display stalls with their products (mostly screens and laptops) which can be used and ordered on the spot. They are in a few Westfields to pick up maximum passing traffic. ALways seem busy.

[BenRoethig]

HP is kicking their rear end these days for two main reasons.

1. They have better laptops
2. They have fixed configurations sold at retail stores.

[Brandon Sharitt]

Originally Posted by BenRoethig

HP is kicking their rear end these days for two main reasons.

1. They have better laptops
2. They have fixed configurations sold at retail stores.

Number 2 is probably the biggest reason. I know many people who have HPs simply because they can walk into the store an pick on up. Actually Mac minis at best buy even made a few switchers. Never under estimate the power of retail convenience.

[mkjellman]

lol looking at thread 2 there arn is a major trip down memory lane...to imagine how much this site has grown since then!

[theheyes]

Didnt Dell try this a few years ago and ended up reverting back to their original model?

[devwild]

Dell still puts out some very reliable, top notch equipment if you aren't buying the bargain bin deals. My 600m is still running great after 4.5 years. Their failure rates are no worse than Apple's, and their support plans are the best available. Now, their support staff is definitely the weakest link. I know how to deal with them so it's not a big issue for me, but it is a consideration when I make suggestions to friends and family. At least they actually have e-mail support, unlike Apple, which makes it much easier to work through complex issues rather than spending an hour on the phone or having to make an appointment () at an Apple store (which is seriously weighing on my considerations when looking to replace my G5). Speaking of which, how does Apple support deaf people... TTY?

I doubt Dell going into retail will hurt their identity much as long as the mail order model remains intact as well. Especially with Gateway and such wasting away, they would remain the company for getting a custom ordered PC, because they offer more options than any of the big names. If they are smart they could carry that identity to retail by allowing customization and the ability to walk out the door with your machine (perhaps something like come back in an hour and we'll have the video card swapped and the disk reimaged with your vista version, or linux since they are going that route again). That would certainly maintain a unique identity.

I dunno, but I just hope they don't take that money away from improving support back to pre-india standards.

Also, you can't use Apple's store model as an example for the PC industry, because it is based largely on Apple's image and style, which has been shown not to carry weight in the common PC industry. Apple really built their own model from the ground up in many ways, and it works for them because they are different (but also contributes to their smaller market-share, particularly since they won't cater to businesses - why do I get the feeling Steve Jobs really doesn't want to be that successful, because it would change their image?).

Eh, corporations these days love to try re-orgs for no good reason, either it works or it doesn't

[iJawn108]

Originally Posted by Brandon Sharitt

Number 2 is probably the biggest reason. I know many people who have HPs simply because they can walk into the store an pick on up. Actually Mac minis at best buy even made a few switchers. Never under estimate the power of retail convenience.

it's true, sometimes waiting just doesn't cut it. My local apple reseller has lost about $3,000 from me just cause they can never deliver on time. Weeks go by and they don't have what I wanted in stock so I just go to Toronto(an hour and a bit away) and buy it at the Apple Store.

[scottlinux]

Dells does have the cheapos, but when you configure a computer to have a good size hard drive, ram, video card, and so forth the price quickly goes up to $1000 or more. Then that great deal suddenly is not so great.

And their notebooks still are large, bulky dinosaur-looking devices from the 1980s. It's amazing if you look at apple powerbooks starting in 2002- current macbooks that apple can clearly make a nice thin, silent laptop for a consumer price point. I wonder why dell and others have not been able to do this.

[Rocketman]

They are going to invest considerable sums to expand into a proven failed strategy (Gateway Country, Computer City, etc) with the worst of all worlds product. A commodity product with thin margins, low component reliability, no standardization, no vision, too many choices thus complicating inventory control, etc.

If I were Dell going into retail (heck, I'll consult them if they want), they should do micro square footage with instore configuration (ship to customer same/next day) and in stock stacks of the most popular configurations and a genius for any single feature changes they can do in under a half hour.

Rocketman

[nsbio]

Originally Posted by scottlinux

And their notebooks still are large, bulky dinosaur-looking devices from the 1980s.

How about Dell ultraportables? Now, how about ultraportables? My boss ended up buying Dell, not Apple, notebook precisely because Dell, not Apple, offered a laptop weighing less than 3 lb.

[iMikeT]

I wonder what the scene would be like if Dell set up a retail store across from an retail store.

[localoid]

Originally Posted by iMikeT

I wonder what the scene would be like if Dell set up a retail store across from an retail store.

Silicon Paradise Gone Amok -- Next week on Only Geeks and Hippies Can Save the World, Dell opens up a retail store across from the Apple store. Hilarity ensues.

[APPLENEWBIE]

It just seems to me that Dell's got nothing to sell that can't be bought down the street from some other manufacturer. Apple succeeds in retail stores because it has something DIFFERENT, and hopefully better than the store down the street. I think that's why Gateway failed... All windows boxes are about the same when you get down to it. Cheap ones feel cheap. Expensive ones feel, less cheap. But the user experience is all about the same. It's just a matter if you want to hide from viruses in a cheap windows machine, or a more expensive one...

[SPUY767]

This reminds me of something else. . . let me think. . . Oh yeah, the other commodity Juggernaut's retail store, Gateway, and we all know how well that went.

[dernhelm]

Originally Posted by mkjellman

lol looking at thread 2 there arn is a major trip down memory lane...to imagine how much this site has grown since then!

Weird to see joe_k's last post in there...

[RedTomato]

Originally Posted by devwild

Speaking of which, how does Apple support deaf people... TTY?

Yup. speech to text (and text to speech) relay service via a third party.

Only exists in some countries globally, and usually subsided by national mandates. Takes longer, and can be annoying (bored operators, spelling mistakes, always busy etc) but better than nothing.

Deaf professionals usually hire a PA to do telephoning for them, rather than rely on an erratic relay service, but getting the experience and qualifications to get to that level remains a major hurdle.

A new development is to use videophones/webcams to a remote interpreter to translate sign to speech and back. Works well for people who have better signing skills than typing skills.

I have no idea if in the case of telephone support being charged $50+ per hour, a reduction would be given for calls that take longer cos of being made through relay service. I imagine the individual techs, if they have any leeway (maybe to allocate extra support time to the account), would err on the side of generosity.

[IJ Reilly]

Originally Posted by TheBobcat

However, today's PC is a commodity.

It has been a commodity item, ever since the first clone rolled off the assembly lines at Compaq. As with any commodity item, competitiveness means finding and exploiting the lowest cost of production and sales model, which Dell discovered in direct sales. This was their secret to success for many years. Where do they go next, now that they're in desperate need of reinvention? They always were a one-trick pony. I wouldn't bet a dollar on Dell's ability to recapture their glory days.

[gkarris]

The only other stores around here doing well with direct PC sales is the Sony store. But, they have slightly more upscale PCs like Apple.

Dell had kiosk stands around the malls years back. The employees got ticked off when customers tried to return their computers there who were sick and tired of getting overseas support and got nowhere with it...

Have fun, Mr. Dell...

[oscuh]

Originally Posted by TheBobcat

If Dell follows suit with Gateway and sticks their PCs into big-box retailers like Best Buy, they will further slip into the just-another-PC category and lose any remaining sense of identity that they have.

<p>I thought they were just another PC ...

<p>I mean, what does your standard Windows box offer? A copied, and poorly copied at that GUI, bland styling, mediocre performance, etc etc etc?

<p>Granted, PCs have Apple beat on initial price per unit, but the cost over the long run is no contest. The PC as you know it is dead, people just haven't figured it out yet.

[princealfie]

Originally Posted by nsbio

How about Dell ultraportables? Now, how about ultraportables? My boss ended up buying Dell, not Apple, notebook precisely because Dell, not Apple, offered a laptop weighing less than 3 lb.

Agreed. their ultraportables are nice.

[killr_b]

Originally Posted by iMikeT

I wonder what the scene would be like if Dell set up a retail store across from an retail store.

Hmmm…

[oscuh]

Originally Posted by killr_b

Hmmm…

I think you're giving dell too much credit here.

Think more cinderblock and bland architecture ... kinda like a Circuit City, but not as nice.