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Dell Reconsidering Direct Model. Dell Retail?

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 companys 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.

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63 months ago
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
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63 months ago
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.
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63 months ago
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.
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63 months ago
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.
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63 months ago

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.
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63 months ago
lol looking at thread 2 there arn is a major trip down memory lane...to imagine how much this site has grown since then!
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63 months ago
Didnt Dell try this a few years ago and ended up reverting back to their original model?
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63 months ago
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 (:eek:) 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 :rolleyes:
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63 months ago

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.
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63 months ago
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.
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