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Dell To Sell To Retailers
dmarx writes "The Boston Globe reports that Dell, which has heretofore sold only through its website, direct to consumers, will now sell generic computers to dealers. This marks a shift in Dell's business model."
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They should have taken a lesson from Gateway... this doesn't work! Also, didn't they try and sell a line of computers retail (I forget the name of the system, it was smiilar to IBM's NetVista) and it went down the tubes?
Aw, fuck it. Let's go bowling. - The Big Lebowski
Dell is not selling to Retailers, no, you won't see that brand new shiny Dell in BestBuy or Circuit City. Dell is only selling 'generic computers' to dealers who in turns sell them to small businesses.
I thought true slashdotism (not reading the story) only happens to joe six packs, and no the editor..
geek page at KY speaks
Back in 95 they tried a build to order system with Touch Screen kiosks in some Price Clubs (Soon to be Costco)
I worked on the kiosk system... it was kinda cool...
They didn't sell many systems though...
I've noticed that Dell seems to be shifting away from customizability and towards mass production of more standardized models. Their most "value" -priced desktop model is all but unconfigureable.
Mod me down, and I will become more powerful than you can possibly imagine!
My first PC was a dell dimension 386 SX-25 with 2MB RAM bought back around 1992/1993.. and it was bought at a Price Club.. now known as CostCo. So I'm not sure that statement is entirely accurate..
You crazy man? You piss off supahfly!
This will either propell Dell to undisputed leader or be their downfall as the pressures of regular retail margins make them lose their competitiveness.
Depends. Their budget line does (often via an integrated chipset) but a lot of their higher end machines use AGP cards like Radeons and GeForces. Haven't looked in a while so I can't tell you specifically, but as far as computer companies go, Dell's actually not so bad. If I had to get a prebuilt system, I'd buy a Dell.
As an OEM, it's hard to turn down retailers who are asking to resell your product. Basically what it boils down to is whether or not the retailers are cannibalizing your own direct sales.
Dell has made an enormous investment in proving themselves to be a good online/catalog source for PCs. Direct sales are nice - you get fatter margins (my guess is 20 to 35% for Dell) and all you have to do is stick the labels on the boxes. Compared to the cost of manufacturing a PC, the cost of sticking labels on 100 invidual boxes vs shipping one big box of 100 pcs is negligible. The sales work is completely automated now.
What Dell needs to ensure is that their retailers are reaching *new* markets - people who would not have otherwise bought a Dell. The worst case scenario is that people browse their web site to get the technical specs and pricing, and then head down to their local retailer to actually buy it. Dell still sells the same number of units, but they make $200 apiece instead of $400.
My company makes *half* as much per-unit when we ship in qty to a reseller vs direct to a customer. We want out resellers to be happy so they'll promote the product, but at the same time we miss the margins for direct sales. You can't be greedy though. Sometimes a smaller piece of a bigger pie is better. Good luck Dell!
OK. Gotta sort this out here. If Dell sells to retailers (which will mark up the cost a bit to give them a profit, bumemr), what will Billy Boy and his gang in Redmond do? Will they adapt their license agreement (again) to force Windows onto these machines? Some retailers do sell PCs with vacant HDs, allowing for OS choice. I'm willing to bet MS won't take too kindly to that...
Or could this be a tactic to circumvent MS? If Dell sells directly to retailers, could they install another OS onto the machines (ie Linux, FreeDOS, etc)? Does MS's license cover Direct-To-Consumer PC makers adding in the retail factor? This is going to be an issue to keep an eye on...
Blog Prophyts - Right On, Man
I have a 4-year-old Dell laptop. My mom has a 6-year-old Dell laptop. I have a 3-year-old tower. My brother has a 4-year-old tower. My dad has a 1-year-old tower. My step-mother has a 1-year-old tower. We have several servers at work that are also Dells. I may have left one or two out. Sure, it's a bit of brand loyalism, but it has paid off. Every one of the aformentioned machines is still rock solid to this day. The only maintenance has been upgrades for more RAM/HDD space and the like. Honestly, my friends and I haven't had any such luck with other brands. When the screws fell out of my laptop (I guess cuz of too much abuse on camping trips), a Dell tech was at my house next day with a little bag of screws. You really can't beat that. I've had nothing but good luck out of Dells. Although I run my own custom-built system, I always recommend other not-so-technically-inclined users to Dell just for the stability and support you get out of them. That makes for fewer tech support calls to my cell phone and that makes me a happy person.
I wonder if the generic systems are going to be just as stable. Are they going to have to rebrand all of their parts (since all the stuff in the past 2-3 years has had Dell printed EVERYWHERE!) Maybe a migration towards not-so-proprietary hardware. In that case...d00d! Yer getting a white-box Dell! (Sorry, had to do it...gotta fit in with the rest of the posts).
And a side note about the Dell dude: Apparently he isn't much different in person. Or so I've been told by friends of mine who have met him (the Dell dude and I are from the same home town).
BUT boy does their service SUCK! They'd better improve their service or else this will quickly go down in flames!
I've seen their machines at Staples, though years ago. But the fact of the matter is that their not selling to any dealers. Only dealers "who serve businesses with 100 employees or fewer." So don't count on seeing an unbranded Dell at the local PC shop anytime soon.
My guess is these white box specials will come without Dell technical support and will sell at a lower price, all the while helping Dell get penetration into small to medium sized businesses. The consultants that service these companies often opt for generic machines so they can make a couple bucks. After all, you can't buy a pricey Dell and mark it up. This move from Dell basically allows the consultants to acquire Dell's at dealer pricing, as long as they provide the technical expertise when typical problems arise. It's less problematic than cobbling together poorly tested combinations of generic parts and there is still a profit to be made. A good move on Dell's part if you ask me.
Market tradegies typically indicate that a person must see, hear, think of (or in any type, come across) your comapny name or product 22 times before they will potential switch to you service or product. And the 'Dude' - "Steve" just stuck one more memory in your head.. Dell !
I'm sure that Dell's move to supply a generic model to retailers can and does have a more broad plan of attack then may be seen at first. Even if the end effect is jsut to have you think, hear and come across their name once more. Though by that time you have already purchased something of theirs.
Additionally in the current market, major companies are folding and buckeling under the current market strains. Comapnies need to diversify as much as they can to ensure that they are hear for tomorrow.
I agree with an early post from someone over at slimdevices that the profit margins are cut in half (if not more) but when you have the choice of cutting profits and staying in business or closing your doors.. well.. you decide.
Never try to beat a professional at his own game!
generic repackaged Dell! B..but it's still a Dell!
[insert witty comment here]
If he ever gets fed up with that evil free software, he can install Windows on that machine and not worry about licenses. He already bought one! How convenient huh?
Oh, and writing the name of my company with a dollar sign instead of an 's' is childish. Give it a rest. That's old already.
Sincerely,
William Henry Gates III,
Microsoft Chairman and Chief Software Architect.
Will they still use all their freaky proprietary connectors I've seen in some models? That would raise the cost of any retailer trying to support the machine. It's little things like a drive bay just a little too thin in width or a power/everybutton connection to the mobo. That's what got me out of manufactured PC's years ago.
Also, "Steven" and I were in the same class in high school. He's a nice guy, a bit goofy at times, but all in all ok. It's funny working in a world where people crack on him as an icon. I'm as annoyed by his character as the rest of us, maybe a little more. I hate anyone that acts like an idiot constantly. But way to go... If I could fall ass backwards into an ad campaign like that I'd love it. Go Dude Go!
I remember seeing Dell's at retailers like compusa during the early and even mid 1990's as well. I recall they left because retailers were complaining that they made too many different models and that it was expensive to stock due to shelf space issues. I know bestbuy stoped carying imacs for this reason( too many colors ). Apple changed their new imacs to white to counter this and gateway opened up their own country stores to show off all their models. Gateway too use to sell to retailers but retailers complained about the large selections.
Anyway what dell did was to decide to go into mail order only and keep their different models rather then slim out into 1 or 2 lines only like HP or Compaq. Then the internet came along and they made quite alot of money through internet orders as well and then through television commercials. The investors want Dell to continue growing and non technical people get their machines from a store and prefer to look around and ask a salesmen rather then buy pc's from the internet or through mail order ads from computer magazines. I bet Dell will supply a limited selection of models for the stores and keep their customizable machines online.
It makes perfect sense.
http://saveie6.com/
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http://saveie6.com/
One thing I've learned about "brand-name" PCs (even though I know these are "no-name") is that the components are tried and true in terms of their compatibility. Well, I really haven't noticed this for PCs, because that's not my bag, but rather, in servers. For instance, how many times have we pieced together a motherboard, memory, video card, and hard drive (I mean, how simple can it get?) into a case and NOT have it work because of some incompatibility?
Well, all I know is that I cracked open a couple HP LPR1000r (1U rackmount) servers and those motherboards have the ASUS name on it; however, it seems to have been a custom make for HP. Also, the same ole' sym53c1010 chips are sitting on that SCSI controller. But I believe the big difference is the testing -- the damn stuff just works together.
So, because I haven't got my hands on one of these whitebox Dells, I can't say for sure. But I'm pretty much going to guess that what makes this Dell a better no-name than the mom-and-pop no-name is that the components are tested to be reliable, but even more important, compatible.
Sure, I think that the prospective costs of a "whitebox" computer could definately let someone purchase a Dell computer for a great deal cheaper than they can get directly from the online Dell store. I think a lot of the markup on most major brands (not just PCs, but this applies to everything from clothing to cars and then some) is the brand name. There's always someone out there who has a similar product for less price. Just take a walk through your local grocery store and you'll see all the generic brands available, side-by-side with the name brands, and the costs are a lot less. So now that Dell is selling these systems without their logo, the price will drop off a bit for the end customer. Of course the cost of a service agreement, or tech support may not change. And with Dell pushing to get all their systems manufactured overseas (Mexico & China mainly), the cost of these systems can come down a bit more. Though personally I think the prices won't drop as far as they could, otherwise it would dig into the profit margin too much. And like any other company, Dell is in business to make money. It's just too bad for me that the company I work for is closing this location in November due to Dell pushing for overseas manufacturing of their cases and other components. It's been fun to see the new system designs a year or more ahead of the general public. And what's coming down the pipe for next year looks really cool. Just wish Dell would use these new case designs for their "whitebox" systems, and not go back to the boring beige box look of the past.
It's odd how so often a business that succeeds by breaking the mold will eventually form itself almost perfectly to that same mold.
Dell start by selling cheap, quality, configurable machines direct to customers providing value and quality of service. The big boys were selling through retil channels with all the supply lag, cost increases, etc... that entails.
Now that Dell IS the big boys they start selling this way because there is more money to be made quickly. Its easier to make $100 selling a pallet of non-configurables to wal-mart than selling a pallet of individually specced machines to SMEs.
Take almost any innovative company and this will happen. So... the question is... who are stepping into Dells shoes?
My guess is that they can sell it cheaper as a no name item since they do not have to handle:
1) Tech Support. This includes web/phone/email etc.
2) Advertising [this alone would be around %3-%5 of a machines cost AT LEAST...
3) R&D wrt design and "dell" labeled cds/manuals/etc... [they dont have to reprint the OEM manual with their own logo] and still use essentially the same parts.
4) This could also be a way to get around certain restrictive licensing agreements that Dell has... [ie: if the machine has the name "Dell" on it they may have to pay some company something to license something else.. weather its software/bios/whatever]
All the above could EASILY make a PC %20-%30 cheaper for the end user...
--
Time is on my side
My most recent example...at home, my Dell monitor gave out--flicking and being all blurry on me. I had my wife (who's not really a super-technical person) call up the next day when I was at work...
Basically, they said the monitor line was defective, I was still under warrenty (bought the computer 2 1/2 years ago with a 3 year warrenty), and they would send a new one within 2-3 business days. (This was on a Thursday, by the way.)
Great! I totally didn't expect them to do jack, especially not replace my monitor that quickly.
So...what do they do? Monitor on my doorstep via Airborne Express at 11am THE NEXT MORNING.
Yes, they overnighted me a new monitor when I was in year 2 1/2 of the most basic warrenty--all when they made no promises to me any sooner than 2-3 business days. (Meaning Tuesday or Wednesday the next week. Obvously, I wasn't thrilled about having no monitor for 5 days.)
So, in my experience, Dell's service is outstanding. They get a big thumbs up from me.
-Jayde
What's a sig?
What ever you do don't go through Dell Financial Services. My experience with them was so bad that I will gladly waste karma and time to tell people.
Some things:
1. I received a rude bill for $.05(no kidding)
2. I was called numerous time after I paid off my entire bill saying I better pay or they would report me.
3. One time I received a call asking me if I had the decency to return their calls.(After I already had)
4. If you paid more than the monthly bill it would screw everything up on their end.
5. Can't pay a bill on their web site, and they make it nearly impossible to pay over the phone.
They are so bad I almost think they do it on purpose to squeeze out more money from "customers".
If anyone has any info I would like to hear it.
...seems to me that I always recommend Dell over Gateway to folks (unless they want *me* to build them a custom pc) because even though the boxes are more or less equivalent, and because even though you have to pay shipping on either box, the Dell always comes out a bit cheaper as Dell has no retail stores and hense no sales tax is paid by the purchaser.
Here in Louisiana, the sales tax is almost 10%, which is a pretty hefty chunk of change on a $2000 computer.
I think Dell realizes this, and yet it still wants to be able to go after the same local markets that a Gateway store more or less owns around here. This is a way for them to get at that without taking away the sales tax advantage from their mail order business.
When I worked at my last company, they had all Dell machines. One went out, and it tooks DAYS of sitting on hold for 1-2 hours to get through to someone. This was WITH the paid next-day support.
When it was time to upgrade the machines, we bought all Compaqs. With Compaq, I call, 3 options in the voice mail, and I'm talking to someone within 5 minutes. They overnight all the parts to us, etc.
I've had several bad experiences with Dell, I had nothing but great experiences with Compaq (going back 5 years to a stint at Citrix).
I realize that lots of Slashdotters are really impressed that Dell gave them the overnight treatment for their basic service plans, but that didn't help me. It would somethings take 2-3 days to get someone to the office to fix the problems. We're paying for next day, so that's unacceptable.
Alex
I've got a small, struggling business, and 100% of my customer base is small businesses with less than 20 employees. So I am definitely in the demo that Dell is targeting with this new "white box" initiative.
You know what? It won't help my business at all. Customers who buy white boxes are only looking for one thing: a low price. They don't care about brands. Most don't understand the hardware specifications well enough to discern any differences between a Celeron, PIII, P4 or AMD. As long as it runs Word, Quickbooks and lets them surf the Net, they are more than satisified.
The $499 price is not going to make me nor my customers sit up a take notice because I can still get comparable computers for $100 to $150 less than that. If my customers wanted a Dell, then they'd get one. Brands don't matter to my customers. They are too busy trying to keep the doors open, and a "generic" Dell computer priced at $500 is not what they are looking for.
"The Boston Globe reports that Dell, which has heretofore sold only through its website, direct to consumers"
This is incorrect. Dell did experiment with selling their PCs through retailers. I know, because in around 1991, I bought a Dell 486/50 from CompUSA.
Actually, I didn't know who this guy was that everyone was talking about. I had to figure it out based on everyone else's comments.
Tivo rocks.
It is not just general lack of upgradability.
I would go further and say that they are designed to become obsolete quickly.
I have had several generations of Dell boxes. On my 3rd one right now. (P4-1800, 512Mb) The first time we switched from a Gateway 2000 to a Dell was back when 16 MB was a fair amount. (PII 200) Later as that box was at the slow end of our PC's it got shifted to other duties. It was upgraded to the max. ram that it could take -- 64 MB. This very limit forced this PC to be prematurely obsolete. We had upgraded its drive. It would make a nice little server. (At the time, 1999, it needed to run NT 4 as part of a pilot project we were involved in.) Later in order to do some experimenting with Win2K, this box was unsuitable due to the 64 MB limit.
The story does have a nice ending. In 1999, I was just getting into Linux. Sometime in 2000, my boss let me set up this old obsolete box with Linux. (Used SuSE 6.4) Was a wee bit slow, but worked. Shut down the GUI and it made a great little server. Good enough that my boss decided that we should set up a permanent Linux server. (Now does Apache, NetATalk, Samba, HtDig, PHP, SSH, on SuSE 7.2 -- uptime was 320 days, until we needed to swap scsi cards. Compare to NT 4 which we also run.) So what did he buy to run this nice server on? A Dell. (P3 1GHz, 256MB, summer 2001) The 320 day uptime started on 7/23/2001.
Those who would give up liberty in exchange for security and DRM should switch to Microsoft Palladium!
I remember the first time I saw a Dell computer. Being from Austin, I took a tour of the Dell facilities when I was in high school, and even met Michael Dell. That was in 1990? 1991? But the first one I saw for sale was in a department store in Toulon, France in 1993 or 1994. I probably would not have taken note if I hadn't been on the tour...
main(){char I,l,O[]={'-',1-1,0,(1<<5)-1,0+'-',-10-1,-10,11-0,
...post a picture of it running linux all over the net.
That would so totally make my day.
"First lesson," Jon said. "Stick them with the pointy end."
Oh, and writing the name of my company with a dollar sign instead of an 's' is childish.
Didn't you write a BASIC interpreter for the Altair and the Apple II? If so, isn't this correct BASIC?
In old versions of BASIC (i.e. before QuickBASIC), names of string variables ended in a $ character. M$ is shorter to type than "Microsoft".
Will I retire or break 10K?
Why would a reseller pay $499 for a basic Celeron box with no monitor? They can easily build it with brand-name industry standard components for under half that amount (add $80 or so for XP).
Not to mention Mortal Pongbat, Ares, Maze Wars, Avara,and Pillars of Garendal
T Money
World Domination with a plastic spoon since 1984
Very true, but most generic PC retailers will know enough about the hardware that's on the market now to let a customer know if there's a gross incompatibility. (Oh, no, NO sir, you don't want to use that video card with that motherboard, it won't work)
Not to say that all retailer know what they're doing, but most do, especially the small shops.
This message brought to you by the Council of People Who Are Sick of Seeing More People.
Not to nitpick, but at work we _just_ obsoleted a P133 OptiPlex that had ended up in a server role.
Dimensions are sometimes a little... under... engineered, and I usually argue that's because Intel designs the lion share of those systems, and they have an obvious interest in getting people to buy new systems sooner.
OptiPlexes have typically been overengineered. For instance, this particular P133 had a spot for a 2nd CPU (which we populated later on) and SCSI on the motherboard. This wasn't a special order, it was simply what Dell shipped at the time for P133 OptiPlex desktops.
I have no idea if Dell still operates in this fashion, I wouldn't be surprised if they've started underengineering the OptiPlex line as well (given the penny-wise dollar-stupid corporate behavior the past few years).
Moof!
Doh!
I meant to mention it supported - at least - 128MB. If I remember correctly the max was 256MB.
(sigh)
It was impressive given the age of the box.
Moof!
also, some of the dell desktops (i think its the optiplexes) have the hardware standardized for 3 years. Meaning you can stick with the extact same hardware configuration for three years. Great if you are a company trying to standardize your desktops.
*Not a Sermon, Just a Thought
*/
Now I can have the radioshack pimply teenagre nervously listen to my orders of Anza Nodes and Niad Brasuhes not knowing if I'm for real or not.
It's a NIAD pulse converter and an ANZA brush. Jeez, you kids today.
-- Old Man Kensey
So you are from Chattanooga, TN?
"Da ist ein Technölüst in mein Unterpanten!"