Dell CEO Tells All

zapatero writes "The San Francisco Chronicle has an enjoyable read with new Dell CEO Kevin Rollins. He has quite a critique of the HP acquisition of Compaq: 'They had a great, profitable printer business before. They still have a great, profitable printer business. ... Their profits are 70 to 80 percent from the printer business. So that's the area where the profit pool still lives. It's where it lived before. It's where it still is now. So I just ask, what's changed?'"

Comments

What's changed

[afidel]

Is that HP now has a MUCH larger enterprise offering, a larger services staff, and a line of decent x86 servers. This means that they can get into a lot more large enterprise support contracts where only IBM really played before. Dell is great at slinging boxes for a cheap price but they can't compete where the real money is, services. I don't know how much it's showing on HP's balance sheet yet but I can guarentee you that the only way HP was going to survive was to transform itself the same way IBM did in the 90's, thanks to Dell and all the Dell wanna-be's there's zero cash to be had in building boxes, so you either have to beat Dell at their own game or find another area where there's money to be made, and services are about the only area I see.

Re:Do let's be consistent, shall we?

[taj]

http://www.offshoreexecutive.com/

Dell = old HP?

[darnok]

As an ex-HP person who left on happy terms several years ago, I'm continually impressed by what I read from and about Dell's execs. They seem to be doing a lot of the things that HP seems/seemed incapable of doing; establishing new markets (as distinct from new products), managing people upwards as well as downwards, keeping focus on their core products, managing change, excellent marketing, etc.

A lot of that existed in the "old HP" (except the excellent marketing!), and seems to have gone from HP over the past several years. It's remarkable how short a time it took for HP to transition into the company it is today. HP's status as a leading engineering company seems to have all but disappeared now.

Many years ago, I went to HP as I thought it was the best training ground on offer; these days, I'd probably go to Dell for the same thing.

HP and Compaq - my take

[Ubergrendle]

HP benefits more from the merger than Compaq, for the following reasons:
1. One less commodity x86 company to deal with on the Wintel side.
2. Acquisition of DEC, aka Compaq Alpha, and Tandem, aka NonStop. Instant credibility and long term customer base in the high-end transactional space. For non-enterprise Slashdotters, Tandems are almost as prevalent as MVS (mainframes) in the financial services sector.
3. iPaq and hand held technologies. HP's offerings weren't so hot until they got Compaq's mindshare.

Ironically, HP is massacring it own customer base in the HP-UX space. The Itanium relationship has been a disaster. "Hey, port to Itanium as its our long term unix strategy. Well, yes the processors underperform...and yes, no ISVs have ported over. And, well, no, we'll keep supporting HP-UX as long as its possible.." Of course, HP-UX customers are questioning the future of PA-RISC now in light of Itanium. So basically what's happened is no one is picking up Itanium nor PA-RISC at this point, and the PA-RISC space is slowly declining as people move to the P-Series (IBM) or Sun or linux clusters. Look at the latest sales and install base charts. I figure PA-RISC jumped the shark about 3-4 quarters ago, and its descent is accelerating month-by-month. (Mostly at the expense of IBM P-Series it seems)

I find it amazing that HP can make money some days...

Re:What's changed....

[telemonster]

As far as the laserjet office printers, I believe they are still fairly strong. Granted the physical unit might not be quite as heavy as a 4SI was, they still live up to the HP duty cycle.

As far as home printers and inkjets, yea you gotta sell shit to compete in that market because all your competitors are doing it. Ink jet printers are a rip off. Simple solution is to avoid them.

Just bring home a 600dpi or 1200dpi (RET) HP from eBay or the local thrift store, it will last another 30 years or so. If the fuser blows up, they are like $20 for a replacement. Same with the pick up rollers.

You can get a good deal, with one of the huge mailbox sorters. Every member of the family gets their own output tray!

Hear hear

[SuperBanana]

Did you know that corporations pay less than 5% of tax revenue?

Used to be about 50%. In the last half-decade, it's shifted almost entirely onto the shoulders of the individual, because corporations have become experts at paying the least amount of taxes possible. Yay corporations!

Re:Hear hear

[Bold Marauder]

Ok, let's take your argument at face value, then. If we are to say that a corporation should not pay taxes by virtue of being a "pass-thru" entity, then they should not --for that exact reason-- benefit from grants or cash benefits.

As I said previously; you cannot have it both ways.

Re:Hear hear

[fname]

What do you mean-- the percent of all taxes paid, or the tax rate paid by corporations; right now, your post is rather ambiguous. That lead to start typing the text below.

No, I didn't know that, and it's certainly completely untrue. If corporations paid 5% of their revenue in taxes, that would be a very high number since net margins are typically 10%; you non-Math majors, that means the income tax rate would be 5%/10%=50%, a very high number.

Regardless, even if corporations went from paying 50% of all taxes to 5%, I don't think it happened over a period of 5 years! There may be some basis to your numbers, but I'm skeptical either way, and other readers should be equally wary. Just because you read something doesn't make it true, and try to have a first-source reference when citing "facts."

Re:Hear hear

[IgnoramusMaximus]

Any why should a corporation pay any taxes.A corporation is a fictitious entity...

If that was indeed a case, you would be right. However in order to exempt themselves from all responsibility for their actions, people who hide behind this ficticious entity insisted that laws be drawn to make corporation a "person" in all respects of the law. That way that ficticious person is responsible for any damages caused by its actions and not those who actually make the decisions that lead to those actions. You cannot have it both ways. What you described is called in legal terms a "partnership" and is wholly distinct from a concept of a corporation which is in most respects a living person. (yes its stupid but thats how billionaires like to make sure that some grandma whose toaster exploded killing her grandchildren wont get hold of the CEO's yacht).

So in a partnership, each individual is responsible for paying their share of taxes based on their slice of the revenue. In a corporation, the corporation itself is responsible for its own taxes and the CEO only pays tax on his "salary" which usually is $1 and he collects "dividends" and what not in convoluted transactions that result in his tax burden being nil.

Re:Hear hear

[xsbellx]

If corporations paid 5% of their revenue in taxes, that would be a very high number since net margins are typically 10%; you non-Math majors, that means the income tax rate would be 5%/10%=50%, a very high number.

Speaking from first hand knowledge, 50% is not out of line when compared to individuals. Let's take a look at some REAL numbers (Canadian dollars and tax rates but concept should translate).

I pay $1400 per month for rent. I buy groceries, $400 per month. I pay electric, water, cable, telephone, internet access, $350 per month. I have a car, lease payments $450 per month,maintence and gas add another $250. Household, car and life insurance adds another $250 and clothing, another $150. Let's add another $150 per month for entertainment. So basic expenses total are approximately $3400 per month or $40800 per year.

I earn approximately $92,000, taxed at a rate 48% or $44160. Using your formula for corporations, I am really paying 86.25% in taxes (taxes paid / gross income - expenses or 44160 / 92000 - 408000).

So now the question is, who should change the way taxes are calculated?

Re:Hear hear

[IgnoramusMaximus]

If the United States abolished corporate income tax

So let me get this straight.. you propose that abusive ficticious legal entities which in order to protect the business elites are considered "persons" and thus are "responsible" for damages they cause instead of their owners, be exempt from any taxes on top of that? So those who benefit the least from the way our crazed version of capitalist society operates are to pay the most in order for these corporations to quarduple their income? And than to force this system upon the rest of the world in a classic "race to the bottom" fashion? All in name of "efficiency"? I mean "efficiency" and not the conditions of living of citizens are the goal of this entire excercise called "society", no? Am I reading this right? So lets see, real citizens create conditions for the ficticious citizens to prosper, pay for the infrastructure of the society, education, medical care, roads and security and then the ficticious citizens are to make vast profits free of taxes and invest them in foreign locations and/or dispesne them in tax free ways to those strange beings known as CEOs or Directors. Right? Thats the plan?

Get a grip man. Corporations are your enemy. Small "inefficient" businesses employ vast majority of workers worldwide and their output constitutes vast majority of world's products. Great majority of those businesses operate within a single country. Most have deep roots in their communities and are active in them. And they very rarely move. Large corporations are the leeches that suck the planet dry and play goverments across the globe against each other, states in those countries against each other, cities against each other and individual workers against each other to achieve their only goal: to enrich the CEO and in some rare instances their large institutional investors. Boosting the said CEO's ego by acquiring rival corporations also plays a large part. They are an abberration of captialism that is probably making Adam Smith spin in his grave.

Remember this: the most "efficient" corporation is one that collects revenue for nothing, employs noone and all of its other expenses are picked up by individual taxpayers while the corporation itself pays no taxes. I dont want to live in a world where your "efficient" corporations rule.

Memo to Dell CEOs: Mind YOUR business!

[Anonymous Coward]

Michael Dell was always taking shots at Apple, now this new guy is ripping HP? It's like some kind of inferiority complex with these guys, I swear.

I guess they just feel a little short in the pants because all Dell does is repackage other people's technology and slap a logo and a low price sticker on it. When everyone else is doing the innovating for you and all you do is shave your prices to run your competitors out of business, the business pretty much runs itself. That must leave a lot of free time to criticize other companies.

The question I'd like to see these fucks answer in an interview is, "Using only your fingers, can you tell us how many people have traded in an iPod for one of your shitty Digital Jukeboxes?"

Tell Dell seems interesting

[aardwolf204]

This interview was especially interesting, and I'm usually one to read a hardware review over a CEO interview any day. Its amazing to see how dells business has grown and spread out over the last few years. I think they're corporate image and branding have had a lot to do with it.

When I think "HP" the first thing that comes to mind is "Printers". When I think "HP PCs" the first thing that comes to mind is "junk". Now when I think of dell I think of a reputable company, I think of laptops, desktops, servers, handhelds, printers. I think of solid machines that work very well, last a long time, and are a plesure to work ok (I love the screwless entry and layout of the Deminsion Desktops). My great experience with dell desktops and servers makes dell a good choice for a pocket pc or printer in my view.

My company primaraly buys dell. We have a Dell NT4 server thats been in the company for 7 years now and its still ticking. Its not as easy to get inside of as the desktop workstations but I've actually never had to open it up to replace anything. We had a different CEO a few years ago that was a Gateway fanboy. A couple of gateway laptops were ordered but have since broken down. The feeling around the office when it comes to hardware is, "just go to dell". I know it seems like the "nobody ever got fired for buying microsoft" thing but the bad experiences with gateway and the solid ones with dell have really impacted our thinking when it comes to hardware

I thought the "Tell Dell" part of the interview was especially interesting. Twice a year dell gives the employees a way to speak their mind about their boss and it directly effects their bonus, and this goes all the way to the top. I think that is a wonderful way to give employees a sense of belonging. It gives lets them know that they have a say in the way the company operates. The company I work for does employee performance reviews twice a year. Its like the same thing dell does but the other way around. Now considering the fact that my company is small in comparison (100-150 employees) I'm not sure something like "tell dell" would work in my company. There are tons of things I could say about how my CIO "doesnt get it" (but then again I'm thinking like an engineer not a manager), but saying them on paper and turning that in to my boss is a completely different story.

Does anyone else hear work for a company that does performance reviews, or boss reviews? I'd like to hear some testimony, and this has really intreged me so I'm wondering if something like this would work in a small company like the one I work for.

Slashdot needs spellcheck. Maybe I should get that firebird spellcheck extension

Re:Tell Dell seems interesting

[Anonymous Coward]

HP does yearly "management evaluations". They call them the "voice of the workforce", or "the VOW", and they send out cheesy e-mails that say "Take the VOW!". A month or two after the surveys the anonymous results are handed out and the managers go over them. At a certain level of management there has to be a set number of responses before they can get the report -- so if you're a manager with one or two people reporting to you, you won't be getting any results -- they'll be handed to YOUR manager. They may or may not be tied to pay at the management level; I'm not in management so I'm not sure. But I think they at least take a good stab at using them to make positive changes in the workplace.

Re:HP's benefit ...

[afidel]

That's very cool. I know as an IBM field tech I used to get parts via Sonic Care all the time. If they didn't have the part at the local depot they would buy it a ticket on the next direct flight from whichever city they did have one in to where I was, then it would be driven by courier directly to me.

Re:HP's benefit ...

[nbvb]

Yep, gotta love that DEC support. It's amazing to me how many DECies are still around, now working for HP. In fact, we had a Superdome install about a month ago, and our onsite Alpha support guy ran into someone during the install that he hasn't seen in 10 years -- it was like a reunion!

I'm a UNIX admin, and right now, I'm playing Sun and HP-UX. We've got the Alpha/VMS "Platinum" support model right now on HP-UX, and I have to tell you, it couldn't be better. That "NOTHING is too much trouble" thing is still true. You have to be a Big Fish, and you have to pay for it, but I'm still getting that "Whatever we can do to help means literally WHATEVER" support.

Fantastic stuff; I'm happy to see that HP's willing to adopt that support model (at least for us, anyway) on the Superdome/HPUX side. I'm sure it's causing some infighting between ingrained HPers and DECies, but as the customer, that's not my concern. :-)

Another Skull & Bones Society?

[Bill_Royle]

Darl McBride, SCO - from Brigham Young University.

Kevin Rollins, Dell - from Brigham Young University.

Coincidence? I think not!

Now - where did I put that tinfoil hat?

The Compaq merge had nothing to do with technology

[Ralph Spoilsport]

It had to do with 2 things (a Close Friend works at HP, so I get to hear things...)

1. Carly Got Paid. She wanted to make a few million and shore up her shaky position with the board. She got both wishes.

2. COMPAQ PAY CURVES

Compaq paid their people less, gave them fewer benefits, and shorter vacation. By applying Compaq Pay Curves, most of the people at HP suddenly found themselves at the top of their pay curve. They won't get a raise for decades. On top of that, if you were getting 5 weeks vacation because you had slaved for HP for 15 years, you now only get 4, thanks to the adoption ofthe Compaq HR regs. There was a whole raft of HR changes in HP that saved the company hundreds of millions of dollars on an ongoing basis. So not only did it chop X jillion bucks off their expenses this year, they wouldn't see it coming back the next.

Those left stateside who are not in management and not outsourced, are doing the work of three or four people.

This is NOT a sustainable situation and it is going to come crashing down in fairly short order.

Carly's HP is a disaster. She led Lucent gliding into a death spiral, and she's going to sink HP. And weep all the way to the bank. Plutocratic leeches like her must be stopped.

RS

He appears to be lying.

[DAldredge]

He said "The bulk of our employees are still in the U.S. "

That is a LIE.

ROUND ROCK, Texas (AP) - Computer maker Dell Inc. has more workers overseas than it does in the United States, reversing the makeup of its work force of just a year ago. Round Rock-based Dell said it was allocating resources where growth has been fastest, including China and Japan.

"We have great opportunities outside the U.S., and as such we have built our employee base in areas that best reflect our strong growth areas," Dell spokesman Bob Kaufman said Tuesday. "Our jobs have grown all over the world, including here in the U.S."

Dell had 46,000 employees as of Jan. 30. About 22,200 of those, or 48.3 percent, were in the United States, while 23,800 people, or 51.7 percent, worked in other countries, according to a filing with the Securities and Exchange Commission on Monday.

A year ago, 54.2 percent of Dell's workers were in the United States, according to company filings. Dell's work force grew 17.6 percent during 2003.

Dell said overseas job growth in the past year ran the gamut, from sales and manufacturing to call center support.

Last year, Dell stopped routing corporate customers to a technical support call center in Bangalore, India after a flood of complaints. Tech support for Optiplex desktop and Latitude notebook computers are being handled from call centers in Texas, Idaho and Tennessee instead.

Shares of Dell were down 23 cents to $35.56 in afternoon trading on the Nasdaq Stock Market.

FROM: Associated Press ^ | Apr 13, 2004

Re:SOMEbody's bitter!

[Technician]

Executranslator output:

We don't want to comptete. We want to take the market and the profit margins.

Enter the ship a printer with a PC program. We also include a ship us your old printer free box and pre paid UPS.

The idea is to get you to send them your old printer before you find out the new printer has postage stamp size cartridges for the same price + S&H as the old printer. Visit their website. THERE IS NO DATA ON CARTRIDGE VOLUME OR PAGE YEILD. They provide no way to figure cost of operation. They don't want you to know.

My wife bought a new DEL PC and got the companion all in one printer. I was skeptical with the recycle your old printer program. I checked into the prices and sources of ink for the new printer. The lack of information was apalling. When installing the cartridges, I was astounded the big all in one printer/fax/copier used such tiny cartridges. I was even more upset by the price for replacements.

My other printers are networked and work with my other PC's. The Dell printer has drivers for Win 2K and Win XP only. As such, none of my other PC's can use it, even if it were networked. Needless to say, we'll probably "recycle" the new printer when it runs out of ink instead of sending a good printer.

The printers on my LAN are a HP Laserjet III (cheap operation) HP 720c (cheap web page color printing) and a HP 950 (nice photo prints, but expensive color cartridges) The black cartridges are easly refillable as well as the Laser. The Dell will be replaced with a flatbed scanner when it runs out of ink. There is no info on refilling it. The ink is from Dell only with shipping and handeling costs. Yuck.

I love the Hawking print servers. They support both Windows and Linux.

Re:Company's brand way too strong

[lewp]

Dell laptops by and large are shit, but compared to a machine you found on Pricewatch it's likely built like a tank.

PC components are generally cheap enough that you can get away, to a certain degree, with buying crap. Laptops, due to their integrated nature, the extra abuse they take, and the difficulty of obtaining and installing replacement parts are not so forgiving.

You should be spending well over a grand for any sort of decent machine that's new. You probably shouldn't be buying a Dell (of course I know people who swear by them), but don't buy some generic piece of crap either.

The way to solve the cartridge problem.

[Anonymous Coward]

I'm really surprised that Dell (or anyone else) hasn't come up with the best way to knock out HP's main profit center - the printing business.

All the non-HP companies have to do is to actually create a standard for the printing cartridges. A standard which allows backward compatibility. One which gets used by everyone (though HP will no doubt balk at first).

All of a sudden, the cost on cartridges drops significantly. And people will be more inclined to buy printers which adhere to the standard.

I can think of no better way to hit HP at its weakest spot; and provide a lot of value to customers too. HP had better hope that its competitors don't try to pull this off. But being at the mercy of your competition is usually not spmething which is desireable.

Re:Company's brand way too strong

[Ibanez]

You're right, you should choose your battles carefully!

There's a bit of a difference between 1.8 Ghz Celeron notebooks and 1.8 Ghz Pentium M processors.

Dell doesn't offer a 1.8 Ghz laptop with a Celeron processor. What you were looking at is this:

Dell

Go look on Pricewatch:

1.8 Ghz Celeron Notebooks starting at $800.
1.8 Ghz Pentium M Notebooks starting at $1700.

Where are my mod points when I'm forced to defend a company I don't particularly care for against trolls...?

Ibanez

Re:Company's brand way too strong

[Anonymous Coward]

Your prices are a bit off but the point is valid.

If anything buy from IBM. Their thinkpads are rock solid and will at minimum save you $300 per laptop if you're smart enough to *not* buy IBM direct.

We dropped Dell laptops after one sales cycle. Servers are gone as well. We started going with HP and are very satisfied with the quality of parts and service response time on major issues. Dell is dropping the ball and this article just goes to show they are worried about HP now. Why would they start flinging FUD at them if HP didn't matter?

Re:Company's brand way too strong

[gtada]

$550 versus $1400 for a 1.8 GHz, 14" LCD, 512 MB RAM laptop? The difference in price looks a little hard to believe. Did you check to see if that's a barebones system on Pricewatch? I clicked on quite a few of the links that were listed under "Windows Installed", and most of them were configurator pages (where you still had to pay extra for Windows). $550 was the base price, and it was *possible* to configure the machine as you listed, but they were not selling the configuration you stated for that price.

Don't get me wrong... I've seen plenty of crapola Dell laptops, but I think you didn't check out the actual deals thoroughly enough. I will say that the ads were definitely misleading. It's okay, you're still an intern. ;)

It depends what you mean by "bulk".

[ajdecon]

When he said "The bulk of our employees are still in the U.S.", what he may have been trying to say is "We still employ more people in the U.S. than any other single country." A plurality, not a majority.

Quite shaky ground, I know. But it means he may not have been flat out, intentionally lying... just being very sneaky and misleading.

Re:Do let's be consistent, shall we?

[Anonymous Coward]

What? Do you think that somone just gets to be CEO beacause they luck out right out of high school or something?

YOU are the one who has no idea what the world is really like. Someone gets to be CEO because they have a life of experience that shows that they can be trusted with everyone in the company's future. It's not a lightly given job, and its not given to "total morons".

And if you think corruption is bad in the west... you have no clue at all about the world.

Try going to China, THEN talk about corruption.

Re:Do let's be consistent, shall we?

[EnderWiggnz]

actually, both of these cases happen...

some CEO's busted their ass on the line, and worked their way up. these are usually the better ones...

others, have acquired their positions solely due to who their parents were, and their birth SOCIAL STANDING.