Slashdot Mirror
Dell To Sell Its Computer Factories
Anti-Globalism sends us to a Wall Street Journal for a report that Dell plans to sell its factories in an effort to revamp its production model. Quoting:
"Dell's plants are still regarded as efficient at churning out desktop PCs. But within the industry, company-owned factories aren't considered the least expensive way to produce laptops, which have been the main driver of growth lately and are complex and labor-intensive to assemble. Rivals such as Hewlett-Packard Co. years ago shifted to contract manufacturers -- companies that provide production services to others -- to build their portable computers. H-P builds "less than half" of its PCs in facilities it owns, wrote Tony Prophet, H-P's senior vice president for PC supply chain, in an e-mail. Contract manufacturers can generally produce computers more cheaply because their entire operations are narrowly focused on finding efficiencies in manufacturing, as opposed to large firms like Dell, which must also balance marketing and other considerations."
CEO Michael Dell, October 2007, on being asked what he'd do if he were CEO of Apple:
Since then DELL stock has gone up by 72%... while AAPL has gone up 3080%.
Dell's basic problem has been known for a while. They don't do anything unique. They were one of the first to "get" just-in-time custom manufacturing and they rode that horse for a long time, but everything they do, others can do better -- and apparently do.
Innovation, if it can be sustained, always wins over efficiency, because innovative hardware and software design can empower users by orders of magnitude, while efficiency gains approach an ideal asymptotically.
All of Apple's parts are Foxconn, except the intel processors, and $somebody's hard drives.
Congratulations, you have parts made from the bottom-of-the-barrel of the shittiest components maker, Foxconn. Nobody would touch that with a 10-foot poll when they have Gigabyte.
Apple cuts its costs to make a profit, too. Or you thought an iMac really costs 1000$ to make?
It takes more fuel to truck something from LA to Chicago than it does to ship it from China to LA. No doubt trains improve on trucks quite a bit, but fuel costs aren't particularly onerous for objects that regularly retail for $100/pound (maybe worry about it when you see bananas go for $5 a pound instead of $0.70).
Nerd rage is the funniest rage.
container ships run on "bunker" fuel which is basically the nastiest cheapest stuff that will burn. They're dirty cheap to operate and they're typically subsidized by host country to boot. So the Chinese government, Korean government, etc make it cheaper in the interest of trade.
Frankly, I'm surprised Dell has been assembling computers in the US for this long. Don't tell me they "build" them here that's a load of nonsense. The parts have been made in China and Taiwan for ages it's just the final assembly that was happening in the US. In fact, the shipping cost difference is likely ZERO because all the parts were coming from Asia anyway.
Anyway, Dell has been doing a lot of cost cutting recently. They've outsourced their IT to India and now they're moving all of their assembly to China.
The worst part is that Dell doesn't even offer good prices anymore. I'm seeing better prices from small US companies with more flexibility then anything out of dell.
So to hell with them. They'll ride on their names for a few years and then they'll be another dried out company like the rest of them.
The only thing the foreign debt holders can do is stop buying new debt. That would force the rates on treasury securities to go up, until the point those securities became attractive to buyers again.
Once a few big countries decide they don't want to continue propping up the dollar, high rates won't do anything but highlight what a house of cards American wealth really is. High rates are meaningless if you can't get a return on your money invested. It's like the value of a Picasso paining that is proven to be a fake, when everyone thought it was legit it was worth millions, and as soon as they lose that faith it is worth a few hundred at best. The only thing that has changed is peoples perception. The move of the world to the Euro is an international vote of "no confidence" in the USA; perceptions are changing. When US debt become worthless paper backed by nothing, the purchasing power of the dollar (also backed by nothing) will follow. Most of our wealth is based on the global perception of value in America, the last several years have destroyed our image of strength, our image of morality, and our image of educated competence. Without that high value on the American brand, we are rapidly becoming a middle of the pack industrialized nation, and the size of our expenditures will soon have to reflect that.
We are all just people.