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Where Does Dell Go After Losing 3Par?
crimeandpunishment writes "It was the big deal Dell wanted in a big way. But now that it has lost out to Hewlett-Packard in the bidding war it started for 3Par, where does Dell go in its effort to diversify its business and move into the higher-profit area of selling technology to other companies? The company faces significant challenges, largely due to its lower-end focus, and because many of its competitors beat Dell into branching out. One analyst says, 'People see [Dell] as box-pushers'."
Dell already has somewhat of an alliance with EMC. I'm not sure who would be getting the better deal out of a deeper alliance or even a merger, but the possibility exists.
If libertarians are so opposed to effective government, why don't they all move to Somalia?
you're not getting a 3par
Dear Dell shitbags: Optiplex GX270 fiasco you went to great lengths to hide which you're finally getting sued for. Enough Said.
"To err is human, to mod Funny divine."
and say unreservedly that Dell can go to hell.
and going back to their successful business model would be a good first step.
They're looking so 1990s, and a 20-year old image is never good in the computer business.
Hmm, where have I heard that one before?
Maybe they'll get lucky and invent the next great... um... portable music player? No, that didn't work... PDA? No, that worked, but the market disappeared into smartphones... Smartphone? No, beat to the punch 4 or 5 times over... Printers? Tablets? TVs? No, no, and no.
Dell's problem isn't that competitors beat it into branching out. Dell's tried branching out tons of times. Dell's problem is its founding business model - mass-assemble PCs using standardization and volume to bring costs down - doesn't work on any of the new electronics markets. And even the things that went well were crippled by bad design, bad materials, or just blame bad timing. (For instance, their multi-function displays are nice... but who wants to carry around a multi-function display with their laptop?)
There, fixed that for you. There's a few "caps" I'd like to put in Dell's ass, and they know the ones I mean because they have Dell's name on them already.
Dell can go to hell for all I care
-- Let us endeavor so to live that when we pass even the undertaker shall be sorry. -- M. Twain
Let's put it this way:
Apple charges a lot more money for its products and they still sell a lot of them. It's not the price that makes Apple successful.
Dell built its business on customer support and service. While it's quality has more often been pretty good, it has remained more or less on par with its competitors. What makes them better is their support and service accessibility.
Sad thing is they started sending all their call centers out of the U.S. and they wonder why they started losing business? "Everyone else is doing it" was the wrong answer in the case of Dell. I remember when the change was announced. Many business customers started leaving Dell immediately before Dell did an about face on it. Still... they did it anyway... just slowly and quietly.
So, "so-so" to good quality, and a pretty decent online database for machines and a not-difficult means of getting device drivers and such.
If Dell wants to rally, they need to bring their support BACK to the U.S. That will be the only way they will be able to differentiate themselves. And if they cost a bit more, I don't think people will mind so much.
After losing 3com and 3par to HP, they always can try with 3M.
3Par is not worth it, HP is just being bully and want to get rid of the HD partnership so they can push their own storage.
For Dell and their customers this is a relief as they would have burned a lot of their cash reserves, now HP have. 3Par was impressive yesterday tomorrow somebody else will show how storage should be done.
They're making billions as box pushers, isn't that good enough?
Dell's problem is its founding business model - mass-assemble PCs using standardization and volume to bring costs down - doesn't work on any of the new electronics markets.
As I see it, they either need to embrace their role as a builder of boxes and switch to a dividend rather than growth company - or they need to stop selling low-margin shit. How much do they make on a $400 laptop? Why do that to themselves? If they are afraid that their store will not be a "one stop shop", then make the store a separate corporation and sell cheap shit from other companies - only put the "Dell" badge on high-margin - and preferably high-quality - merchandise.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Sorry SuperMicro, but you could use a bigger umbrella.
So, Dell: Buy SuperMicro
Also, Dell, you need to make some serious inroads in the backend service arena. There are several dozen cloud service and storage business starting up every week. Buy two or three of each. Three billion Dollars should go pretty far in this arena.
Split the software and services from the hardware. While you're at it, buy or invest heavily in implementation and sales engineer forces.
Once all the divisions are established, take some of the leftover funds and run a few Super Bowl ads around Dell Ver. 2.0, where directly offered services come with the requisite backing (whether cloud or otherwise)
Does "faces significant challenges" mean "Is no longer capable of satisfying the bloated expectations of parasitic wall-streeters because it basically just produces an unsexy commodity in quantity, like steel or potatoes" or does it mean "is seriously fucked because corporations will only buy if they can get a "total enterprise solution" from one company, by cutting a single PO?
The former seems like a largely perceptual problem. Earth to investors, not every industry segment can double its profit every quarter forever, and if it can, it is probably a scam. Civilizations are built on largely low-margin commodities. Cement, steel, sulfuric acid, corn, potatoes, x86s. Go find a Ponzi scheme if you can't deal with that.
The latter, though, seems like a real issue for Dell, one that could seriously impact their mid to long-term viability.
No. Their shareholders demand that Dell produce an ever increasing value to the company - forever and ever. They have to get bigger or the stock value will decline and the CEO's options will not be worth enough.
Alex, I'll take keybindings not used by Emacs for $400....
We are going 5PAR.
Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
The problem with Dell is, that they were never big into R&D. Dells business consisted always of providing quality PCs with reasonable prices through direct (online) distribution. Not much invention here. It doesn't surprise me, that they lack the vision to invent something (r)evolutionary to differentiate them from competitors. IBM (Lenovo), HP, Apple, Asus, they all tried to diversify lately.
Probably when Michael Dell said it about Apple.
Isn't it funny when people start suggesting that you take your own advice?
Check out my sci-fi/humor trilogy at PatriotsBooks.
It's never been in anything before, why break a perfect record now?
Blank until
instead, you'll strugle with HP's crap. those are getting as bad as everybody else's.
IBM won't buy them. IBM wants nothing to do with the same PCs they invented nearly 30 years ago, that's why they sold the PC business to lenovo. found out that their market is with corporations, not consumers. when the largest buyers of printers, PCs and notebooks became end-users (instead of their bosses), they jumped ship. and i don't blame them.
i just got out of linuxcon brasil, and i saw an idea there that could save dell if they pull it right. it came from john maddog hall (funny guy, BTW. loved his talk).
it's one of the ideas he's pushing as part of project cauã. really small, ultra low power computers that can remainin an always on state running linux (of course) attached to the back of TVs or small monitors, with really nice broadband, so you can watch videos, listen to music, play games on the TV, control home automation, VoIP, cell phones (with a buil-in femtocell), and other stuff. also make a tablet that can sync sith the little thing behind the TV, and who knows ?
of course, they'd be competing with apple on that, but if they play it right, make the vertical integration work as well as apples and leverage the low cost of opensource, it might just work.
What ? Me, worry ?
I buy Dell computers from the refurb market. They are cheap and plentiful. I love 'em! I have nearly 150 small form-factor systems and laptops. Because of the indecently low cost I get them, I keep spares on the shelf. I don't fix them, I just swap the HD to another box. The parts are easy to swap in and out and I have experienced a high level of up-time with all of my systems. GX150 were the first systems, then up to GX260/270/280. Now that those systems are leaving the refurb market, moving up to the GX520/620. There is nothing wrong with being a box-pusher. Someone has to make the boxes and that I will eventually buy off refurb.
Bearded Dragon
mass-assemble PCs using standardization and volume to bring costs down
Dell's bread and butter was that each computer was special built per customer specifications. That got dropped a little after Micheal retired and that is when the company started going down. They started to copy Compaq, which was the worst thing they could do.
When I worked at Dell in shipping the head of logistics forwarded on the following editorial.
http://www.forbes.com/1999/04/21/feat2.html
Don't know something? Look it up. Still don't know? Then ask.
only put the "Dell" badge on high-margin - and preferably high-quality - merchandise.
The problem is that Dell already has a pretty solid reputation... for building marginal quality merchandise in the corporate workstation side at the cheapest price, and absolute shit-scraped-off-my-shoe merchandise in the consumer side at even cheaper prices. Price is generally the first, last, and only reason to go Dell in the consumer marketspace. Corporate machines aren't quite as bad, but they are a tad less competitive in that space.
There's a reason their nickname at corporate purchasing a couple of jobs ago was "Packard Dell", and it was not a compliment.
If they seriously want to go quality, they really need a new brand name for that. Plus, they'd lose the last memories of pot-smoking Dell Dude.
"This post contains words, known to the State of California to cause thought. Wash brain thoroughly after reading."
But for buying Dell? You'd might as well start cleaning out your desk before you hit the order button.
There's no -1 for "I don't get it."
There is nothing Dell can do, that another company cannot do better, whether it's top end cloud infrastructure, sophisticated software and servcies, top end personal hardware, or low end hardware. Dell no longer has a selling point, and it'll keep going downhell until it finds one.
They're making billions as box pushers, isn't that good enough?
If they paid dividends, maybe.
Since they don't, they are expected to grow. And grow they have not.
Technically, they've roughly doubled their revenue in the last 10 years, but their net income has been flat or declining.
If you are an investor, you have other choices in the growth game - like competitor Apple with their 10x revenue growth and corresponding net income growth. Or HP with their 3x revenue growth and significant net income growth.
They are being out-grown by their competitors. If they aren't in that game anymore, then they need to issue a dividend and compete for retiree money.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
1.They have little long term vision, but are instead obsessed with making the goals for the next reporting period.
2. The "executives" are a series of "wonder boys" that come in, discard everything that wasn't their doing, and re-invent the wheel with their brand on it. They usually are there long enough to screw things up and then get picked up by another company.
3. Middle management has a siege mentality, never knowing when one of these "wonder boy" executives is going to come in and fire them, replacing them with their buddies.
4. The actual workers spend a lot of time wondering what the hell is going on and who is in charge this week.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
No. Their shareholders demand that Dell produce an ever increasing value to the company - forever and ever. They have to get bigger or the stock value will decline and the CEO's options will not be worth enough.
Actually many stock options are crafted in such a way that any dividends paid will be treated as notionally received by the CEO and reinvested in stock, so this is not so much of a reason. A better reason is that public companies no longer believe in paying dividends. The rationale nowadays is that you own a stock in the hope that it will go up in price so you can make money by selling it to someone else... who will presumably be buying it in the hope that further down the line they can find someone else to offload it onto. It's the "Greater Fool" theory of investing - nobody buys a stock because they hope to get money from the ownership, they hope to make money by finding a "greater fool" than themselves to buy a fancy stock cert that is functionally just a piece of paper (or electronic equivalent).
There is nothing inherently wrong with a company retaining money for growth rather than distribution, it's just that it has become an idee fixe. CEOs don't want to start paying dividends because dividend-paying stocks are perceived as having limited growth potential. The reluctance to pay dividends leads to ridiculous results, like Apple and Google sitting on huge cash-piles larger than some Fortune 500 companies with no particular plans as to what to do with them. Still, the lack of need to ever raise new finance frees the Board from having to justify investment decisions to banks or investors.
Instead they do stock buy-backs to artificially increase the price of the stock - which only helps those investors who sell out, not those who continue to hold the stock. Or they go on "empire building" expeditions where they blow cash on wild merger & acquisition activity that is more about them becoming CEO of a larger empire than about building value for shareholders.
Look at the 3Par events. The final valuation is ludicrous at 325 EBITDA. Yes, what 3Par do is important to the future of IT. Yes, they will experience growth over the next few years. But this valuation already prices in an ultra-optimistic scenario. How can HP shareholders get a profit from this deal? In finance you take risks to earn rewards. I can certainly see a risk that 3Par will underperform, but how can it reward HP by overperforming? I just don't get it.
To create new products and innovate in markets you need Research and Development. You can't be a me-to follow on that wins with low manufacturing costs. R&D requires a different mindset and a whole new way of planning. It means risk taking but balancing the risk carefully with planing and strategy to correctly evaluate and drop things that are not going to work as well as properly spend on the high quality part where it is needed.
Dell's problem is its founding business model - mass-assemble PCs using standardization and volume to bring costs down - doesn't work on any of the new electronics markets.
As I see it, they either need to embrace their role as a builder of boxes ...
Dell's problem is that the novel and leading practices that they pioneered are now standard practices. They no longer have the manufacturing, assembly and distribution advantages they once had. This is one of the reasons they have been so eager to grow into new markets with new products.
Also prices have collapsed since Dell's glory days. Even with higher quality corporate oriented products Dell would still merely be selling "commodity" products at a low margin. Not commodity as in cheap stuff but commodity as in fairly indistinguishable from comparable products from other companies.
Sadly I think Dell is a little more likely to be on a Gateway-like path than an HP- or IBM-like path. Michael Dell's advice on what to do with Apple in 1997 may come back to haunt him: "What would I do? I'd shut it down and give the money back to the shareholders".
I believe they go into a room and high five each other, cause they just conned HP into paying an absurd amount of money for something they didn't really need.
No. What's going to happen is a merger between Dell and HP. One fewer PC manufacturer. 5000 people laid off. There will be a bidding war, which will drive up the stock price and make a bunch of traders rich. Big bonuses for the CEO (and for the lawyers who handle the merger.
Customers suffer.
You are welcome on my lawn.
Dell could go after Compellent... very similar to 3PAR. CML stock has almost doubled since the start of the 3PAR acquisition. Compellent has a very similar feature-set to 3PAR arrays and Dell could pick them up for about 750M.
Dell always was a low cost knock-off product. They were never innovators, and never developed a real R&D function in their company. They basically sold the same thing as the other guy, except for less money. The difference is that HP, IBM, and for a while, Compaq would create products that Dell did no have at all (there was a time where you could get servers from IBM, Compaq and HP, but not from Dell). Dell would wait until the component manufacturers would have the commodity parts (depending on market size that would be weeks, months or a year or so) , and then would bring a less expensive machine to market. For desktops, since Intel provided chipsets and reference boards, there was no lag, and often Dell was quicker than others to put the latest CPU in a desktop. HP, IBM and Compaq had to finance building machines in advance and shipping them to resellers. Dell would take orders this week, and make and ship the PCs next week. This practice worked in Dell's favor as components would drop in price, allowing them to lower prices faster than their "channel bound" competitors.
Ironically, the last of the big 80s and 90s PC makers is Apple, who has continued to invest in R&D, still has a big channel (even though they have retail stores) and is using their ability to create new products (iStuff) and/or superior products (Mac) to extract very healthy profit margins from a recession market. Dell wants some profit, but is stuck being the low cost leader and doesn't have the internal resources to fix the problem, and their friends in Redmond aren't exactly producing the electrifying new software that makes people want a new PC.
-- $G
Why doesn't "standardization and volume to bring costs down" work with the new "electronics markets"?
I didn't realize the successful companies were doing well because they were hand-building their products to order.
You are welcome on my lawn.
Dell's problem is its founding business model - mass-assemble PCs using standardization and volume to bring costs down - doesn't work on any of the new electronics markets
Dell was always an "assembler" and not a "manufacturer" of computers. Today's products need a manufacturer as they are not a chassis with plug in components.
I don't think Dell is dead, or has no chance in the future, because they have money and market share. That's not a forever thing, though. Dell needs to change how they approach creating new products. Dell needs to focus on creating products that haven't crossed the chasm yet. Dell keeps trying to launch products after the product has become mainstream, instead of getting a position in a growth market. Dell could also focus on creating disruptive products, like iPad has been for Fujitsu and Motion's tablet business. Dell's got to get some creativity. They can't just continue to be a knockoff maker forever... you've got to have the guts to just do something completely different.
-- $G
I disagree with your conclusion--TV manufacturers are already building similar devices into the TVs themselves, and this is just going to become more and more common. No way the suggestion above would be a win for Dell.
What part of "shall not be infringed" is so hard to understand?
Is no longer capable of satisfying the bloated expectations of parasitic wall-streeters because it basically just produces an unsexy commodity in quantity, like steel or potatoes.
Wall street has no problem with low margin commodity type companies. They just expect them to describe themselves as one and to act like one, not to pretend that they are still a growth company when all that differentiated them has come to pass.
I backed over my corporate Dell latitude d830, and after replacing a cracked screen and the hdd, it works perfectly. Granted, it was in a decent carry case (which in turn was well-cushioned with several printouts of legal writs), but I am very very impressed by their corporate stuff thus far.
OTOH, their inspiron crap goes wonky if you even look at it funny. Hard to believe that the same company produced both laptops.
I'm a minority race. Save your vitriol for white people.
Here's the problem: Wall Street doesn't like companies that make a profit and pay a dividend. In today's upside-down growth-obsessed "free market", it doesn't really matter what companies make or sell. The only thing that matters is the accumulation of cash so they can buy other companies. There are even bidding wars in leveraged buyouts. Think about that for a second. And a Department of Justice that has never met a merger or takeover they didn't like.
Apple has 40 billion in cash. Stock price is in the stratosphere. P/E of 19.23(ttm). They still don't pay dividends.
We've got companies who are trading at 3 times earnings, booking huge profits and still not paying a dividend. Then we've got companies trading at 25 times earnings, booking huge profits, and still not paying dividends. Companies aren't using that cash to start new projects, or build new plants or hire people or pay dividends. They're just accumulating. If they did pay dividends, it would mean some of that cash that's sitting in corporate mattresses would actually end up in the economy. But that's too "long-term" of a play for the captains of industry There are actually companies whose capitalization is less than their cash on hand. So they're capitalization is 30 billion and their cash on hand is 35 billion. They get taken over and the new buyers realize a 5 billion gain before the ink is dry on the sales contract. Paying dividends has become a signal that you're not "growth oriented" enough, that you're not "aggressive" enough. In other words, that you're paying attention to your core business instead of looking to buy or merge with your competitors and suppliers.
Short term thinking and "free market" fantasies have mutated big business into something that only benefits the number of people you can fit around a conference table. Profits are up, but for most working people, income and quality of life are down. How long you think that's going to last, and what will our society look like after another decade of that trend?
You are welcome on my lawn.
FWIW, this situation is a direct consequence of congress making laws in the early 80s that encouraged tying CEO compensation to stock price. They thought somehow it would fix things if CEOs got paid in stock instead of in cash. Now CEO compensation is so complicated, the laws surrounding it, you need a special consultant whose entire job is to figure out how to pay CEOs.
Many investors are happy to have a company that consistently pays dividends, and grows at roughly the same speed as the economy. In fact, that's a good stock.
Qxe4
Compellent (CML) and Isilon (ISLN) that has storage virtualization technology?
I would have hard time getting excited over a Dell-branded smartphone (or a Dell-branded anything else) but that's just prejudice. Smartphones have barely started happening, and nobody has been "beat to the punch" yet. There's only phone on the market which doesn't suck in a certain drastic, crippling in-your-face way (that phone is Nokia's N900), and that's just one one point of view, not to mention that "doesn't suck" is hardly a ringing endorsement. One "doesn't suck" on the market leaves plenty of room for someone to come along with "good" or even "kick ass."
Shit, you don't even need to get fancy/expensive with the manufacturing; right now most phones' problems have to do with the software. Most of the different phones' hardware all looks similar anyway and time makes a fool of anyone (and I'm not just talking about customers, I mean manufacturers too) who pays extra for the latest and greatest. Lowball it -- make the cheapest possible (within reason) hardware (surely Dell can pull that off!) -- and they just have to preload some carefully-chosen software which'll cost 'em nothing or nearly so. Just think about what users need instead of what carriers, governments, and "strategic partners" want, and you can be a leader. The users are still waiting.
There's so much remaining potential in smartphones that it can still be anyone's game. We still don't know who is going to come out with the first good phone, but there's no reason it couldn't be Dell, if they were to try.
How about taking the $1,500,000,000 they were going to give 3Par shareholders (to get 3Par and 350m cash) and give it to Equallogic engineers instead to design a 3Par competitor. Maybe tout for a few Google hardware people and wait out their non-compete but keep Equallogic in its current arms-length form to prevent Dellification of the final product. Why not boost R&D in the US rather than giving venture capitalists a pay day.
It's one thing when you don't have the cash or engineers to roll your own. Dell does.
*Disclaimer - the shop I work for has an Equallogic since Dell's buyouts. They are very proactive with notifications of new firmware etc. We are happy.
Oh man, I smell me some paid shrills. Dell has issues but lets look at HP for a second. HP just forced out their CEO. Not good. Then HP killed all server sales they were getting through Cisco. Cisco now exclusively sells IBM servers. They used to sell HP. Cisco is out for blood too with HP. They want them out of business. HP wants Cisco out of business. THAT is not going to happen. Cisco has the enterprise on lockdown. Then HP turns down business left and right. If they find out you sell Cisco or Dell they won't even partner with you.
Basically HP just locked themselves in the bridge of the Titanic and told the orchestra to keep playing as the ship sinks.
at least in my eyes is quality. i tell people to stay away from dell because all the hardware ive ever bought from them has broken down within 1-4 years.
insert funny sig here
HP built the platform to put that idiot in the United States Senate, as if that body didn't have enough problems.
One analyst says, 'People see [Dell] as box-pushers'.
Those of us who have been engineers for a while are disheartened to see Hewlett-Packard in the same light.. Dell has always been Dell, but HP was once truly a company worthy of respect.
The higher the technology, the sharper that two-edged sword.
It would give them a damn fine direct sales force and a way to sell Dell servers into the enterprise --http://www.brocade.com. No, I don't work for them. Frankly, I doubt if they can afford them ($2.5B plus 80%), but, in reality, they can't afford not to have them either.
The old school Latitude laptops for corporations were built like tanks. I stepped on mine (d510) once by accident (no case, no nuthing + I am a big fella) barely any damage. They also came with decently priced 3 year accident / warranty on-site next-day replacement for parts or even whole laptop, which saved my butt at least once. The laptop is now 5 years long, and still tugging along, albeit slowly. Note, it was done bought & serviced with Dell EMEA, not Dell USA though... not sure how it works here.
Don't you think you've steered away from the topic a bit? :)
Profits are up, but for most working people, income and quality of life are down.
I hear this a lot, but I don't buy the argument. By what measure is quality of life down? Compared to when? Sure, we spend more of our income on health care - but we get a lot more, too. Life expectancy has steadily increased over the years. Cancers are often not terminal anymore. AIDS is a chronic condition rather than a death sentence. In the mid 80s we were astounded by open-heart surgery - now it's often an outpatient procedure.
Cars are more expensive, but you are a lot less likely to die in them and they routinely last 3-5 times longer than they did in the past. And despite this, you can still pick up an accent or Versa for about $10,000. In 1955, that would have gotten you a used Ford (adjusting for inflation, naturally).
A walk into Wal-Mart should amaze anyone who remembers what things used to cost. Hell, even in the 80s my mother was patching holes in our pants. Do they still make patches? Does anyone bother? I haven't seen a patch in ages. Clothes are so cheap that when you donate clothes to charity, they ship them to Africa because no one here wants them.
I reckon that you can live a 1950s lifestyle for a smaller portion of your paycheck than you could in the 50s. It's just that no one wants to give up their TVs, phones, cars, clothes drier, dishwasher, computers, fresh produce from Peru in the middle of the winter... need I go on?
Most people can "earn" an additional $100 or so per month by dropping cell phone service and cable. Most decide to live somewhere that requires one or even two cars.
Anyway, I think you can argue that Wall Street needs to be reigned in without trying to argue that we are worse off than previous generations. I mean, obviously people are worse off in 2010 then they were in 2008 - but the long term trend is not down.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Here's the problem: Wall Street doesn't like companies that make a profit and pay a dividend.
Sorry, but you're completely wrong. Hint: "Wall Street" is not one entity: it's millions of investors. Lots of them want/need income instead of growth. With a little googling, you can discover dozens of multi-billion-dollar retirement funds that invest in income stocks instead of growth stocks. You can also discover millions of individual investors who want tax-free dividend income over taxable capital gains. Hot growth stocks will always have higher P/Es than income stocks but it's been that way for 100 years and yet big companies continue to thrive.
There are actually companies whose capitalization is less than their cash on hand.
Yeah, wow, that's so amazing, because it hasn't happened thousands of times in history. You might want to read up on balance sheets a bit more so you understand them.
I know your coursepack had a photocopy of an old Ron Paul rant and you feel very sophisticated commenting on the market, but you really don't know what you're talking about.
Advice: on VPS providers
I always see this line of thought come from slashdoters, "why do companies have to keep growing, why can't they just keep doing what they're doing now?" Companies are not individuals they are long-lived entities that exist beyond the lifespan of any one individual. If I were to make the same analogy and say that the human race has achieved a lot already why bother trying to improve, would you agree with this comment? Even as individuals, shouldn't we always strive to be better?
I'm sorry, but I have not seen even a glimmer of this from Dell. Just look at all of the people complaining about the vendor lock-in that their H700 controllers impose. You cannot use any third-party drives, you must use the Dell rebranded drives (that are really the same product just with a label change) at a significant markup. I will not buy any server that does this nonsense, and I would not recommend Dell to any custormer. Vendors that treat their customers like they are stupid deserves to go out of business.
Quit playing Monopoly with Bill.
Linux - of the people, by the people, and for the people.
By family income and wealth. Compared to before 1980.
The cost of things at Wal-Mart doesn't really have any impact on quality of life. In fact, you could say that the lower the cost of things at Wal-Mart, the lower the quality of life.
There's no question that we are worse off than previous generations, whether or not you "reign in"(sic) Wall Street.
In 1956, a single breadwinner, earning the average wage, could expect to put a couple of kids through college and own a nice single-family home and provide health care to all the members of his family, even buying a new car every 5 years, all without having to use a credit card. More so, after 25 or 30 years, they could expect to have paid off their house entirely and have a comfortable retirement. Today, that's simply not possible.
Please don't try to measure quality of life by how many people have big-screen TVs.
Your reckoning would be dead wrong.
You are welcome on my lawn.
They're making billions as box pushers, isn't that good enough?
No. Every publicly traded company is expected to grow. If the Dell's market is saturated and there are limited growth opportunities there then Dell will have to find new sources of revenue outside their traditional business. This becomes VERY hard to do when a company gets as big as Dell. It gets absurdly hard when a company is as big as GE. Dell made about $50 billion in revenue last year. To grow the business by even 5% (which would be considered low) Dell would have to find $2.5 billion in new revenue EACH YEAR. For perspective that means creating a Fortune 500 company from scratch every two years and that is considered underachieving.
If Dell can't do it the markets are not especially forgiving. Dell's stock price has fallen to 25% of its value in 2005.
Dell should sell a line of dirt cheap android phones direct to the consumer. Don't lock them down. Let the user install their own OS if they want. Go for quantity. This would work outside the USA where GSM dominates as a standard.
http://michaelsmith.id.au
To create new products and innovate in markets you need Research and Development.
You don't have to have in house R&D but if you don't you do need the cash to buy companies that do R&D. Cisco is actually a good example. They do some internal R&D but they acquire a lot of companies specifically for the products they develop. R&D doesn't have to be in house but if it isn't the company will have to acquire it. Dell has $10 billion in cash so they should be able to acquire technology. However Dell doesn't have a ton of in house expertise in M&A activity either (mergers are HARD to do successfully - most fail) so they're kind of in a tough spot.
You can't be a me-to follow on that wins with low manufacturing costs.
Sure you can if the market is for a commodity product or if your price point is low enough to outweigh the advantages of differentiation. Dell built a $50 billion / year company competing primarily (though not exclusively) on price. BUT there can only be one winner in a market where they are competing solely on cost. Few markets compete solely on cost but it is a huge factor nonetheless even in markets with significant differentiation.
How much do they make on a $400 laptop? Why do that to themselves?
Low margins can be fine if you have the volume to support them. Dell has annual revenue of $50 billion and net income of about $1.5 billion. That's about a 3% profit margin which is pretty good for a manufacturing company. Their gross margins are about 17% which is in the range of normal for a large manufacturing concern. Walmart does just fine with low margins but they have no illusions about moving into higher revenue products. Dell has been very good at being a low cost manufacturer and they should be comfortable with that.
There is a very large market for low margin products but (as you noted) it's very hard to simultaneously compete in low margin and high margin at the same time. People who shop at Nieman Marcus are very different customers with different expectations from those who shop at Walmart. Both strategies work and both serve a niche but you can't do them both at the same time.
I agree with your assesment, but is it correct to compare GE to Dell?
For the point I'm making (that top line growth is very difficult for large companies) sure it's a valid point. Keeping a consistent percentage growth becomes harder the larger a company gets. This is true irrespective of the specific industry a company is involved in.
GE is a conglomerate.
Which carries it's own set of burdens. GE is run amazingly well but it's very common for the component companies of conglomerates to be worth more as independent companies. More than once the question has been asked if GE would be more valuable in pieces than as a whole. The question comes up with any large diversified company. In recent years GE is really a finance company that has an industrial arm. During Jack Welch's tenure most of the profits came from GE Capital.
Dell is an IT company. While IT is vast, it comes down to selling computer hardware, network hardware, and the services to support it. Hardly as diverse and vast as GE who can scan your body, microwave it, fly it across the world, and tie it to a wind turbine.
I could have used Berkshire Hathaway or Tyco or any other conglomerate to make my point. Top line growth is hard for ANY company. Doesn't matter if they specialize or not.
3PAR. This was supposed to be Dell's answer for being SUB-PAR.
They are very good at supporting their customers when things go wrong. I have purchased a number of Dell computers and have had excellent service with them over the years, particularly when I've had hardware failures. They attend to them courteously and promptly.
HP on the other hand does not support its products. I purchased a very expensive color laser printer from them just a few years ago, but when Windows 7 came out and I upgraded from XP, I discovered they refused to make a new driver for this printer. I and I learned thousands of other customers like me were left high and dry. I will never, ever buy HP equipment again. They simply don't support their products.
Given that most computers these days are essentially built from commodity components, service becomes a much more significant issue in terms of total cost of ownership. With Dell I have come out ahead when it comes to service, but with HP I had a lot of hidden costs when it comes to support for the inevitable repairs. HP may look sweet when they are new, but they become lemons a lot sooner than they should because of HP's determination to cut service and support costs at the expense of their customers.
While Dell has foreign call centers and they did have a rough go of it early on, it seems to me that they have that largely resolved. If you are willing to be even modestly polite (I know difficult for many Americans, always determined to prove their cultural "superiority"), you can get quick fast service. This is no longer a problem. However, with HP, you'll be luck to talk to a telephone server machine that won't send you into phone hell or simply just hang up on you, if you can even find a phone number on their website.
You're right though they could do even better, for example get their servers to better pass service tag, identification info, etc. on to the next tech so you don't have to repeat it. Nonetheless, they have improved quite a bit.
Just be a really good box-pusher.
I'm thinking that they have an inferiority thing going. Equallogic boxes are *way* nifty and a solution for a huge percentage of users, but I think they want an answer to the fiber connected stupidly expensive storage options. Honestly, I don't think they really need it...
Yes, but the average American family owned more of that smaller house. A lot more. Great, you've got a huge McMansion and a jumbo mortgage you'll never pay off. People in the '50s and '60s and '70s actually used to have "mortgage burning" parties. I was there when my Dad and Mom burned theirs. Today, you have foreclosures and people walking away from their underwater mortgages.
Well, in 1956 there were a lot fewer single moms. All that so-called "prosperity" didn't do a whole lot for families, did it? Remember, you are comparing family budgets where in 1960 there was one breadwinner and in 2010 there have to be two just to be in about the same place. But even with two breadwinners instead of one, you're not nearly in the same place. What's the cost of not having a parent in the home raising children?
What's the percentage of a family budget that goes for debt servicing today? What was the percentage in 1960? Paying interest does not add to a family's wealth or well-being. Just because the percentage of the two-breadwinner family's income that's used for clothing and food and housing is less today than it was for a one-breadwinner family in 1960 does not mean that the rest of the budget is going to anything beneficial. Savings rates are way, way down. Fewer workers in private industry have pensions. More people have less access to affordable health care. Maybe the amount spent on food, housing and clothing has gone down because the percentage spent on medical care has gone up so much.
I'm sorry, but there's no question that family incomes have gone down since 1980. In 2000 to 2008 alone, the average family made $2000 less. And worked longer hours. And had bigger credit card balances. And had less mobility and options for changing jobs, changing careers.
You're picking some very misleading data if you are trying to say that quality of life is improving. But misleading is the only kind of data you could possibly use because the quality of life is most definitely NOT improving.
You are welcome on my lawn.
"Dell's problem is its founding business model - mass-assemble PCs using standardization and volume to bring costs down - doesn't work on any of the new electronics markets"
No, Dell's problem is that they've simply stopped doing their founding business model well. For example, simply ordering a laptop from them online can and easily does take weeks to months (literally, I do not exaggerate) to deliver. Secondly, their system is so ball-sucky that you cannot, I kid you not, even do something simple like change the delivery address during the weeks/months they are busy "processing your order". Third, you phone them to cancel the order, and get not just arrogance, but a refusal to confirm the order cancellation or give a reference, just 'assurance' that your 'order cancellation request will be forwarded to the right people'.
Dealing with Dell feels more like dealing with a broken government bureaucracy than a private company with competition in a free market. We live in a world where nobody needs to, for example, wait weeks just to get a simple laptop ... my HP suppliers get me HP laptops same-day or next-day, and they jump to it. What is Dell thinking ... nobody can get away with such rigid and arrogant 'bureaucraticness' built into their processes in this market, and that is entirely their own doing, their own decisions, their own management, their own broken processes and systems.
What's going to happen is a merger between Dell and HP
I suspect such a merger might have a difficult time getting approved due to anti-trust considerations.
They're just accumulating. If they did pay dividends, it would mean some of that cash that's sitting in corporate mattresses would actually end up in the economy.
That money isn't in a corporate mattress, it's in the economy through bank accounts, commercial paper, investment grade bonds, etc. But let's pretend that's somehow not in the economy (by whatever bizarre and tortured definition you're using), 72% of Apple stock is owned by institutional investors and mutual funds, which are no doubt excluded from your economy as well. And the other 28% of Apple stock owners are most likely not desperate for money (if they were, maybe they should sell their shares), so those dividends would sit in a bank account -- also excluded from your economy.
Do you even lift?
These aren't the 'roids you're looking for.
I'm not sure why people would still be complaining about that, seeing as Dell released a firmware update in July that removed that restriction. Yeah, it was a dick move, but at least Dell listened to customers and fixed things.
how the fuck is this flamebait?
Do we have dell fanbois here now? LOL
-- This space for lease, low setup fee, inquire within!
You're joking, right? Do you know how many mergers the DOJ has blocked in the past ten years?
You are welcome on my lawn.
I'm specifically talking about the cash on hand. It's really nice of Apple to let people buy stock which allows them to be in business, but at 20 times earnings, there's a very good chance the stock won't be high for long. Those shareholders are paying for their risk.
Remember, the stock market does not go only one way.
Cash on hand is a whole 'nother story.
You are welcome on my lawn.
I know I'm going to get a "Slashdot is a US site, yadda yadda yadda..." for this, but all the same.
My parents, here in the UK, got married about 3 decades ago, both of them quite young. Neither of them were in great jobs, but they bought good sized 3 bedroom house in the suburbs on mortgage, which they payed off entirely in 20 years. Their house is now worth 5x as much as when they bought it. University education at this point was also free.
Me and my girlfriend are now about the same age as that, and we are in better jobs than they had been at the time. Banks won't give us a mortgage without a deposit of a little less than twice my yearly salary, and the maximum they will lend us will afford a much smaller house than they had. The average student debt for Uni leavers is now £23,000 ($35k).
In terms of replying to your figures- in the 1950s, many (most?) houses would have had a single bread winner and a stay-at-home parent. Nowadays, a majority of households have two adults in employment. The fact that food, clothing and housing budgets accounted for 65% a single wage earner's wage in the 1950's, and accounts for 50% of two wage earner's wages in the 21st century, is a particularly interesting figure.
Expanding Dell's business means getting into services. IBM gets almost equal revenue from services as products. HP Bought EDS for the same reason - to grow their services market share. Dell bought Perot last fall - they need to figure services out - then pump up the volume. Simply buying another hardware products company won't do it. EMC is out there in storage land - and they own Teradata...any bets?
If they were going to go after another storage vendor, Compellent is the obvious choice. Not only does it complement their last storage acquisition (equalogic), it expands on it. Alot of the key features of the equalogic are expanded on in the compellent storage...
Equalogic was... iscsi + thin provisioning + snapshotting + replication.... ... equalogic + fibre + scalability
Compellent is
Whats more, compellent pride themselves on the fact their storage runs industry standard components rather then being custom-built. I.e. their controller heads are supermicro boxes (running a modified version of the ecos? FOSS RTOS) with standard PCIe HBA's in them (unlike 3pars totally-custom-built model). The backend storage is simply Switched fibre jbods or SAS jbods. All of which Dell actually manufacture themselves (though compellent use xyltec or something?). They would simply be buying the software component off compellent really. Hell, they could do a deal with compellent and just license the OS. Replace the components Compellent use with Dell's R710's (or whatever) and Dell's own storage boxes (SAS and SATA), and you have a serious storage story worth talking about (from a dell perspective).
To me, compellent is a much more sensible acquisition (or partnership) then 3par ever would be and so much easier to transition into with their own components... Add some framework for integrating it all into the Dell PAN software they license from egenera and you have a very interesting and compelling (no pun intended) story in terms of data center management...
The sad part of loosing 3par is probably that Dell perhaps put a huge dent in their emc relationship... whooops... so they may need another storage story and fast... on the plus side, with HP aquiring 3par, HP would probably not have the money to block a buyout of compellent if Dell tried (though hp probably do have the money to spare in reality)
That of course doesn't address any of the other area's Dell could expand into though, i.e. tables, phones, music or whatever. Maybe they should look at doing their own networking kit? im sure there are a few vendors out there ripe for buying in that space...
just my 0.02c
By family income and wealth. Compared to before 1980.
How do you arrive at your definition of income and wealth? Income has to be adjusted for inflation - which usually includes things like energy and health care. Energy is at least twice as expensive as it was in the '50s. Health care is many times as expensive. In both cases, it's not a fair comparison. Even the cheapest cars get many times the mileage as a '50s car, making gas prices a wash. And '50s health care was limited to antibiotics, mended bones, and minor surgeries. State of the art was the boom of vaccines. No replacement hips, knees, effective diabetes treatments, heart surgeries, stroke treatments, etc... to say nothing of cancer, which was a death sentence. I'd love to see someone compare the costs of health services that were actually available in the '50s with what they cost today. This article echos my sentiments. Certainly, manufactured goods are much less expensive.
So what's left? Housing. Housing has gotten more expensive, for sure... about double by most estimates I see. Of course, the houses are twice the size, so I'm not sure why this is a big mystery. Halve your square footage and live like the average person did in the '50s and you'll probably find a comparable price.
Ah, almost forgot education. This is another example of people demanding more. Take a look at any college campus and note the EXPLOSION of buildings with a cornerstone newer than 1980. For good or for bad, students are demanding a lot more out of colleges than they did in the '50s. I won't claim you get "more" or that the cost is worth it, but they are simply responding to demand and the costs have risen accordingly. For what it's worth, you can still go to a public school for about $5000 on average... that's a hell of a bargain, though it varies tremendously by state. Also, consider that in the '50s only about 6% of people actually got a college degree... your argument that the average person could send kids to college seems suspect given this statistic. I suspect you are thinking of a idealizing based on a very small portion of the population. Today over 16% go on to finish college, despite the cost increase.
In fact, you could say that the lower the cost of things at Wal-Mart, the lower the quality of life.
This statement is pretty vague... lower for who? Certainly the average person benefits from lower cost goods - but obviously the US factory workers suffer when goods are produced in another market for less money. Of course, those same workers are SOL when a robot takes their job - but I wouldn't argue against automation based on job impact. I think the move to China is a sham, but it will self-correct in time... and far sooner than it will get corrected by any political action or protectionist measures. Think about it... what are the Chinese going to do with trillions in US currency? Hold on to it forever, until inflation and devaluation render it worthless? Or buy stuff with it. When they buy stuff with it, who will benefit?
In 1956, a single breadwinner, earning the average wage, could expect to put a couple of kids through college and own a nice single-family home and provide health care to all the members of his family, even buying a new car every 5 years, all without having to use a credit card.
I'd love to see a source for this. Average salary in 1955 was around 4 grand. College seems to have cost about $1000. An "average" family in no way could have "a couple" of kids in college. As I said, 94% of people did not finish college. Health care only cost about $500/year but bought you virtually nothing except antibiotics, pain killers, and mended bones. You could probably still do that for $500/year if you could find a doctor willing to prescribe the crap they used in the '50s. And I'm glad you said "a
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
I'm specifically talking about the cash on hand.
You are missing his point. "Cash on hand" is not actually cash, but a mixture of cash and short-term investments. Even the "cash" is actually just a balance in a bank account, which obviously is re-invested by the bank.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
What you want is offered by independent retailers, however. At least in Germany all major online computer (part) retailers offer BTO, operating system and support optional. You pay for the hardware, a small fee for assembly and S/H costs. After that, the box is entirely out of the retailer's hands unless you bought a warranty plan.
The nice part is that European law forces them to offer the usual warranty (minimum of two years, for the first six months the burden of proof lies with the retailer) and you usually get retail boxes (plus accessories) for all components (perhaps sans case) so if something breaks you can RMA it.
Dell is maybe interesting for laptops but independent retailers give me total control about which parts go into my desktop at prices fairly close to Dell's, especially since I don't have to buy Windows unless I want it. If I do buy Windows I get a DVD, not a partition. There are no custom parts of unknown compatibility or preinstalled crapware, either.
Dell advertises how they offer BTO systems... but the truth is that other companies are doing it better, as far as the home user sector is concerned. As far as the singular customer is concerned, Dell has been out-Delled.
USE HOT GRITS WITH STATUE OF NATALIE PORTMAN (NAKED AND PETRIFIED)
So going by your statistics, an year of college cost 1/4 of a year's salary.
Today, a year of college is closer to 100% of a year's salary. We have people coming out of college owing $200,000, plus interest. Except for the very few who go to work for top line law firms or banks, they're mostly going to earn about $40k their first year on the job, if they are very very lucky. Considering that after expenses, you might have 5 or 10 grand with which to pay back that $200k, you're going to be paying back college loans for over 20 years.
Now tell me how many college graduates in 1968 or 1978 came out of school with a twenty year mortgage for their education? The cost of higher education has outpaced the CPI by about 5 times every single year for decades. This is despite the fact that input costs for universities have not gone up anywhere near that much. What's happened to those huge endowments? Harvard has what, about $4 billion in endowment? The cost of a year at college has gone up like 20 times since 1960. What else has gone up twenty times?
>And now they spend their entire day commuting to and from a job where they spend eight hours (if they are lucky, since employers are now commonly forcing unpaid overtime and weekend work). They get home at 7pm and then they still have laundry. And who took care of the kids during that time? What is both parents being out of the house doing to the kids?
I don't know which women you talk to, but the ones I know would love to be able to stay home and raise their kids.
You are welcome on my lawn.
Except when banks refuse to lend money, in which case it's used to buy other banks, further concentrating wealth in the hands of a few.
Even the commercial paper is fundamentally frozen. My point is, there are tens of trillions of dollars being taken off the table. The money supply is shrinking, on top of it, with the government deciding to borrow instead of print money, which would be much cheaper. Considering the cost of servicing debt, a little short-term inflation would be much less harmful, but then banks wouldn't make even more money. There's something really smelly about what's happening below the threshold of most peoples' attention regarding our economy, both nationally and worldwide. The most pessimistic person I know is an economist from my institution who specializes in this area. That worries me a great deal.
You are welcome on my lawn.
well, then chalk this as another missed opportunity for dell.
mike dell seems to have a talent to be always behind the curve.
What ? Me, worry ?