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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'."
and say unreservedly that Dell can go to hell.
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?)
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.
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.
We are going 5PAR.
Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
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
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.
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.