Dell Customers Ask for More

Cheap PCs just arent doing it for Dell anymore, some of its customers say.

Several Dell customers of varying sizes, informally polled by eWEEK, said that the PC makers low prices are no longer enough to effectively separate the Round Rock, Texas, PC maker from its PC rivals, such as Hewlett-Packard.

Dell has been going through a rough patch that has seen it miss its quarterly financial targets, issue a massive recall of 4.1 million notebook battery packs and disclose a probe by the U.S. Security Exchange Commission. The probe contributed to Dell pushing back the filing of its second-quarter earnings and postponing its Sept. 13 financial analyst meeting.

With all of this going on, the company seemingly cant afford to not respond to the concerns of medium and large corporations, which are customers that provide the bulk of Dells revenue.

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Indeed, the company has pledged to plow hundreds of millions into improving its service and support, including rolling out its DellConnect troubleshooting software and announcing plans to offer Advanced Micro Devices processors in its servers and some desktops before the end of 2006.

The company, once an Intel-only operation, is likely to ultimately offer AMD processors across the board, even in corporate desktops, as it works to give customers more of what they want, analysts said.

Whats Dell doing to help large customers replace their batteries? Click here to read more.

"I think it does [need AMD in business PCs] just to be competitive," said Richard Shim, an analyst with IDC in San Mateo, Calif. "This market is not that hard to figure out. The bottom line is [to offer] what the customer wants."

To be sure, customers wants can be a moving target. Where direct sales and pricing have been suitable enough to win huge amounts of business for Dell—despite the first quarter 2006, Dell has grown worldwide shipments more quickly than the market rate, quarter after quarter—many others said that theyre now looking for more of a complete package that includes good prices along with solid service and technological innovation in things like management tools.

Some place more emphasis on technological diversity and innovation, while others focus on service and support. Although our poll was a small sample—the opinions are mirrored in reports from firms such as Technology Business Research—the increasingly restless customers intone the potential for more trouble, should Dell fail to react.

Dells top executives argue it is reacting to what customers want. Many of them, including Chairman Michael Dell and CEO Kevin Rollins, will be New York City on Sept. 12 at a meeting with press and analysts to reinforce that argument by discussing Dells latest efforts in products and services, including items such as its AMD-processor-based desktops and servers.

The meeting, which had been planned to happen in advance of Dells analyst meeting on Sept. 13, is likely to take on added importance due to the cancellation of the analyst meeting.

Dell on Sept. 11 said it had cancelled the meeting after pushing back the release of its final second fiscal quarter earnings statement, due to the SEC probe.

Dell is unable to file the report due to questions raised by the SEC as well as by its own independent investigation. Those investigations have indicated the potential of misstatements relating to accruals, reserves and other balance sheet items that may affect the companys previously reported financial results, Dell said in a statement.

Thus Dell executives are likely to focus on the companys work to improve customer service woes and react to customers demands with new types of products, including AMD-Athlon based desktops for both businesses and consumers and servers using AMDs Opteron processor.

However, customers who see low prices as a given, may ask for a lot more.

Among their desires include an increased emphasis on proactive customer support and product design as well as greater research and development efforts.

While Dell has said it would invest more in product design as part of its efforts to improve customer satisfaction, it has not spelled out its plans in public as of yet.

Next Page: The innovation gap.