The Innovation Gap

By John G. Spooner  |  Posted 2006-09-11 Print this article Print

"Dell really excelled commoditizing the basic stuff, making it cheaper and having a great service angle," Lew Moorman, senior vice president of strategy and corporate development at Rackspace Managed Hosting in San Antonio, Texas.

"But I do think that now a lot of the big guys have gotten their cost structures in line and have continued to innovate" products and technologies.
Thus, he said, a gap in innovation has developed between Dell and companies such as Hewlett-Packard. Due to its work, HP can now mirror Dells prices much more closely, while offering more innovative management tools, he said, for example.
Other manufacturers, meanwhile, can offer even lower-priced, yet more basic gear. Moorman said he sees potential for Dell to be caught somewhere in the middle with pricing thats no longer the lowest, and products and services that are less innovative technologically, should the company not make changes. Dell to offer more products with AMD inside. Click here to read more. Moorman, who remains a Dell customer, lobbied the company to offer AMD-processor servers for some time—the AMD chips were much more power efficient than Intels until recently—before contracting with HP to buy HP AMD-based servers. He said he still thinks Dell should be more responsive to customer requests. Rackspace, which maintains more than 17,000 servers now has fleets of Dell-Intel servers, HP-AMD servers as well as AMD-based white box servers, he said. "We havent felt the pains of the customer service issue as much as others have. But Ive heard it a lot," he said. "The whole idea of the direct model is to listen [to customers]. To me [the Dell-AMD announcement] just happened so late in the game…it made me question a little bit, are they really listening to the customer?" Even if Dell were to retain the low-price crown, that might not sell as well as it once did, said Tom Miller, senior director of IT at FoxHollow Technologies in Redwood City, Calif. Instead, service and support—the more proactive, the better—are more the key to companies, said Miller, who manages hundreds of Dell desktops, notebooks and servers. "Dell does a good job on pricing. It treats the [small and medium business] market very well from a pricing standpoint," he said. "But when you go beyond pricing, what else is there? [Dell is] sort of a me-too company when it comes to innovation of technology and when it comes to value added services," Miller said. "I want to see a more proactive effort from Dell. I want them to go above and beyond what they provide now from a support perspective." To be sure, Miller says he has a good relationship with his Dell account team. But that doesnt mean he wouldnt like a tighter relationship with the PC maker, involving more exchanges of information. The type of communication Miller would like to see, he said, includes proactive alerts on trends uncovered by its technical support group on issues that might affect Millers IT operations, he said. Miller also found Dells SEC probe worrisome, he said. "Are they getting defocused as a company?" he asked. "What Id like to know is Michael Dell doing something—Bill Gates stepped back in when Microsoft was threatened by the Internet, whos doing that, right now, at Dell?" However, not all of Dells customers are necessarily looking for more. "Of all the machines weve purchased in the last several years, Ive had very little issues," said Anthony Kolasny, systems manager at Johns Hopkins Universitys Center for Imaging Science in Baltimore, Md. The lab uses high-end desktops as well as a Dell server-based high-performance computing cluster for jobs such as medical imaging. "When I get new machines in here, everything works right out of the box," Kolasny said. "Dell has been very supportive. Ive been able to call them up and, within that day, get a technical support rep who could talk me through the issue Im having." Check out eWEEK.coms for the latest news in desktop and notebook computing.

John G. Spooner John G. Spooner, a senior writer for eWeek, chronicles the PC industry, in addition to covering semiconductors and, on occasion, automotive technology. Prior to joining eWeek in 2005, Mr. Spooner spent more than four years as a staff writer for CNET, where he covered computer hardware. He has also worked as a staff writer for ZDNET News.

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