U-Turn: Users in Control

 
 
By Eric Lundquist  |  Posted 2003-12-01
 
 
 

Wal-Mart continues to set the supply chain agenda and may soon set notebook computer and online music pricing levels. Dell has redirected some of its customer support lines from India back to the United States at the instigation of customers.

The use of product activation continues to build an activist community that is saying, "Not if you want our business."

The business of technology is taking a U-turn. Just recently, industry consolidation appeared to be giving us a smaller number of companies that were able to dictate to their customers a limited number of technology choices. Now, however, customers are doing the dictating.

There are three reasons for this reversal. First, the economic downturn thats ending was especially cruel to technology companies. That cruelty was often deserved by vendors that had offered up a lot of hardware, software and services without a lot of business reasoning. Large technology users, such as Wal-Mart, that survived and thrived through the downturn now find themselves in a position of strength at the bargaining table.

Second, while the economy is rebounding, the memories of costly unused tech products linger. Executives learned the hard way to ask for tighter scrutiny of tech investments. They want proof that the products work, and they want examples of how other companies are using them. Being first is no longer as important as being right.

Third, the outsourcing option is stronger now than in the past. Many tech staffers have seen the ranks of their colleagues decimated. Knowing that making a poor vendor choice could give rise to their own job being outsourced, customers are exerting greater caution in their buying decisions.

In addition to supply chain leadership, Wal-Mart also seems intent on becoming a technology force in the retail channel. Some recent news items buttress this argument. Wal-Mart is widely acknowledged to be the main customer driver in the move to use RFID tags for pallets and cases. In a given region, if a supplier cant tag within a year, it cant play in the Wal-Mart sandbox. The company has also stated it will require compliance with the AS2 format (one of two formats defined by the Internet Engineering Task Force for EDI transfer over the Internet). Again, no AS2 and, at some point, no business.

These moves tend to get overshadowed by news that Wal-Mart is considering getting into the online music business or is apparently working with some Asian laptop manufacturers to develop its own line of laptops. However, the financial muscle that Wal-Mart is wielding to generate these new initiatives comes in large part from its leadership back-end and supply chain business practices.

The news that Dell is rerouting some service calls back to the United States from India following customer complaints garnered a lot of attention. A week earlier at Comdex, Dell held a press conference at which company officials talked about their commitment to corporate customer service. Dells continued growth in the corporate market depends mightily on its ability to bring the same efficiencies to service that it brought to computer manufacturing and distribution. The move back onshore from offshore could spur other companies to re-evaluate exactly what they gave up when they sent operations offshore. Dell did the right thing in paying attention to complaints instead of trying to fault customers.

At eWEEK, one of the largest floods of reader e-mail weve had in quite some time came in response to a column by Jim Rapoza that took vendors to task for using product activation. Product activation is simply a bad idea. Imagine getting an activation code when you buy a refrigerator or a new novel. Vendors have every right to make sure they get paid fairly for products they create, but putting the burden on the people who paid for the products in the first place makes no sense. Readers generally agreed with Jim and told him they intend to vote with their wallets against activation.

Once again, this time, the customers are asserting their buying power.

Editor in Chief Eric Lundquists e-mail address is eric_lundquist@ziffdavis.com.

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