Dell CEO: Direct Model Is Religion - 2

Q&A: Despite some challenges in 2005, Kevin Rollins, president and CEO of Dell, insists the company's business model is strong and that he sees no significant changes to it in the year ahead.

Despite some challenges in 2005, Kevin Rollins, president and CEO of Dell Inc., of Round Rock, Texas, insists the companys business model is strong and sees no significant changes to it in the year ahead. Rollins recently spoke with eWEEK News Editor Dennis Fisher, Senior Editor Jeffrey Burt and Senior Writer Brian Fonseca about such issues as customer service, channel strategies and Advanced Micro Devices Inc.

Can you talk about your stumbles in the customer service area and what youve done to fix that area?

Weve made some mistakes in terms of the resources weve applied to the consumer business in the U.S.—not in Europe, not in Asia—and thats just a function of missing it. Weve already turned that around—hiring the resources, getting the training in place—to fix it. The service and support on the corporate side is still fine, but its really resource [on the consumer side].

During the conference call for the [third-quarter earnings], you said it was Dells goal to become more efficient. Dell has always been known as a hyper-efficient company, so what does the company do to become even more efficient?

This issue is really more one of execution than it is of efficiency. We got ourselves a little too segmented, so we need to get ourselves some uniformity in our pricing and our marketing messaging and in our go-to-market strategies.

/zimages/3/28571.gifClick here to read more about Dells efforts in the consumer market.

But thats a fairly minor tune-up in terms of what we were doing. We are now aggregating all our online capabilities into a single team and making investments into new online capabilities for customers. Were experimenting with a new capability we call TechConnect. Were up to about 2,200 customer calls per day now, where we can do remote takeover. [TechConnect has been] massively successful for us, and somewhat unique in terms of the core of the direct model, how [we] interact with customers directly—that [is what] youre going to see more of.

You have some industry analysts calling on Dell to expand how you do business into the channel. Does Dell have any interest in looking into this now?

No, absolutely not. The direct thing is a religion. Thats what we do, thats the basis. We have a better cost structure than any of our competitors, we can offer better customer support, so no. Well experiment with things from time to time, but the core of the model is going to be direct.

What about the argument that, while the direct model works well in regions where the Internet is well-established, it may not work as well in emerging markets, where there isnt as much access to the Internet and face-to-face contact can be more important?

Lets pick a big one: China. Last quarter, we grew 46 percent in China, faster than anyone, [and had] 29 percent revenue growth and excellent P&L—[in an] emerging market. So [the direct model] works everywhere. Brazil—growing like a weed. India—great business. So we dont have a major emerging market that were having struggles with.

Is there any concern that by not adopting AMD technology, youre leaving a significant amount of business on the table?

We certainly worry about that, and we track that very, very carefully. But if you look at where the inroads have been made, theyve been made in those fairly small unit volumes, theyve been in the four-way servers. Is it strategically a killer? No. Financially, its not. Intel [Corp.]s got a better road map coming up, in terms of performance and in terms of thermals in the coming year, so thats been very encouraging for us.

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