Dell is on a roll. There is no disputing that. Recently, I spent a day in Texas at the companys financial analysts meeting, which was more like an analyst love-in. You would have been hard-pressed to find an analyst not remarking about the companys ability to bounce over the bursting of the dot-com bubble or not expecting Dell to continue to exceed the goals outlined by the team of Michael Dell and Kevin Rollins.
The facts speak for themselves. At the meeting, the company raised its expectations for first-quarter revenues to $11.4 billion, up another $200 million from a February forecast and 20 percent better than the comparable quarter a year ago. The $41 billion company turns over its inventory 115 times a year (way ahead of anyone else) and consistently makes money in industries and economies that leave others penniless. Quite a feat for a company often painted by its competitors as lacking innovation and vision and married to a strategy of moving boxes when the technology world supposedly wants services.
Somewhere around the 20th slide showing a grand financial forward march (slides with bullets stating “3 year capex of $1.6B including $635M of MSL” are way beyond my meager financial understanding), I took to doodling out a couple of issues Dell needs to confront. Here they are. Id like your opinions.
Dell has grown from being a lesser leg of the Microsoft and Intel triangle to being one of the Wintel alliances largest customers. When you become the big dog on the block, you need to bark louder on the customers behalf. Dell needs to show that it is intimately involved in shaping products such as Microsofts “Longhorn” operating system and the next generation of Intels processors, rather than simply continuing to be a good customer.
The same is true for issues such as the Linux operating system, open-source desktop applications and new-form-factor handhelds and phones. There is nothing wrong with waiting for a market to mature to standards before jumping in ($41 billion of market-jumping revenue is pretty powerful), but the company should do a better job outlining the feature set needed before the market will welcome new technologies.
One of Dells great strengths is it can gather information directly from its customers as well as sell to them directly. Once in a while, the company needs to roll out some of that information to the technology public.
Spending some time explaining exactly where open source fits into the future technology road map would be useful to those users planning technology purchases over the next five years.
The company still gets rankled when accused of not being innovative. I think that is understandable, as you could make a decent argument that the direct-purchase model is the greatest technology innovation to come down the road in the past five years. However, I think the company would be well-advised to take a page from the automobile industry—in this case, from Toyota.
Toyotas development of hybrid cars took place during a time when the prevailing wisdom was for continued development of gasoline engines or for making a great leap to some new fuel. Toyota has shown there is a way for technologies to transition without giving up performance.
Somewhere between the current hardware model and the new world of Web services lies a transitional technology model. Dell should be in the forefront of helping its customers understand where that transition resides. Dell has become a huge company with ambitions that now include storage, services and printers. There is little reason to expect that those ambitions will not be achieved, at least in part. The company is also a worldwide enterprise with more of its work force residing outside, rather than inside, the United States.
In addition to price, delivery and service, customers are looking for direction. Providing that direction would be a strong service Dell could offer its users.
Editor in Chief Eric Lundquist can be contacted at [email protected].