C
Chad Harris
LO Benjamin-- These are for your viewing pleasure--but you have to "read
them." Enjoy.
You should start reading a few papers. Try www.nytimes.com/tech and
www.washingtonpost.com/tech
and www.nytimes.com/business
You missed a number of articles on Dell that butress exactly what Bobb
said.
Benjamin the date on the first article I link for you is July 11, 2006--is
that current enough for you--it's today's NY Times--What do it read like to
you Benjamin?
http://www.nytimes.com/cnet/CNET_2100-1005_3-6092728.html?_r=1&oref=slogin
July 11, 2006
Dell set to change consumer pricing
Tom Krazit, for News.com
Apparently, the price is wrong at Dell.
The company plans to announce "a major pricing initative" for consumers and
small business customers on Thursday, it said in a press release distributed
Monday. Further details were not immediately available, but Ro Parra, senior
vice president and general manager of Dell's new Home and Small Business
Group, will lead a conference call.
Dell has been looking to jump-start its consumer business this year.
Although enterprise customers account for 85 percent of its business, the
company has sought ways to expand its presence among home users of
technology. As the PC market share leader, Dell has tried to get its PC
customers to purchase other electronic gear, like televisions and printers,
with mixed degrees of success.
As a whole, however, the company has blamed the consumer business for much
of the earnings shortfalls that have stifled Dell's runaway growth.
CEO Kevin Rollins blamed some of the shortfall on increased sales to the
unprofitable low end of the PC market as the company focused on maintaining
market share. But a resurgent Hewlett-Packard has caused problems for Dell.
A mounting number of service complaints also has forced the company to
belatedly improve its technical support operation.
Thursday's pricing initative will probably look to recapture some of that
lost momentum. Dell cut prices on a number of desktops and notebooks earlier
this year as stalwart partner Intel cut its own prices on certain chips.
Intel is also planning price cuts during the upcoming quarter as it gets set
to launch its Conroe desktop processor.
June 15, 2006 Falling Short of A+
By DAMON DARLIN
http://www.nytimes.com/2006/06/15/t...24000&partner=rssnyt&emc=rss&pagewanted=print
ROUND ROCK, Tex., June 9 - Kevin B. Rollins, the chief executive of Dell,
does not want to dwell on what has gone wrong for the last year at his
company, the world's largest computer maker. He calls it "wallowing."
When pressed for an explanation of why revenue growth has slowed drastically
and why profits have fallen, his explanation is short. "We got a little too
far ahead on profit, and that allowed competitors to sneak in," he said in
an interview at the company's headquarters here, referring to Dell's
profit-margin goals. "Our competitors got better, and that allowed them to
get strong."
How could this happen on the watch of a former Bain & Company consultant who
prides himself on measuring everything and on meticulous execution? "We just
don't know," said Mr. Rollins, who has held the top job since July 2004.
Though the company has faltered, for the first time growing more slowly than
the rest of the PC industry, it is not a crisis, said Mr. Rollins. "It's not
anywhere near that," he said. Nonetheless, Mr. Rollins is not being blasé
about the very real problems facing Dell, which recorded revenue last year
of $55.9 billion. He is pushing the company to act quickly and aggressively
to fix its problems lest they get bigger. There is truth in the law of big
numbers, he said, which states that it is harder for a multibillion-dollar
company to grow at the rate a multimillion-dollar company grows.
Dell will be growing more slowly, he said, but it will still grow faster
than the rest of the industry, improve profitability and take market share
from competitors.
Joseph A. Marengi, Dell's senior vice president for the Americas, said:
"There is a feeling of 'let's get this back to where it should be.' It's
basic business, but at the end of the day there is a sense of urgency."
One problem was of Dell's own making: the deterioration of its customer
service. It has thrown a lot of money at that problem very quickly, more
than $100 million in the last few months, to answer consumers' questions
quickly.
Its other major problem is more vexing. Dell does not have a major cost
advantage in low-priced notebook computers. "That's where our advantage has
been a little lower, and that's where the growth has been," said James M.
Schneider, Dell's chief financial officer. The company has to find a way to
squeeze more costs out of a procurement and manufacturing system that is
already world-renowned as the leanest in the industry.
Mr. Rollins insists that the company was not complacent. "We pushed some
elements faster than we should have," he said, comparing the situation to
that of an A-plus student who merely gets an A. It is still a great
performance, but everyone is nonetheless disappointed. Mr. Schneider agreed,
saying, "Once someone misses who never misses, there is concern."
The sense of urgency that Mr. Rollins is trying to instill comes at a time
when Dell's share price has been in steady decline, hovering lately around
$25, a loss of about 40 percent since last July. It is a long way from the
heights of almost $60 achieved in 2000, before the stock fell to barely $16
after the technology boom collapsed.
Wall Street is still wary. A. M. Sacconaghi, an analyst with Sanford C.
Bernstein & Company, said that Mr. Rollins's "articulation of a series of
steps and a plan is a plus." He also said, "The company has misestimated its
fortunes before, so there is some healthy skepticism." Mr. Sacconaghi said
he thought that the company would have been better off solving its problems
with customer service and improving product design before it started cutting
prices to increase sales.
To reverse its recent setbacks, Dell is now willing to question just about
anything - even breaking longtime exclusive allegiances with a major
supplier like Intel.
Dell announced last month that it would begin using chips from Intel's
rival, Advanced Micro Devices, in one of its high-end servers. Asked if the
company would switch to A.M.D. processors for some of its PC's, Mr. Rollins
would answer only with a wink. Glen Yeung, an analyst with Citigroup Global
Markets, has said Dell would do so by September.
Dell's exclusive use of Intel processors has lately appeared short-sighted.
The fastest-growing segment of the notebook market, which is the
fastest-growing segment of the PC market, has been for machines with
Advanced Micro chips, Mr. Marengi said. Other companies, most notably
Hewlett-Packard, were able to offer lower-priced notebooks because they used
Advanced Micro.
Meanwhile, the decline in computer prices took a toll on customer service,
long a hallmark of the Dell model. The company found it harder to justify
the kind of service it had provided for $1,000 PC's when those systems were
selling for $350. So it decided to stop fixing certain kinds of problems,
mostly related to software, spam and viruses. It decided to answer more of
its customers' questions from call centers overseas, and long waits became
common.
The economies made sense on paper because individual consumers account for
only 15 percent of Dell's business. But as complaints mounted, Mr. Rollins
ordered a reversal. "We will do whatever is necessary to get it fixed," he
said. He moved the company's manufacturing wizard, Richard Hunter, to
customer service and asked him to apply the methods of employee empowerment
to call centers, calling out for help from specialists the moment there is
an unmanageable problem. Dell quickly provided staff members for new call
centers in North America.
Mr. Rollins sees a new service, DellConnect, as a technology that could
solve customer woes and save the company money at the same time. A call
center employee asks a customer with a troubled PC whether a Dell technician
can take over the machine remotely via a high-speed Internet connection. The
technician then diagnoses and fixes as much of the problem as possible.
Mr. Rollins said that DellConnect, which was in testing until early this
month, had been used 450,000 times and that 80 percent of problems were
resolved. Here is the part Mr. Rollins really liked: 95 percent of customers
were left satisfied.
It is hard to argue that Dell ever got complacent about costs. "We've been
at this a long time," said Glenn E. Neland, Dell's senior vice president and
chief procurement officer. Two years ago, Dell eked out $1.8 billion in cost
savings. Last year, it squeezed out 22 percent more, or $2.2 billion. This
year, Mr. Rollins wants Mr. Neland to find an additional $3 billion, or 36
percent more than last year. Mr. Rollins does not want it done the easy way,
with layoffs. "It gets harder and harder to find it," Mr. Neland said.
Instead, the market's shift to notebooks, which Dell makes in China just as
its competitors do, erased much of its cost advantage. "We'd have our thumb
on all of the supply and all of the cost," Mr. Neland said.
Five years ago, the cost of assembling the PC's motherboard, which contains
the processor and other main electronics, was $20. With a supply base in
China, a better knowledge of component costs and of how overseas assemblers
operate, and by increasing competition among them, Dell got the cost down to
$5. The company might be able to squeeze more out of that area, but the
gains will be small. It has to look elsewhere.
The savings are not necessarily in the hardware. For instance, Dell shipped
computers to customers in three boxes, one each for the computer, the
monitor and the peripherals. That was great for the individual customers,
but made little sense for its business customers, who were getting up to 500
computers at a time. So Dell began packing 16 chassis or eight flat-panel
monitors in a single box. Customers liked it better, too, because they had
fewer empty boxes to dispose of.
Mr. Rollins is presiding over meetings on how to find several more major
sources of savings. "Kevin leads a discussion," Mr. Neland said. "He is not
a table-pounder. But once we have a level set, he can be very intense." Mr.
Neland said sometimes the consultations are daily, "sometimes by the
minute."
As focused as Dell is on its core business, a number of challenges remain.
It is still relatively small in Asia, where the world's greatest demand for
computers has shifted. But it is growing fast in China and India.
Dell needs to catch up with Hewlett in supplying corporate data centers.
Though Dell has a bigger share of the American market than its archrival,
Hewlett dominates worldwide. Dell has just announced a new line of servers,
known as the Power Edge series, that are easier to install and manage.
It has even made the servers more stylish by masking exterior buttons and
switches and color-coding interior components to give data center managers a
sense of order.
Dell is emphasizing style in its desktops, notebooks and printers as well,
in an effort to keep those products from being mere commodities. On the door
providing access to the interior of the XPS desktops, for instance, Dell
installs a gasket and deadens the ping sound of the spring so it closes with
the thud of a car door.
A new all-in-one printer uses a liquid-crystal display instead of many
buttons to control functions. Dell designers are convinced that other makers
go button-crazy so that the shopper in a store will quickly see how
full-featured the product is. Dell, selling online or by phone, does not
need that visual sales pitch.
The company has not made a splash selling flat-panel televisions the way it
did when it entered the market for servers and printers. That is because
prices across the board have fallen sharply, making it difficult for Dell to
offer consumers a significant price difference.
But Mr. Rollins said that did not mean the Dell model of selling direct
would not work there, too. It is opening stores in malls to display its
products, though they must still be purchased directly by phone or over the
Internet. The company sees major opportunities selling TV's to corporate
customers. Target is buying digital TV's for in-store displays, Dell
executives said.
"The opportunity to continue to grow in the highest-growth categories is
ahead of us," Mr. Rollins said.
CH
them." Enjoy.
You should start reading a few papers. Try www.nytimes.com/tech and
www.washingtonpost.com/tech
and www.nytimes.com/business
You missed a number of articles on Dell that butress exactly what Bobb
said.
Benjamin the date on the first article I link for you is July 11, 2006--is
that current enough for you--it's today's NY Times--What do it read like to
you Benjamin?
http://www.nytimes.com/cnet/CNET_2100-1005_3-6092728.html?_r=1&oref=slogin
July 11, 2006
Dell set to change consumer pricing
Tom Krazit, for News.com
Apparently, the price is wrong at Dell.
The company plans to announce "a major pricing initative" for consumers and
small business customers on Thursday, it said in a press release distributed
Monday. Further details were not immediately available, but Ro Parra, senior
vice president and general manager of Dell's new Home and Small Business
Group, will lead a conference call.
Dell has been looking to jump-start its consumer business this year.
Although enterprise customers account for 85 percent of its business, the
company has sought ways to expand its presence among home users of
technology. As the PC market share leader, Dell has tried to get its PC
customers to purchase other electronic gear, like televisions and printers,
with mixed degrees of success.
As a whole, however, the company has blamed the consumer business for much
of the earnings shortfalls that have stifled Dell's runaway growth.
CEO Kevin Rollins blamed some of the shortfall on increased sales to the
unprofitable low end of the PC market as the company focused on maintaining
market share. But a resurgent Hewlett-Packard has caused problems for Dell.
A mounting number of service complaints also has forced the company to
belatedly improve its technical support operation.
Thursday's pricing initative will probably look to recapture some of that
lost momentum. Dell cut prices on a number of desktops and notebooks earlier
this year as stalwart partner Intel cut its own prices on certain chips.
Intel is also planning price cuts during the upcoming quarter as it gets set
to launch its Conroe desktop processor.
June 15, 2006 Falling Short of A+
By DAMON DARLIN
http://www.nytimes.com/2006/06/15/t...24000&partner=rssnyt&emc=rss&pagewanted=print
ROUND ROCK, Tex., June 9 - Kevin B. Rollins, the chief executive of Dell,
does not want to dwell on what has gone wrong for the last year at his
company, the world's largest computer maker. He calls it "wallowing."
When pressed for an explanation of why revenue growth has slowed drastically
and why profits have fallen, his explanation is short. "We got a little too
far ahead on profit, and that allowed competitors to sneak in," he said in
an interview at the company's headquarters here, referring to Dell's
profit-margin goals. "Our competitors got better, and that allowed them to
get strong."
How could this happen on the watch of a former Bain & Company consultant who
prides himself on measuring everything and on meticulous execution? "We just
don't know," said Mr. Rollins, who has held the top job since July 2004.
Though the company has faltered, for the first time growing more slowly than
the rest of the PC industry, it is not a crisis, said Mr. Rollins. "It's not
anywhere near that," he said. Nonetheless, Mr. Rollins is not being blasé
about the very real problems facing Dell, which recorded revenue last year
of $55.9 billion. He is pushing the company to act quickly and aggressively
to fix its problems lest they get bigger. There is truth in the law of big
numbers, he said, which states that it is harder for a multibillion-dollar
company to grow at the rate a multimillion-dollar company grows.
Dell will be growing more slowly, he said, but it will still grow faster
than the rest of the industry, improve profitability and take market share
from competitors.
Joseph A. Marengi, Dell's senior vice president for the Americas, said:
"There is a feeling of 'let's get this back to where it should be.' It's
basic business, but at the end of the day there is a sense of urgency."
One problem was of Dell's own making: the deterioration of its customer
service. It has thrown a lot of money at that problem very quickly, more
than $100 million in the last few months, to answer consumers' questions
quickly.
Its other major problem is more vexing. Dell does not have a major cost
advantage in low-priced notebook computers. "That's where our advantage has
been a little lower, and that's where the growth has been," said James M.
Schneider, Dell's chief financial officer. The company has to find a way to
squeeze more costs out of a procurement and manufacturing system that is
already world-renowned as the leanest in the industry.
Mr. Rollins insists that the company was not complacent. "We pushed some
elements faster than we should have," he said, comparing the situation to
that of an A-plus student who merely gets an A. It is still a great
performance, but everyone is nonetheless disappointed. Mr. Schneider agreed,
saying, "Once someone misses who never misses, there is concern."
The sense of urgency that Mr. Rollins is trying to instill comes at a time
when Dell's share price has been in steady decline, hovering lately around
$25, a loss of about 40 percent since last July. It is a long way from the
heights of almost $60 achieved in 2000, before the stock fell to barely $16
after the technology boom collapsed.
Wall Street is still wary. A. M. Sacconaghi, an analyst with Sanford C.
Bernstein & Company, said that Mr. Rollins's "articulation of a series of
steps and a plan is a plus." He also said, "The company has misestimated its
fortunes before, so there is some healthy skepticism." Mr. Sacconaghi said
he thought that the company would have been better off solving its problems
with customer service and improving product design before it started cutting
prices to increase sales.
To reverse its recent setbacks, Dell is now willing to question just about
anything - even breaking longtime exclusive allegiances with a major
supplier like Intel.
Dell announced last month that it would begin using chips from Intel's
rival, Advanced Micro Devices, in one of its high-end servers. Asked if the
company would switch to A.M.D. processors for some of its PC's, Mr. Rollins
would answer only with a wink. Glen Yeung, an analyst with Citigroup Global
Markets, has said Dell would do so by September.
Dell's exclusive use of Intel processors has lately appeared short-sighted.
The fastest-growing segment of the notebook market, which is the
fastest-growing segment of the PC market, has been for machines with
Advanced Micro chips, Mr. Marengi said. Other companies, most notably
Hewlett-Packard, were able to offer lower-priced notebooks because they used
Advanced Micro.
Meanwhile, the decline in computer prices took a toll on customer service,
long a hallmark of the Dell model. The company found it harder to justify
the kind of service it had provided for $1,000 PC's when those systems were
selling for $350. So it decided to stop fixing certain kinds of problems,
mostly related to software, spam and viruses. It decided to answer more of
its customers' questions from call centers overseas, and long waits became
common.
The economies made sense on paper because individual consumers account for
only 15 percent of Dell's business. But as complaints mounted, Mr. Rollins
ordered a reversal. "We will do whatever is necessary to get it fixed," he
said. He moved the company's manufacturing wizard, Richard Hunter, to
customer service and asked him to apply the methods of employee empowerment
to call centers, calling out for help from specialists the moment there is
an unmanageable problem. Dell quickly provided staff members for new call
centers in North America.
Mr. Rollins sees a new service, DellConnect, as a technology that could
solve customer woes and save the company money at the same time. A call
center employee asks a customer with a troubled PC whether a Dell technician
can take over the machine remotely via a high-speed Internet connection. The
technician then diagnoses and fixes as much of the problem as possible.
Mr. Rollins said that DellConnect, which was in testing until early this
month, had been used 450,000 times and that 80 percent of problems were
resolved. Here is the part Mr. Rollins really liked: 95 percent of customers
were left satisfied.
It is hard to argue that Dell ever got complacent about costs. "We've been
at this a long time," said Glenn E. Neland, Dell's senior vice president and
chief procurement officer. Two years ago, Dell eked out $1.8 billion in cost
savings. Last year, it squeezed out 22 percent more, or $2.2 billion. This
year, Mr. Rollins wants Mr. Neland to find an additional $3 billion, or 36
percent more than last year. Mr. Rollins does not want it done the easy way,
with layoffs. "It gets harder and harder to find it," Mr. Neland said.
Instead, the market's shift to notebooks, which Dell makes in China just as
its competitors do, erased much of its cost advantage. "We'd have our thumb
on all of the supply and all of the cost," Mr. Neland said.
Five years ago, the cost of assembling the PC's motherboard, which contains
the processor and other main electronics, was $20. With a supply base in
China, a better knowledge of component costs and of how overseas assemblers
operate, and by increasing competition among them, Dell got the cost down to
$5. The company might be able to squeeze more out of that area, but the
gains will be small. It has to look elsewhere.
The savings are not necessarily in the hardware. For instance, Dell shipped
computers to customers in three boxes, one each for the computer, the
monitor and the peripherals. That was great for the individual customers,
but made little sense for its business customers, who were getting up to 500
computers at a time. So Dell began packing 16 chassis or eight flat-panel
monitors in a single box. Customers liked it better, too, because they had
fewer empty boxes to dispose of.
Mr. Rollins is presiding over meetings on how to find several more major
sources of savings. "Kevin leads a discussion," Mr. Neland said. "He is not
a table-pounder. But once we have a level set, he can be very intense." Mr.
Neland said sometimes the consultations are daily, "sometimes by the
minute."
As focused as Dell is on its core business, a number of challenges remain.
It is still relatively small in Asia, where the world's greatest demand for
computers has shifted. But it is growing fast in China and India.
Dell needs to catch up with Hewlett in supplying corporate data centers.
Though Dell has a bigger share of the American market than its archrival,
Hewlett dominates worldwide. Dell has just announced a new line of servers,
known as the Power Edge series, that are easier to install and manage.
It has even made the servers more stylish by masking exterior buttons and
switches and color-coding interior components to give data center managers a
sense of order.
Dell is emphasizing style in its desktops, notebooks and printers as well,
in an effort to keep those products from being mere commodities. On the door
providing access to the interior of the XPS desktops, for instance, Dell
installs a gasket and deadens the ping sound of the spring so it closes with
the thud of a car door.
A new all-in-one printer uses a liquid-crystal display instead of many
buttons to control functions. Dell designers are convinced that other makers
go button-crazy so that the shopper in a store will quickly see how
full-featured the product is. Dell, selling online or by phone, does not
need that visual sales pitch.
The company has not made a splash selling flat-panel televisions the way it
did when it entered the market for servers and printers. That is because
prices across the board have fallen sharply, making it difficult for Dell to
offer consumers a significant price difference.
But Mr. Rollins said that did not mean the Dell model of selling direct
would not work there, too. It is opening stores in malls to display its
products, though they must still be purchased directly by phone or over the
Internet. The company sees major opportunities selling TV's to corporate
customers. Target is buying digital TV's for in-store displays, Dell
executives said.
"The opportunity to continue to grow in the highest-growth categories is
ahead of us," Mr. Rollins said.
CH