Dell is having some rough times. Revenues have fallen, and their stock price is the lowest in years. What is going on? Should you still buy Dell? Here is Bob's take on the situation.
First of all, I have always liked Dell and in the past heavily recommended its products - excellent PCs, well engineered. This also often extends to other products, such as printers and MP3 players. Support used to be excellent. Every Dell PC that I took out of the box for a client was always perfect. I can recall only two failures in all the years I have been doing Dell - a bad display and a bad keyboard. Not a bad record for the hundreds of PCs that I have uncrated both while I was working for companies here and in Raleigh.
But there are some issues. First and towering above all the other issues is customer support. I think that Dell made a very bad decision to offshore customer support for home and small office PCs to India. The interesting thing is that from what I read, Dell did an excellent job here - hiring and educating the right people and providing an excellent workplace for them. But Dell didn't see the forest for the trees - the cultural and language barriers were insurmountable. Add to that the constraints that their support workers had to deal with; it seems that their people couldn't innovate or use their knowledge to solve problems - they had to work within standard scripts and apparently were monitored and checked regularly. This makes the process tedious at best.
If parts were needed, Dell relied on local outsourced local companies, but supply and availability of parts was often not what it should have been.
The result? Dell support slipped from one of the best to just average - and average in this business is pretty bad.
Second on the issue list was Dell pricing. Dell was never the absolute low cost leader, except back in the early days when Michael Dell started the company from his dorm room. But Dell prices were at least "fair", given the excellent support and quality. More recently, they instituted a very confusing pricing policy with "deals" and freebies changing so often that it was impossible to pin down a price. Cheesy ads in the Sunday paper offered very inexpensive prices on PCs, but they were either terribly underpowered (i.e. older, slower parts) or once you actually configured one the price was much higher - for example, offering only a 90-day warranty at the cheap price.
Adding to the price problems was that Dell refused to offer PCs with the more inexpensive AMD processor chips. This first hurt their retail prices, but later when AMD actually became the performance leader and processor of choice for users requiring the highest speed, Dell lost that entire segment of the marketplace. They have attempted to recover this with the purchase of Alienware Computers, but it remains to be seen if this will change anything.
But Hewlett Package / Compaq computers was waiting in the wings. Once ineffective CEO Carly Fiorina was pushed out, new CEO Mark Hurd is working hard to reestablish the brand name. You can now buy very respectable HP / Compaq PCs at the local electronics stores for prices much less than equivalent Dell's - and no waiting.
A third area that Dell slipped in was notebook (laptop) PCs. Again here, Dell prices pushed up, and HP undercut them. The differential between Dell notebook prices and local HP prices is even larger.
So, where does that leave Dell? They may soon get a performance boost as the newest Intel processor products are being reviewed and have apparently recaptured the performance lead from AMD. Shipped quality remains high, and Dell has promised to make the purchasing experience more straightforward and to offer less come-ons and difficult to pin down freebies. Although service still seems to be an issue, I believe it is no worse than HP / Compaq. This leaves Dell is still in the running, but watch the prices carefully.
(Bob Seidel is a local computer consultant in the Southport - Oak Island area. You can visit his Website at www.bobseidel.com or e-mail questions or column ideas to him at bsc@bobseidel.com. For specific inquiries, please call Bob Seidel Consulting, LLC at 278-1007.)