{"id":139,"date":"2005-11-01T12:28:38","date_gmt":"2005-11-01T19:28:38","guid":{"rendered":"https:\/\/www.roughtype.com\/wp\/?p=139"},"modified":"2005-11-01T12:28:38","modified_gmt":"2005-11-01T19:28:38","slug":"michael_dell_is","status":"publish","type":"post","link":"https:\/\/www.roughtype.com\/?p=139","title":{"rendered":"Michael Dell is from Mars"},"content":{"rendered":"

Back in January, I described the bifurcation of the home PC market<\/a> – into a dirt-cheap low end and a fashion-driven high end – and the challenge it posed to Dell. Back then, the challenge was theoretical. Now, it’s real.<\/p>\n

The company’s announcement of a major sales and revenue shortfall<\/a> yesterday underscores the problems it’s having, particularly in the consumer market. Dell’s been extremely successful for many years in riding the IT commoditization wave – streamlining its operation to make money at a price point that’s unprofitable for competitors – but now it’s finding that sometimes cheap can be too cheap. Unlike in the business market, where Dell has been able to offer attractive value-added services to keep box prices off the floor, a large number of home buyers are just grabbing the cheapest machine available. With competitors, including a resurgent HP, now willing to battle Dell for market share<\/a>, particularly in the expanding laptop market, Dell’s in a squeeze. It’s lost its margin on home PC sales. Although the consumer market represents a relatively small portion of the company’s overall revenues, it’s big enough to wreak havoc with Dell’s results, a fact that’s led investors to flee the once bullet-proof stock.<\/p>\n

Dell’s response? To shift away from its traditional, scale-driven commodity strategy and try to boost profits by selling high-end machines to the well-heeled. Because the new positioning goes against the grain of its low-cost, anti-innovation heritage, the shift will be a tough one to carry out. Dell will have to compete more on the terms of high-style companies like Alienware and Apple, rivals it hasn’t had to worry about much in the past. It’s leaping, in other words, into a new world.<\/p>\n

Michael Dell is from Mars, Steve Jobs is from Venus. Planetary convergence is rare, in business as in the heavens.<\/p>\n","protected":false},"excerpt":{"rendered":"

Back in January, I described the bifurcation of the home PC market – into a dirt-cheap low end and a fashion-driven high end – and the challenge it posed to Dell. Back then, the challenge was theoretical. Now, it’s real. The company’s announcement of a major sales and revenue shortfall yesterday underscores the problems it’s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-139","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts\/139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=139"}],"version-history":[{"count":0,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts\/139\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}