Dell-issues?
With it’s recent battery recall and appalling customer support, Dell seems to be in quite a fix right now - devaluating stocks and all. It seems that no company is really invulnerable to the brutality of the global economy, even one of the biggest names in computer hardware can have its bad days.
Practices can be copied
Much of its woes can be attributed to its focus on cost-cutting leadership. While definitely a big advantage over any type of economy, they bet so much on their 1990s-then-state-of-the-art assembly line. With such tactic subject to imitation and improvement from others, there is simply no long-lasting benefit or advantage for the company. For example, with the maturity of the internet, component suppliers are able to collaborate with Dell’s competitors for tighter Just-in-time inventory schedules that reduce costs. Dell should look for other ways to reach out for the market. Acquiring Alienware was a good move, but I have yet to see Dell’s economies of scale work for Alienware.
Outsourced Opportunities or Problems?
With Dell outsourcing their tech support to the Philippines, I’m quite curious how much Filipinos contributed to Dell’s current situation - whether we were partly responsible or we were actually the lesser of Asian evils. It makes me wonder, “Is Dell in the Philippines for the quality (show me a bunch of 100 random Filipinos who don’t think they’re good in English), price (show me how much an American Call Center Agent earns in an hour and I’ll show you how much a Filipino Agent earns in a day) or the price for quality ratio (the best bang for the buck amongst Asian nations for the moment)?
If it’s about quality, then I believe we only have a decade at most worth of advantage as compared to our fellow Asian neighbors. Remember that these are contract-based projects. It’s not unusual for foreigners to close outsourced factories and relocate to more favorable countries. The quality of education has gone down while distractions have increased in numbers. It’s funny that more malls are being inaugurated in the Philippines every year than hospitals and schools are - combined. I’m not saying malls are bad, mmmkay? I’m saying that there are other things that Filipinos could be doing with their spare time and money.
The Big Picture
What’s gotten shares plunging are caused by analysts whose predictions weren’t met. In my opinion, I think these analysts failed to see that computers have gotten way more powerful than they were before. The word processing, spreadsheet crunching and web browsing needs of the Average Juan de La Cruz hasn’t stimulated any need for greater computing horsepower over the past few years. Everything just works. Why fix something that isn’t broke? Moreover, everyone’s hurting because of delayed sales caused by MS Vista. Everyone wants to see Vista first before getting their Vista-capable machines.
Lastly, the battery recall is something that shouldn’t really get as much negative reaction that it does. For a company as big as Dell, there is no fast and easy way to switch battery suppliers. An environment with a more critical quality assurance and testing might have helped, but how can you test a battery for its problems? The best form of user testing is when the user actually uses the product. Even Apple has announced for a battery recall recently.
Let us not forget though that Dell does not only transact with the masses. They also have Server offerings for supramundane computing needs. Their recent changes to use Opteron and increased Linux are signs of entrance to a possibly bigger market base.
However sad that the picture might seem for Dell, they’re still ending the year with a profit of more than US$3 Billion. How Dell-icious is that?
