| There is a war shaping up that involves two | | | | beneficiary. |
| giant companies facing off, and soon there | | | | |
| will be three. The war is between Dell | | | | The consumer is now becoming aware that |
| Computer, and Hewlett Packard for supremacy | | | | certain Sony manufactured notebook batteries |
| in the personal computer world. The first | | | | sold by Dell from April 2004, until July 2006 |
| battles have been fought, and clearly Dell | | | | are capable of exploding and causing a fire. |
| has been the winner for years. The next | | | | A Dell recall is now in effect involving 4 |
| battle seems to be shaping up as we write | | | | million PC batteries on a world-wide basis, |
| this, and Dell seems to be victimizing itself | | | | of which 2.7 million are in the United |
| with recalls, and lackluster customer service | | | | States. |
| at best. | | | | |
| | | | Recently the Wall Street Journal carried an |
| For more than a decade Dell has eaten Hewlett | | | | article about a laptop computer smoking on an |
| Packard for lunch in the world of personal | | | | airplane while on the runway. The crew was |
| computers. Any analyst will tell you that | | | | able to open the door and throw the machine |
| Hewlett Packard makes a disproportionate | | | | out onto a conveyer before it erupted into |
| share of its bottom line from selling ink for | | | | flames. We now have over 4 million machines |
| their printers. They sell the printer | | | | capable of this on a world-wide basis. |
| probably at a lost just to get the ink | | | | Several weeks ago, a Dell computer was shown |
| resupply business. If you buy a HWP machine, | | | | to be on first in a movie that circulated by |
| they don't even include a printer cable in | | | | the bloggers on the Internet. Dell tried to |
| the box. They would like to because it only | | | | downplay the story unsuccessfully. Great |
| cost a dollar or two. What happens instead is | | | | management teams confront their problems and |
| that stores like Best Buy, Circuit City, and | | | | deal with them, that's not what's happening |
| others demand that the cable not be included. | | | | at Dell. |
| These stores sell the cable as a separate | | | | |
| item for $20 to $30 depending on length. Not | | | | What is happening with Dell is that they at |
| a bad markup, pay a dollar or two, and sell | | | | the very least seem to be losing their edge |
| it for $30. The stores make more money on the | | | | which they have had since the beginning of |
| printer cable, than they make on the printer. | | | | the PC revolution. There comes a time in |
| | | | every company's growth cycle when the company |
| Carly Fiorina, the former Chairwoman of | | | | gets "Tired" for want of a better word. PC's |
| Hewlett Packard developed a corporate | | | | have become as easy to build as toasters. |
| strategy that was working. The Board simply | | | | There really are no brand differences between |
| got tired of her. Today the current Board is | | | | competing companies, other than advertising. |
| implementing her strategy and it's working. | | | | |
| | | | What Dell needs to do to get back in the game |
| Dell meanwhile has had a tremendous fall from | | | | is re-energize itself. This is no longer the |
| grace. Dell really doesn't manufacture | | | | company that was the subject of several |
| anything. They are an assembler and a | | | | Harvard Business School case studies. They |
| shipper. All manufacturing is done overseas | | | | must get their suppliers to conform to what |
| in an attempt to remain the low cost | | | | use to be very high standards, and pull their |
| producer. Through the years, Dell was so | | | | customer service act together. |
| superior at this that some of their financial | | | | |
| metrics were meaningless. As an example, one | | | | If former "also ran" Hewlett Packard can pull |
| of the things that analysts like to know is | | | | it off, then so can Dell. HPQ has |
| how long it takes you to pay your bills. Dell | | | | successfully merged giant Compaq Computer |
| turned the whole concept over on its head. | | | | into its operations. The post integration |
| | | | savings have been achieved, and it now |
| Let's look at an example. You order a | | | | appears that the merger was done seamlessly, |
| computer from Dell, and pay for it | | | | and restructuring savings are still being |
| immediately by credit card. They have your | | | | achieved. |
| cash. Dell's suppliers ship the components | | | | |
| for that machine before there is any money | | | | What's coming next will be China's Lenovo |
| due them by Dell. This means Dell gets your | | | | which took possession of IBM personal |
| cash, and may not have to spend that cash for | | | | computer division will be making its move |
| months. The usable float amounts to billions | | | | against both Dell, and Hewlett Packard. Both |
| of dollars. So why has Dell fallen from | | | | of the American based companies have heavy |
| grace. It comes down to this. When you play | | | | manufacturing done in China. Lenovo will do |
| by the edge of the table, sometimes you fall | | | | whatever it has to do in an attempt to garner |
| off. | | | | market share for its personal computer |
| | | | manufacturing segment. Over the next two |
| Dell's customer telephone service centers in | | | | years there will be a 3 way war. The argument |
| India are failing the American consumer | | | | will be since Dell and HPQ are selling China |
| miserably. They may speak English, but they | | | | manufactured products already, why not buy |
| do not understand our culture, and they do | | | | China direct. It will be interesting to see |
| not get the job done, as far as consumer | | | | how the winners sort themselves out, what |
| satisfaction is concerned. In the end, | | | | will be Wal-Mart's roll, since 70% of all |
| consumer satisfaction is everything. People | | | | products sold by the giant chain come from |
| vote with their feet and the consumer is | | | | China. Wal-Mart really is China's |
| voting to buy somebody else's machines, | | | | distribution arm. |
| namely Hewlett Packard is the main | | | | |