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