Reinvention time for Michael Dell
Published: 01 Feb 2007 15:46 GMT
…and forging into new markets, the company may have taken its eye off its core business.
Ticked off Dell customers were documenting their concerns all over the internet in 2004, but the company didn't significantly address the problem until May 2006 when it announced plans to spend $100m upgrading its customer support. It later announced plans to simplify the customer experience on its website with more transparent promotions and a redesign of the page. Dell even launched a blog in hopes of reaching customers more directly.
"Our intention with this blog is to address issues that are important to our customers. Give us some time and we'll prove it," wrote Dell's Lionel Menchaca on the second day of Dell's blog.
Likewise, PC customers are becoming more concerned with the look and feel of their systems these days, and have little time for boring boxes. Dell recognised this by introducing its XPS line-up of flashy high-end PCs, but did not start overhauling its mainstream units until late last year under a design initiative previously headed by John Medica.
"We are seeing that the product design expectations from small businesses and consumers are becoming more different. It is very likely that in the future we will deliver products that are more tailored to those specific customer expectations," Medica told ZDNet UK's sister site, CNET News.com, in November.
Demand for AMD's processors was strong throughout 2005, as the company enjoyed a performance lead over Dell favourite Intel. But Rollins stuck with Intel until 2006, just as Intel started rolling out chips based on a new design that erased AMD's performance advantage. The company adopted AMD much later than the competition, and alienated a long-time partner just as it was reasserting itself.
And Dell's famous cost advantage throughout all those years became less important as the industry shifted to notebook PCs, which are generally built and assembled by third parties in Asia. Dell chose to do much of its notebook assembly in-house, creating a situation where its costs were higher than those of its competitors.
Rollins' departure follows a steady exodus of long-time Dell executives from Round Rock, Texas over the past few months. Company veterans such as product guru Medica, small business sales chief Joe Marengi and chief financial officer Jim Schneider have all left or signalled their intentions to leave following a tough year for the PC company. New executives — many from outside the tech industry — have joined Dell in hopes of injecting new thinking into the company.
Unfortunately for Rollins, however, his ultimate legacy might be the outcome of the accounting investigation. His mantra as the business side of Dell's two-headed leadership team placed responsibility for accounting squarely on the shoulders of both him and Schneider: both of whom are now gone.
Michael Dell was in an enviable position when he announced plans to hand over the chief executive reins to Rollins. The company was at the peak of its powers and seemingly could do no wrong. Now Dell gets a chance to add to his legacy with a bid at a turnaround project that was already under way in Rollins' last days with the company.
"The company is going to be invigorated with the change," said Samir Bhavnani, an analyst with Current Analysis. "Even though Michael Dell was around the last two years, he wasn't able to have the impact on the company that he had when he was the CEO. Now he can."
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