Dell’s Revival Strategy Runs Into Trouble by Justin Scheck. Wall Street Journal, Friday, 28 November 2008, p. A1.

Dell is in trouble. It has lost ground to HP in selling PCs and this article points out that Michael Dell’s plan to recover is taking longer than expected. One of the main reasons, as pointed in the article, is the fact that Dell has lost its advantage in producing low-cost computers. Back in the day this was the big advantage of Dell. They could essentially produce custom-built computers at a very low-cost. They achieved this by carefully managing their supply chain and having just-in-time delivery of components. That worked then but now they are seeing stiff competition from Asia.

The article also mentions creating “Dell lust”. That, I think, will be a solution to the problem. I remember in college the HP lust we engineers had. We didn’t want just any calculator, we wanted an HP and we knew them intimately. If it was HP, I wanted it. I see the same thing with Apple. Those who use Macs cite near religious experiences. The question is can Dell create something similar?

Dell talks about coming out with music players and cell phones but I’m not sure that is what is needed. The company has already tried the music player, remember the Dell DJ–I had one–it was too heavy and not nearly as easy to operate as the iPod. They tried the PDA market as well and some who had the Axim’s thought they were great but Dell could not compete with HP’s iPaq. If they enter the cell phone market they will have to beat Apple’s iPhone and RIM’s Blackberry–both of which have large followings already. I’m not sure Dell is capable of coming up with a product that can beat those.

Perhaps they need to focus on some really powerful yet small and light laptops. That is a market in which they excel and can regain their footing. I hope they do because I am a big Dell fan.

One area in which I think they might be able to compete is in customer support. I love the support you get with an XPS and if they can dump the off-shore support and give could support in the US, they may have a tremendous marketing advantage.