Strategy ScrutinizedBy Jessica Davis | Posted 2008-01-31 Email Print
PC Maker Dell has made huge changes in the past year since its founder returned to run the company. But has Dell done enough to turn his namesake company around?
But other observers questioned whether the company's go-to-market strategy could be effective in its current state.
"Dell is missing the opportunities a truly integrated multi-channel go-to-market strategy creates. The silo-ed nature of its strategy, at least as it is published, is setting it up for redundant spending, internal turf wars and channel conflict," said Anne Zink, chief strategy officer for AZtech Strategies, a go-to-market consulting firm.
Zink believes that Dell has not mastered the huge cultural mind shift that comes with the switch to being a multi-channel company.
"The cornerstone of that mind shift is acknowledging the blurry lines between channels and end-user segments," she said. "For example, Dell believes it has a stronghold in the consumer and small business end of the market. However, it has failed to recognize that these two very large communities overlap in its retail and reseller strategies."
What makes it all worse is that Dell "doesn't know what it doesn't know about multi-channels," Zink added. "Hopefully, it will bring experienced multi-channel strategy executives into its corporate strategy group before it gets too mired in the same mistakes the industry made a decade ago."
Other changes the company has made have been lauded by some customers, however.
"I’d say that we have had a very positive improvement with our relationship with Dell during the last year," said Lew Moorman, senior vice president for Strategy and Corporate Development at Rackspace, a hosting company based in San Antonio, Texas, and a large Dell customer. "I don’t know how much of that is because of leadership change but in terms of them being more customer centric and listening more, we have seen a big improvement – both from a product standpoint and a customer relationship standpoint. We feel that we are in much better hands than we were 18 months ago."
IT analysts also view the return of Dell as a positive change for the PC maker.
"Michael Dell’s return was a very dramatic event and I think you have seen that instead of a rip-and-replace plan, there has been a much more methodical approach and a look at what has been working and a look at where they can shore up the weak points," said Charles King, an analyst with Pund-IT Research.
Since coming back, Dell has introduced a number of new products for the enterprise, embraced Linux for its PCs and connected with customers through its IdeaStorm and Direct2Dell blogs.
Acquisitions, a strategy that Dell had avoided, seems to have had the visible affect on the company and helped Dell in two key areas for its enterprise customers.
Its $1.4 billion purchase of EqualLogic shored up its storage division and stands as the largest purchase in company history. Dell already had a deep relationship with EMC, but the EqualLogic move reinvigorated its internal storage division, which had been behind its rivals Hewlett-Packard and IBM, and gave it a strong foothold in the growing field of ISCSI storage.
"What really has impressed me is that since Mike Dell’s return, the company has moved forward with some very specific products and has made bold changes through acquisitions, which it had never prided itself on before," said King.
Now Dell must ensure it keeps up with its channel strategy, and also with the integration of its acquisitions into the company’s portfolio, according to Steve Baker, an analyst with the NPD Group.
"In terms of acquisitions, they really don’t have the time to sit back and absorb what they did," said Baker, adding that Dell will likely continue to focus on acquisitions that help it with storage and with services. "They have to constantly make sure these acquisitions are worthwhile and help the company keep up with the pace of technology. Dell has to keep its foot on the accelerator in order to keep up its advantage."
eWEEK Senior Writer Scott Ferguson contributed to this article.