A New Dell Direction: Is It the Right Course?

Tom Miller has been keeping a close eye on Dell for years.

The senior director of IT for Fox­Hollow Technologies, a
cardiovascular health products company in Redwood City, Calif., Miller
has been a longtime Dell customer. His company of about 600 employees
is standardized on Dell servers and PCs.

And Miller has watched as Dell over the past year has rolled
out innovations, embracing technologies that it historically has kept
away from; a revamped management structure; and new services offerings.
Most recently, the company hinted it may more fully jump into the
channel. All this is happening under the guidance of Michael Dell, who retook the CEO reins in January after Kevin Rollins resigned.

Like other customers and analysts, Miller understands the moves
Dell is making, but he said the company has some distance to go. He
said Dell continues to struggle to address the pain points he
experiences with mastering operational excellence and compliance. After
a while, Miller said, price—Dells traditional trump card—matters less
and less.

"What we are continuing to look for is Dell not just providing
products at a competitive price like its rivals, but at what Dell can
provide in terms of a whole enterprise solution that addresses the
customers needs," said Miller, who is also an eWEEK Corporate Partner.
"Im less concerned about the announcements. What I want to hear is how
Dell is going to differentiate itself from its competitors."

Addressing customer problems is a key focus of the moves Dell
has made over the past year, said Kevin Kettler, chief technology
officer with the Round Rock, Texas, company.

"As weve reflected back here in the last six to nine months,
theres a lot more in front of us that we can engage and address,"
Kettler said. "We are moving to a solutions orientation for our
customers. It isnt a conversation about the underlying technology these
days. Its around a set of problems they have, a set of pain points they
have."

That focus comes at a time when Dell is trying to regain its footing in the industry. The company lost the top spot
in the global PC market to Hewlett-Packard in the third quarter of
2006, and its share has continued to decline. IDC said Dells market
share in the first quarter of this year slipped 6.9 percent. HPs share increased nearly 28 percent.
The Securities and Exchange Commission also has launched a formal investigation into Dells finances and accounting, which has hampered the companys ability to release its quarterly earnings.

Dells responses have been varied. The company now offers chips from Advanced Micro Devices in its hardware, and this month announced it will offer consumer desktops with Ubuntu Linux preinstalled and will support the interoperability agreement between Microsoft and Novell. Dell also is venturing further into services, such as with its Data Center Solutions division, which helps businesses design and deploy data centers.

"Historically we have products that would be available to those
people configuring data centers," Kettler said. "Now we are doing
custom design for those data centers as required to. … That is new for
Dell. The company is moving from build to order to design to order."

He said Dell is taking a more holistic view of its offerings.
"When we talk about these things, we talk about hardware, software and
services," Kettler said. "You can expect us to offer changes in that
space as well. "

Analysts and customers said they believe that Dell, especially
with Michael Dells day-to-day leadership and a new executive team in
place, can bounce back, although the company will have to push itself.

"I dont think its [a question of] if Dell will get back on its
feet; its more a question of when will Dell get back on its feet," said
Samir Bhavnani, an analyst with Current Analysis West.