Dell Wants to Win Your Business

Dell is still hungry for more.

Kevin Rollins, CEO of the world’s largest PC manufacturer, said Dell is going through a shake-up—something he said seems to happen every four or five years at the company—but that it will emerge stronger than ever.

The Round Rock, Texas, PC maker has faced a series of problems of late, some of which Rollins said were of its own doing.

The combination of a more aggressive Hewlett-Packard—which has made gains in cost competitiveness and service and support—combined with slipping satisfaction among Dell customers contributed to a slowdown in Dell normally swift growth, in turn yielding smaller than expected profits for its first fiscal quarter.

The slip-ups have caused some to question the ability of Dell’s direct-sales model to be effective in the future. But Rollins said he is confident the company will turn it around.

“Every four to five years in Dell we have a period of readjustment. I don’t know why…but it’s been true in the 20-year history of Dell,” Rollins said, in a question and answer session at a Bear Stearns technology conference in New York City.

“However, this time, as we’ve been working through that, we’re in far and away better strategic position, management position and leadership position then ever before.”

“A few tweaks” to the system, Rollins said, are being made to get Dell back on track.

Dell, in recent weeks, has unveiled plans to spend $100 million to revamp its customer service and support, pledged to offer new products—it has inked deals with Advanced Micro Devices and Google, for example—and begun offering delivering more aggressive pricing.

Read more here about analysts’ fears of a Dell-prompted PC price war.

Rollins said he expects that the combination of more favorable pricing—Dell was offering its Dimension 1100 desktop and Inspiron 1300 notebook to small businesses for a starting prices of $299 and $449, respectively, after rebates on June 13—and improved service will bring customers back to Dell, allowing the company to continue on its upward trajectory.

Dell has historically grown its unit shipments far faster than the market rate. But during the first quarter, its shipments increased by only 10.2 percent, versus a market rate of 12.9 percent, market research firm IDC said.

But Rollins was careful to avoid any mention of a PC price war, choosing instead to point out what he says is a continuing gap between Dell’s costs and those of HP, which Dell can use to its pricing advantage.

“I think that what we’ve seen is as competitors have gotten better there’s an opportunity for use to accelerate [Dell’s] overall growth. We can do that with price leverage,” he said.

“There are periods of time when you get tightening, markets get a little slower. So utilizing price to get sales going and capture market share is the right thing to do.”

As part of its efforts, Dell has retrained about 5,000 of its support personnel in an effort to help them resolve customer issues more quickly.

It has also rolled out a new online support tool that allows a technician to take over a customer’s system remotely to help solve software issues such as driver problems or assist in diagnosing spyware problems.

Dell will also shake up its product lines. The company will, for the first time, offer AMD Opteron processor-based machines in its server line, beginning in the second half of 2006. It has also partnered with Google to deliver the search giant’s software pre-installed on some Dell PCs.

Rollins said that customers requested the AMD processors and also desired to use Google software and Dell is meeting their demands. But he stopped short of saying whether or not Dell would offer more AMD-processor products, such as in its desktop PCs, in the near-term.

“I don’t know,” he said, in response to a question on a AMD-based Dell PC. “We haven’t announced anything beyond what we’ve done today. The commitment is really back to technology and customer demand. AMD has great products. We’ll have to see how that rolls out…”

To be sure, Rollins said, Dell’s product line shakeup will include numerous new Intel-based systems.

The PC maker has adopted all three of Intel’s forthcoming Core Microarchitecture processors, including the Intel Xeon 5000-series processor, also known as “Woodcrest,” for servers and Core 2 Duo chips for desktops and notebooks.

Read more here about Dell’s new Intel-processor servers.

Rollins described Dell’s Intel partnership as strong.

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