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Dell Redux

An e-mail exchange with a friend prompted by my entry on Dell has helped sharpen my thinking a bit.

Dell's goal is to sell technology, not create it. Given this, who exactly does create it? If our industry was composed of all Dells and no Apples, who would have promulgated the windowing user interface? The mouse? Built-in networking? The CD-ROM drive? FireWire?

For all intents and purposes, Dell has ceded user-level innovation -- i.e., innovation aside from improving manufacturing and delivery efficiencies -- to Microsoft, Intel, and Taiwan Inc., roughly in that order. Is that a good thing for our industry? Put another way, if Apple were to vanish tomorrow, and with Dell as a pure seller of devices, who would provide the pressure on Microsoft to improve their product?

Having dealt with Taiwan Inc. while at Be, here's how it works: the PC "manufacturer's" product management team visits Taiwan and meets with all the usual suspects, who trot out all their new designs. The team narrows the field down to a few models that are reasonably close to what they want, then picks a vendor and a design based on cost and the vendor's willingness and ability to tweak based on their requirements. This is not the kind of integrated design process that gets us major leaps forward. It gets us machines that are a little bit better than last year's for a little less money.

Look at what has happened in office suite software: now that the office suite business is profitable for exactly one company -- Microsoft -- innovation has pretty much ceased. I'm using Office XP now, and as an upgrade to Office 2000, it's something of a joke. With no Lotus Improv, no Aldus Persuasion out there providing competition -- or even a benchmark -- Microsoft just phones in its new releases. This is what frightens me in operating systems. Apple has carved out a reasonably profitable niche for themselves and so continues to provide inspiration for Microsoft from afar. If they go, then we're well and truly doomed, because Dell has washed their hands of the matter.

My friend correctly compared Dell to Wal-Mart. That, in my book, is the problem. As long as I have a choice in product vendors, then Wal-Mart is fine. But if Wal-Mart can only buy from one supplier, then we're all at the mercy of that supplier when it comes to innovation.

Given the nature of the PC marketplace today, if we're casting the role of the leading vendor of PCs, do we want a company like Wal-Mart, focused on relentlessly pushing prices down, or do we want a different type of company, focused on more than just price?

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