« The Top Brands | Main | Stand Back! I Have Something That Resembles a Knife! »

Innovation at Dell?

In Lee Gomes' column for the Wall Street Journal last week, he wrote about the future of Dell:

What does Dell do, exactly? Intel and Microsoft have all the engineers. Dell doesn't even make its PCs; a string of faceless contract manufacturers do that. All it really does is take and ship orders, and then collect your money...

Is there room in the computer industry for intense R&D from anyone besides Bill Gates, Andy Grove and the Linux enthusiasts led by Linus Torvalds? Or will Wintel and Lintel machines do just about everything that the world needs doing, with everything else, such as advanced business systems, an inconsequential niche?...

[I]t's unclear what the future holds for a company whose basic business is to efficiently deliver things that someone else makes.

Michael Dell responded and his letter is quoted in Gomes' column this week:

We've got 3,200 people in our product development groups who differ with your characterization of Dell's R&D capabilities. Importantly, I think our customers would, too. Our expertise in manufacturing and logistics is well known, and our product innovation is also significant...

Comparing R&D spending by individual companies is misleading. Developing proprietary technology is expensive because it's mostly done independently, and has to sustain old platforms. On the other hand, standards-based R&D is collaborative, done by dozens of companies leveraging each other's work.

And the dramatic market share gains Dell is making in the U.S. and world-wide are proof that customers are smart enough to understand this advantage. When it is so clear which model is advantaged, why waste any "managerial brilliance" trying to second-guess our customers?

In other words, Dell will continue to focus its R&D dollars on improving its efficiencies rather than on dramatic changes to the products it sells. Dell is betting that if it can continue to lower its costs faster than its competitors, customers will continue to choose its products over those competitors who attempt to innovate at the level visible to system users.

I have owned both desktop and laptop Dell systems in the past, and I just bought a new Inspiron 4150 for work. When I bought a Dell laptop at Be, Jean-Louis Gassée criticized my choice. "Dell," he said, "they're not so good. They have a good reputation, but their machines break down far too often." It was a fair point. I've had quality issues with all the Dell machines I've ever had. I thought about it for a moment. "All PCs break down at some point, Jean-Louis," I replied. "The question is, which vendors are going to be there for you when they do?"

After swearing off Apple machines forever during the reign of one of their incompetent leaders -- I can't remember now whether it was Michael Spindler or Gil Amelio -- I now find myself at the Apple Store, looking longingly at the Titanium PowerBook G4. Widescreen display, slot-loading DVD/CD-R drive, the beautiful software of Jaguar -- but, doing my best to compare apples to oranges (so to speak), my company would pay a premium of at least $600-800. Also, I have the need to demonstrate specific software that simply isn't available for Mac OS. So the result is that I'm stuck buying PCs. I wanted a mid-weight notebook with a trackpad and the ATI Mobility Radeon 7500 32MB chipset, which left me with two options: Compaq and Dell. The choice was easy.

A former colleague of mine once visited Dell to discuss potential non-PC products. Dell had devoted a great deal of thought to the matter, and held many meetings on the topic, but in the end, their response -- as quoted by my colleague -- was, "We take the best technology from Intel and Microsoft, then package and ship it to our customers." That's the Dell model, and given that it has made them the most successful PC maker in the world, the idea that they would change at this point is almost laughable. But should they change? That's a different question.

Gomes articulates the "Dell needs to innovate to stay ahead" argument. There's also the "Dell owes it to the industry and to the world to innovate argument." Is either correct? I'm not sure. My heart tells me they must innovate both to stay ahead and because they owe something back to the world, but at the same time, I'm typing this on a brand-new Dell and not the PowerBooik I really want.

Post a comment