Dell diversified business transformation
Whether it is released smart phones, or the desperate scramble for 3PAR, were indicative of a problem â Dell wants to reinvent itself, from a PC and server manufacturers to develop into a full range of IT products and business services firms
In the transformation of the way, Dell is farther and farther.
Recently, Dell launched its first U.S. smart phone, but the initial product evaluation, the results are poor. Critics bluntly pointed out that if Dell wanted to find the advantages of the product launch, that is, it basically did not raise the concern of the outside world.
After the product launch because of quietly: in the increasingly crowded smartphone market, a new product is unlikely to trigger any response is almost; followed by the conference along with larger, more dramatic events covered up â it based in Texas City, the company is 53 billion U.S. dollars, a few weeks has been bid with rival Hewlett-Packard, which means small in the acquisition of a little-known developer of high-end data storage technology 3PAR. Surprisingly, HP finally won the battle for victory.
Although he did not buy success, but shows a problem â Dell wants to become a complete IT business products and services to manufacturers. In this regard, Wharton management professor Daniel Levinthal that is not easy to achieve this goal.”Dell seems to have forgotten their own strengths and how to use these strengths to find new opportunities.” He said, “the year of Dell’s business confidence business model with tight win customers, users need only a few clicks of the mouse, Dell will to provide low-cost computers. Now, it is not in this business deterioration, but the environment has changed. “
Industry experts believe that Dell is in the process of adapting to the new environment, started too late, and Hewlett-Packard and other competitors have started by offering more sophisticated products and services to grab market Dell is the envy of the year. After three years of silence, Dell founder and chairman Michael Dell, chief executive officer in 2007, back in control of the helm. Since then, the company will make an effort to areas of higher-margin businesses â for example, storage services provided by 3PAR and rapid growth of smart phones and other consumer sectors. However, Dell is able to realize its ambition it?
Transformation
Wharton marketing professor George Dey and Duke University Fuqua School of Business Professor  Coleman believes that in respect of a business is very good at their businesses, Dell’s dilemma is very typical â – they often ignore the needs of the market for business transformation. Dell has plunged into the “arrogance from the inside out” (inside-outhubris) in.
“To create an effective competitive strategy, we must jump outside the company to competitors, customers and channel members to examine the perspective of such company.” Delly said, “This is Dell, the ideal. This company In the 80s of last century in the boom of the 90s also have a clear customer value orientation. they can master the logistics, and other difficult to match the price and speed of introduction of standardized hardware. “
“However, as with other successful companies, Dell began to think, âWe are more than anyone understand the market’,” Dey said, “so they give up âfrom outside to inside’ concern about the methods the enterprise market positioning.” They are now thinking about is how the use of existing resources and capabilities to maximize benefits and no longer consider the needs of users.
In fact, this model for Dell in the past has brought great benefits. “Around 1997, when the peak strength of Dell, the company will retain the stock for about a week. The competitors will be retained for 2 to 3 months of inventory.” INSEAD, France, Technology and Professor of Operations, European Business School pointed out that “the cost structure of which makes a huge difference. computer fast loss of value: the computer put on the shelf every week, its value will be lost 1%. So Dell won.” According to Netessine estimated that Dell was more expensive than competitors such as IBM and Gateway lower by about 8%. This huge difference in helping Dell become the world’s largest PC manufacturers.
But now the situation? Hewlett-Packard snatched away in the world’s largest PC manufacturer, after the throne, Dell is still struggling for the second position.Netessine, said: “Dell still has a highly efficient supply chain, it is not efficient continuous improvement and weed out the parts.” However, as other manufacturers have gradually learned how to improve supply chain strategy, so Dell’s cost advantage of 8% has been reduced to 2%. Netessine said: “2% difference is difficult to bring any substantial advantage, because Dell’s products are not much stronger than the competition, were not significant, the reliability of the same is not too strong. Not only that, Dell Services better than the competition does not. This is difficult for dell to maintain the rapid growth in 2000. “
In the PC market, Dell though successfully resisted the impact of Acer, but the position remains precarious. The company’s PC shipments in the second quarter increased 19.1% to 10.6 million units, behind HP’s 14.8 million units, compared with Acer’s 10.2 million units, only a slight lead. Dell’s server shipments also achieved growth in the second quarter.According to the U.S. market research firm Gartner, Dell’s server shipments in the quarter among the world’s second to reach 55 million units, up 35%, ranking first and third of the HPand IBM were 64.4 million and 27 million Taiwan.
Into the cloud
Now, Dell reduces the concern of the hardware and instead put more attention on service. Netessine to this model as “service-oriented.” He pointed out that the mass of the products into more difficult for consumers of services compared with each other, in today’s IT vendors are very popular.
Dell’s current growth rate of no enviable place, not to mention many including Dell PC companies have suffered the severe impact of the economic crisis. As of July 30 in the second quarter, Dell profit of 545 million U.S. dollars, revenues of 15.5 billion U.S. dollars, a year earlier profit of 472 million U.S. dollars, 12.8 billion U.S. dollars in revenue. At the same time, Dell’s cash and equivalents of 131 million. In announcing earnings call, Dell CFO Brian Engel bin Laden (BrianGladden) said that they achieve this growth, largely due to “late users to update.” That is, big business has experienced from 2008 to 2009 the cost of compression, it begins to increase IT spending. Dell’s servers, storage and networking products also achieved sales growth of 43%, to 43 million; services revenue grew 57% to 1.9 billion.
Currently, Dell will bet on the cloud services business users interested in the growing â the Internet-based computing allows companies to access resources such as software and storage from Dell, on behalf of the supplier to provide a remote host.In 2008, Dell spent $ 1,400,000,000 acquisition of storage vendor EqualLogic (the company’s first 6 months of fiscal 2011 revenues of $ 800,000,000) and with the storage giant EMC has established cooperative relations, thus providing cloud computing services for SMEs.
Netessine that, for some enterprises, the “service oriented” will be a great change. “You have to really sell the idea of short-term changes in favor of thinking 5 years, 10 years, 15 years of strategy, and find ways to buy these products, users can also sign a number of service agreements.” Netessine says, “think carefully about the life cycle of these products, such as what business users want to contract; if you can services agreement with the additional support for users; you can provide multiple levels of service? but I do not think we should stay away from Dell’s core strengths, such as sell smart phone. “
Made several recent acquisitions to further accelerate the Dell “service” of the development, including the company spent 3.9 billion U.S. dollars on IT management and service providers PerotSystems acquisition (68% premium to the deal.) Dell is the PerotSystems into its service sector.
Hewlett-Packard in 2008 to spend more than 130 million acquisition of IT services provider EDS, they start to expand its services business. Shortly thereafter, the software company Oracle to spend 7.4 billion acquisition of Sun, and to first foray into the computer hardware market. Wharton management professor Joe HU Rui believes that these companies want to imitate IBM. Prior to the IBMÂ PC business to Lenovo, and in 2002 spent 3.5 billion acquisition of PwC Consulting, to develop services.
Wharton management professor David Hsu believes that Dell has money has power to promote this strategy, although it also worried that if the U.S. economy, the second bottom, so Dell will face a more difficult situation. “The current trend is to focus on profitability and operations, not to make strategic changes, but even in the current environment, I do not think the shareholders want it.” He said.
Dell should not be overlooked that small-scale enterprises mergers and acquisitions. But Wharton management professor Lawrence Ho Binya that, while M & A for 3PAR Dell and HP both in terms of significance, but the pay is not worth the high price.He also added that the focus of this battle has been transferred from the 3PAR to HP and Dell’s policy. He said: “a mix of some ‘self’ components. Hewlett-Packard has just fired in August of this year before the CEO Mark Hurd (MarkHurd), they want to prove to the outside world, even without Hart, they are still able to develop strategic decision-making ⦠⦠and Dell is still eager to beat HP, Hewlett-Packard in the PC market because of beating them. “
Do nothing
Dey said that Dell needs to be more focused. Dell’s current strategy he described as “a day late and a dollar less ⦠⦠Hewlett-Packard and other companies into the service time to market much earlier than the Dell.” He believes that some of the challenges is that Dell needs to improve internal efficiency focus shifted focus from the external market. He said that for companies like Dell, “You have to jump with your customers and channel members stand together and not just focus on the competitors in your market trends, but also should pay attention to trends in other markets . “
Other experts were worried that Dell’s inability to establish clear priorities.Should first develop smart phones and other consumer products or one-stop shop for enterprise users to develop products and services? Whether the development should be for all PC and laptop? Or should focus on other areas? Joe HU Rui said: “I’m not sure Dell has a clear direction or uncertainty still exists, or whether they want to be like Hewlett-Packard as the giant across the two areas. Now, Dell does not seem to be added to determine Which areas of major development efforts. “
“Dell is trying to become one of the IT companies do nothing, a wide range of enterprises.” Netessine added, “The problem is all the things you want to do is very difficult. Difficult to imagine how and Dell All of these powerful competitive. These companies join Dell earlier than the time, and in many cases, their products are better than Dell’s excellent. “
David Hsu said, for companies like Dell, the choice to enter the number of different areas, it will face a problem. “This is costly, and will give rise to confusion. Not only in-house and external the same sex would be unique to Dell puzzle.” He added, “Dell to remember is to become a valuable company, not to control the entire value chain. “
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