Friday, February 16, 2007

Is Dell in a state of panic?

It seems that each day there is another change at the top. This alone gives the impression of a company which has lost control and is panicking. Dell created a model which was a major breakthrough. While keeping inventory down, it also ensure that only the latest technology machines were sold. However, in the past few years other companies have shortened their supply chains so that they do not hold large inventory, but consumers do not have long waits for their machines. Also, the market moved from desk-tops to laptops, and Dell was weak in that category. Lastly, consumers want to see, touch and try out these laptops, so computer retailers, including Apple's stores, have taken share. Dell was resistant to change until the company was in serious trouble. While Michael Dell has come back, there is no reason to believe that he can change the system he created. We have seen a rapid departure of top executives and just as fast an influx of new ones. These situations tend to be self-perpetuating, and can even accelerate. I suspect that the problems as Dell are worse than they appear, and the worst is yet to come.

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