Daily Archives: August 18, 2006

Dell Ends Week of Woe, but What Has It Learned?

Dell Inc. must be pleased that this week has come to an end. As the Associated Press reports, Dell’s woeful week included a record-setting recall of notebook batteries, the disclosure of a federal accounting probe. and a 51-percent decline in second-quarter profit.

There also was a lingering controversy over the poorly managed release of a laptop model in China that was powered by a microprocessor other than the one listed in Dell’s product literature.

In a bid to show it is getting with the program, at least belatedly, Dell announced that it would increase its use of microprocessors from AMD.

Until earlier this year, Dell had been exclusively an Intel shop. It’s first tentative stop toward AMD came when it released a four-way, Opteron-based server for high-performance technical-computing applications. Now it will embrace AMD microprocessors across the board, using them to power a range of desktop and laptop personal computers as well as for two-way servers.

Dell will start selling its consumer-oriented Dimension desktops with AMD processors next month. Other models of PCs, including notebooks, will be powered by AMD chips before the end of the year. Opteron-based servers also are expected to reach market by year’s end.

According to a report on CNET’s News.com site yesterday, quoting a report by a Bank of America market analyst, Dell has ordered between 1 million and 1.2 million AMD-powered desktop computers and about 800,000 notebooks.

Calculations by the Bank of America analyst suggest that AMD will capture about 15 percent to 16 percent of Dell’s desktop business and approximately 18 percent to 19 percent of its notebook business. That’s a lot of business, and you can be sure Intel, already in the midst of a restructuring effort, won’t be happy about it.

At least the AMD news demonstrates that Dell is trying to climb out of the gaping hole it dug for itself. Make no mistake, it is a deep hole, and Dell didn’t dig it overnight. It took a lot of misguided shoveling to produce a crater this vast, and Dell now faces a brand crisis that could hobble its image with consumers and enterprise buyers for a long time to come.

There’s no quick fix to the problems Dell faces. None of these debacles that burst into the headlines this week was a result of chance or of fate. Each one resulted from Dell’s institutionalized arrogance, neglect, and a monomaniacal preoccupation with internal processes over all else.

Shifting its mix of microprocessors more toward AMD responds to a symptom of Dell’s chronic problems, but what about diagnosing and treating the disease?

Before it can get well, Dell must admit it has a problem. The problem is one of corporate dogma and ideology. Dell’s success planted the seeds of its decline. It began to view its business-process formula — comprising direct sales, build to order PCs, and a low-cost supply chain — as an end rather than a means to an end.

It got religious about its business model — and business and religion don’t mix, unless you are a televangelist. To paraphrase the late Warren Zevon, what worked for you before might not work for you now.

At Dell, there now should be no sacred cows. Pragmatic executives, prepared to look at everything Dell does with critical detachment, are required. Can the current executive cast at Dell do that job? Are they capable of asking the tough questions and coming up with the right answers, even ones that are anathema to Dell’s previous practices?

That’s the challenge, and it will be fascinating to see whether Dell can remake itself before its decline becomes irreversible.

Google’s Writely Reopens to New Users; TechCrunch Bemoans Potential Market Shakeout

The Writely online word-processing service reopened its doors to new subscribers yesterday after temporarily closing the gate to additional users subsequent to its acquisition by Google.

Google isn’t tipping its hand — not completely, anyway — but it appears the company is developing and stitching together a web-based office suite initially targeted at home users and smaller businesses, market demographics that might be inclined to drop Microsoft’s Office suite if given a compelling, cost-effective alternative. Now enveloped in a prospective Google Office offering are Google Spreadsheets, Google Calendar, and Google’s Writely services.

Gartner Group analysts, meanwhile. have predicted that Google will release a PowerPoint-like web-based presentation service before the end of the year, and, as the folks at TechCrunch note, the release of a Google Drive for online storage is said to be inevitable.

Google still will have to contend with the “offline challenge” — how these programs will operate when users are without access to the Internet — but there are reports that a number of solutions to this problem are being researched and proposed.

What’s interesting about the TechCrunch coverage of this development is that it seems to be lamenting what Google’s entry into web-based word processing will mean for other players in the space.

Writes TechCrunch’s Marshall Kirkpatrick:

Now that Writely is publicly available in the Google suite, do these other vendors stand a chance? They certainly may, but yesterday’s surrender from calender company Kiko — with a nod to Google Calendar — certainly makes you wonder.

While it is an interesting question to ponder, Kirkpatrick would seem to be incorrect in attributing Kiko’s demise to the advent of Google Calendar, as Donna Bogatin explains with considerable supporting detail on her ZDNet.com blog.

More to the point, though, how many Web 2.0 vendors does TechCrunch believe the online word-processing market can support?

Like many Web 2.0 endeavors, the word-processing service purveyors seem to be offering features rather than whole products. In fact, most of them appear to be nothing more than collections of experimental features looking to find and combine with other similarly experimental but complementary features so that, eventually and collectively, they can constitute a whole product or service.

In that respect, what Google is doing — bringing together web-based word processing, calendaring, spreadsheets, presentations, and storage — makes eminent sense. The services tend to mesh together well, and it’s logical that a large percentage of users might want to have them all available from a single service, using a single sign-on procedure.

Why is it so bad to provide people with integrated, user-friendly services? Rather than bemoan Google’s foray into their space, the other web-based word-processing services need to get back to basics, researching and determining how they can improve and extend the services they offer. If the services are good enough, and if the companies are capable of innovating and responding to the needs users, they’ll find favor; if not, they won’t.

If they fail, though, they should point the finger of blame at themselves before aiming it in Google’s direction.