Summary
Dell will come under continued pressure in its core markets. It may have to develop its professional services business and better service SMEs.
Analysis
Dell’s competency of building to order flourished in the early days of PC hardware take up. However, there will be continued pressure on Dell given the new type of mass consumer coming to the market driving PC penetration, the PC replacement cycle and competition on high specification machines (leading to a range of laptops in the sub $1000 bracket).
Dell’s business model has been eroded by those traditional strong brands (Sony, Asus, Toshiba, IBM) who have managed to offer strong entry level and replacement model PCs. Dell’s diversification into PDA’s has not been as successful as originally hoped, once again given the developments in PDAs and smartphones – coupled with the specialist array of high quality handheld specific devices such as GPS units and gaming units that are attractively priced.
It is hard to see how Dell could succeed in mobile handsets, given the success and innovation of the existing mobile handset brands coupled with their strength in both high-street retail and online distribution. Dell may see more success by developing its professional services business and servicing SMEs. However, given Dell’s competency in build-to-order and manufacturing – would it ‘white label’ produce for other companies and extend professional services into this similarly to how Outsourcers did in the late 1990’s?
