August 27, 2006: People
have been asking me what I think Dell should do next? What is in the
future of this company who's main value-add has been lower prices
thanks to its direct model. Now the competition has figured out how to
do the same and maybe even offer lower prices, what is in Dell's future? I have some ideas that I think could boost Dell's revenue and margin potential, but to implement them Dell will require a cultural change within the company and more importantly - how Dell's position in the market place is measured will have to change as well. The board and stock holders will have to stop counting how many PCs and servers Dell sells vs. its competition, they will have to start measuring Dell just like most companies are measured - by its financials. I presented my consumer strategy ideas for to Ron Guarriques this month. He liked the approach but hesitated to do anything about it claiming that "he does not work with people he does not know". Anyway, you can view the presentation I gave to Ron below in this post . Here is a quick overview of the overall strategy broken up by market segments that Dell targets today: Consumer Market: Because of my strong background in consumer markets, this is the area where in my opinion Dell has the most potential. Today this market segment amounts to only about 18% of Dell's total revenue, but it could be a lot more. The main opportunity here is to get into the content business. I am not suggesting for Dell to copy Apple, but to take advantage of its position and be even better! Dell has shipped millions of PCs to the consumer, think of these machines as the equivalent of settop boxes just waiting to pipe content to subscribers. This should not only be a music service, this can be the equivalent of a cable company on the internet - yes, Dell could have a substantial advantage in the internet-based IPTV business. The company already has access to the MediaCenter software from Microsoft. With a few code tweaks this could be turned into a user experience that merges Dell's TV and video content streamed over the internet with the user's own digital files. Dell is shipping MediaCenter but only on desktop PCs - Dell should also take advantage of the PC platform and MediaCenter to get into the living room. I have not seen any Home Theater PC designs from Dell. This is a perfect opportunity to expand into the consumer electronics market. Dell sells large LCD and plasma screens, but no decent living-room style PC to plug them into. The new Hi-Def DVD players are basically PCs in a slim box that looks like a DVD player, Dell could add a lot of value here as well. To summarize - Dell needs to seriously look at the consumer market and the goldmine of components it already has to generate substantial content-based revenue. The Small Business Market: Here I believe Dell is missing a huge opportunity in services enabled by some unique custom software and Dell's own hosting (which can be outsourced). Today, when a small business buys a Dell server they are on their own as far as configuring it, backing it up, and hosting its content. In fact most SME's buy servers from their mom-and-pop IT shops and these are usually not Dell. These small, local IT shops sell HP or other because they get better lead generation and support from these companies. Dell could start a major campaign to sell machines through these small IT shops. Providing them with back-end services to help backup and manage their clients! For the more savvy SME, that likes to do things themselves - imagine they buy a Dell server and there is a Dell-branded management console that let's them with just a few clicks configure their entire small network, host their intranet and external web presence as well as provide disaster recovery - all provided by Dell!...or so it will look like. There is revenue potential in providing infrastructure to the small business. The Large Enterprise Market: This is a tougher area for major improvements. However, I have noticed that enterprises that do not buy Dell, do it primarily because of what I call religious issues. What this means is that some IT procurement guy does not like Dell - this could be because of an initial bad experience or because Dell is considered to be married to Microsoft. This is ridiculous but so true in the real world. Maybe a major partnership announcement with a Linux vendor would help? Dell already sells Linux configurations but it is very quiet about this - for obvious reasons. |
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Dell Consumer Products Strategyposted May 15, 2009 8:06 PM by Paul Zukowski |