dell

dell / observatory / strategy / tablets — 5 Comments
20
Sep 11

Michael Dell’s world of fantasy and delight

Studies  have shown it’s natural and healthy for males to have recurring fantasies. But still, the ones dancing around in Michael Dell’s head may be pushing things.

To hear Michael tell the tale, life is sweet. All this talk of a post-PC world doesn’t phase him. Quite the contrary. With HP leaving the PC business, his eyes light up at the idea of gaining PC market share. So it goes in his recent comments to Financial Times.

Only a few problems with Michael’s logic.

First is the fact that HP decided to get out of PCs for good reason. Even though they sell more PCs than any company on earth, HP believes the smartest thing they can do is abandon ship. That’s because (a) PC profit margins are microscopic, and (b) it’s only going to get worse as PCs continue their descent.

Second, it’s hard to deny that demand for PCs is fading. Not only have the prognosticators lowered their global sales estimates, so has Michael’s own company. It was just one month ago that Dell cut its sales forecasts for PCs, citing “weakening consumer demand” and other causes.

Third, Michael was publicly downplaying his PC sales as recently as April, making sure we were all aware that Dell was now more focused on the enterprise, with PCs only representing one third of their business. The most positive thing he could say about PCs was that Dell made a “modest profit” on them. “I’m just level-setting what Dell is today,” he said.

He speaks optimistically of Dell’s prospects in tablets too—despite the fact that the 5-inch Streak is dead and the 7-inch model is languishing at best. For some reason, Michael’s fantasy here is that things will somehow be different when and if the tablet competition heats up. In fact, Dell will be one of dozens of tablet-makers all sharing the same OS, slugging it out for a sliver of the market.

“We are very distinct from our competitors,” says Michael in that Financial Times interview. Hard to argue with that.

At least IBM and HP stopped having those PC fantasies.

apple / dell / observatory / strategy — 7 Comments
13
Sep 11

Crapware: the search for lost profit

Apple enjoyed pointing out the difference

Everyone knows that crapware is just a fact of life in the PC world.

From my conversations with people, I’m not sure they understand why.

Basically, it has to do with profit margins in the world of PCs. Or, should I say, the lack of them. When competition became fierce in PC-land many years ago, the PC makers had to compensate for the fact that they were cutting their prices to the bone. So they started renting out their spare rooms to strangers, so to speak.

It was only about three years ago that I attended an advertising meeting with the chief marketer in Dell’s consumer division. He had crafted his plan to meet sales targets for the coming year.

(Note: in marketing meetings inside Apple, we absolutely never talked about meeting sales targets. We only talked about doing good ads. The operating theory was that if we did our job right, higher sales would be the result.)

At the proper point in the meeting, Mr. Marketer made mention of the crapware on Dell computers. And yes, he called it crapware. He pointed out that margins being what they were, crapware actually accounted for just about all the profit on each sale. He invited the agency to come up with new suggestions for companies who might want to join the club — and pay Dell for the right to clutter up their PCs just a little more.

Macs, of course, don’t have this problem. You might get a demo copy of iWork, but that’s about it. Two reasons for this: (A) Macs have a very high profit margin, and (B) Steve Jobs has taste. He was no more willing to bloat a Mac with crapware than he was to slap one of those perma-bonded Intel Inside stickers on his MacBook Air.

Macs have that higher profit margin because those who buy Macs place a value on what Apple brings to the party: design, simplicity and reliability. They’re willing to pay more to get more.

The end result: while Apple makes only 7% of the revenues in PCs, its products account for 35% of the entire industry’s operating profits. Seems to be pretty good incentive for Apple to continue working just the way it does. No crapware allowed.

Now that mobile devices are dominating technology, history is repeating itself.

Crapware wasn’t even a thought on the first smartphones. Now it’s becoming ubiquitous. Same reason as above: intense competition has carriers scrambling for profits. Apple continues not to scramble.

Interestingly, in this category, it’s not like Apple products cost so much more. Thanks to Tim Cook’s operating skills, it’s not easy for competitors to undercut the price of iPhones and iPads. So even at a similar price, Apple pulls in the lion’s share of this category’s profit as well — literally two thirds of the available profit, according to Asymco’s last report.

What’s a smartphone seller to do? Crapware to the rescue!

Mike Jennings reports his crapware findings for PC Pro. In a wide range of Android phones, he found a treasure trove of crapware installed by carriers: multiple app stores, security software, game demos, etc., etc. While you can remove this stuff from PCs with a little effort, not so with smartphones. Most of it is here to stay, installed in such a way that it can’t be removed by the user.

Of course, those who don’t care about such things will continue to point out the benefits of an “open” system. Those who do care about such things will go with the phone maker who also cares about such things — and help pump up their profits even more.

advertising / dell / iPad / observatory / strategy / streak / tablets — 2 Comments
15
Aug 11

The tough and brief life of Streak 5

Dell’s Streak 5 phone/tablet may now officially be classified as phone/tablet/dud.

Visitors to the Streak 5 page at Dell.com are now greeted by the above, with Dell giving it the happy spin: “Goodbye, Streak 5. It’s been a great ride.”

Interesting what qualifies as a “great ride” in Dell’s world: a product ill-conceived from the start, then sabotaged by some of the clumsiest ads in the business.

Trying to figure out how to cash in on iPad-mania, Dell decided it could wedge itself into success. “Hey, if tablets are so popular at 10 inches and phones are so popular at 3-4 inches, we could virtually own the 5-inch category.” And own it they did — for the nearly undetectable group of customers who actually wanted such a thing.

Rather than being the perfect size Dell proclaimed it to be, Streak 5 was too big to be a phone and too small to be a tablet. That much was obvious to anyone with eyeballs.

Not content to hobble Streak 5 with an awkward size, Dell went the extra yard by hobbling it in other inventive ways. Streak 5 was launched with Android 1.6, while the rest of the Android world was already onto version 2.2. And its unlocked version was actually priced higher than an iPad. Perfect.

Oh well, least they could make some good ads for it, right? Uh-uh. Not that this blog is the perfect measure of such things, but Streak 5 actually earned two posts here for advertising embarrassments in its short, tortured life. (See those here and here, if you are so disposed.)

If Streak 5 were a real child, Dell would be facing charges of neglect.

But don’t worry. You can still get a 7-inch Streak. And though they’ve certainly taken the scenic route to get there, rumor has it that Dell is finally working on the 10-inch size that’s been such a terrible burden for iPad.

So farewell Streak 5. At least you got to enjoy one great ride. Dell strapped you into the back seat and drove directly off the cliff.

advertising / creative / dell / observatory / streak — 22 Comments
7
Jul 11

Dell’s perfect train wreck

If nothing else, at least Dell is consistent. Change agencies, change marketing chiefs, change CEOs … the end result is always the same: ads that break new ground for tedium.

This time it was a Herculean effort. This isn’t just a new ad — it’s the culmination of a 10-month journey. Deciding it was time to shake up its marketing effort, Dell conducted an all-out agency search, went through all the presentations and evaluations, selected a new agency for each of their market segments, and finally released the hounds to do their creative magic.

After all that, the first work from the new consumer agency, Canada’s Sid Lee, finally appears.

Maestro, hit the Play button. (YouTube yanked the ad, so click this image to see the spot that’s contained in Adweek’s story.)

My goodness, where do we start.

Dell explains that the theme of this new campaign is More You. This is icing on the cake after they recently introduced their new brand theme line, The power to do more, along with that other theme line, You can tell it’s Dell. One can never be too thin, too rich or have too many theme lines.

In a WSJ article about this campaign, Dell’s chief consumer marketer Paul-Henri Ferrard explains, “We realized it was more important to connect more emotionally with customers.”

Dell’s emotional copy goes basically like this: “It has an HD webcam, killer audio… Get this loaded Inspiron 15R now for only five-ninety-nine ninety-nine, powered by the second-gen Intel Core processor family.” That’s connecting, Dell-style.

The Festival of Emotion continues with the following product visual that remains on the screen for about six seconds:

In still-frame form, you can savor things on this screen that the human eye could never absorb in real time.

I’m disappointed that You can tell it’s Dell isn’t in here, because both of their other theme lines are. Although I probably shouldn’t count The power to do more, because you practically need an electron microscope to read it. This is a tribute to the staying power of the Dell marketing person who insisted that this line be present.

Dell’s own press on this campaign trumpets the campaign theme, More You — yet in this entire spot, those words only appear as a throwaway at the bottom of the product screen.

I will assume that More You is meant to describe how Dell computers make it easier to be you. I can only assume — because there is scant evidence of that in this ad. After the basketball player states that his Dell “helps me try new moves, on and off the court,” all we get is the Goofy Dance and a list of product features.

Trying to decipher the meaning of it all, I’d say that switchable lids are supposed to be the big deal here — though that feature is merely shoehorned in with all the clutter. It would never dawn on Dell to create an ad about one feature alone, as Apple did with the iPad Smart Cover. Better to just cram every possible selling point into an ad.

We are assured that other ads in this campaign will follow. Given the brief synopses that appear in various articles, Dell’s imagination is running wild.

In one spot, a young Dell user explains how technology allows her to “indulge her passion for Justin Bieber.” In another, a grandmother shows how a Dell tablet lets her stay in touch with her grandchildren. Will wonders never cease!

Interestingly, Dell actually claims that this campaign positions them as a “lifestyle” brand. In their dreams, maybe. This ad is simply a moving-image version of what Dell normally does badly — catalog advertising. What we get is an unimaginative image of a person with lots of specs sprinkled about, with the price being given the most prominence. This is Dell’s lifestyle, not the customer’s.

I will say this: it’s a remarkable achievement when the 10-second leader at the start of your ad is more engrossing than the ad itself.

In most companies, ads like this are reason enough to fire someone. Oh, right. They already fired their agency, didn’t they. This is from the new agency. Never mind.

advertising / apple / apple news / creative / dell / iPad / observatory — 11 Comments
20
Jun 11

Apple’s new high vs. Dell’s new low

If anyone ever questioned the value of creativity in marketing, Apple and Dell are currently staging a public demonstration.

Scratch that — it’s actually more of a public debate.

With its new iPad ad, Apple argues that creativity can make a message more interesting and important. With the first ad in its new brand campaign, Dell takes the position that creativity is an unnecessary frill.

Here’s a quick look at two efforts that live on opposite ends of the creative spectrum.

A BEAUTIFULLY SIMPLE MESSAGE

Since Mac vs. PC ended, I haven’t fawned over too many Apple ads. What kind of fanboy am I? Well, we needn’t dwell on that now. This ad is Apple’s best in recent memory.

In fact, this is one of those ads that makes me jealous. It doesn’t try to be clever, it just is. It makes the point that iPad represents a sea change in computing without feeling self-important. And, miracle of miracles, it does all of this without using the words magical or revolutionary.

Against visuals of iPads doing various things in the hands of different people, Mr. Voiceover sums up what makes iPad so darn interesting:

“Now we can watch a newspaper, listen to a magazine, curl up with a movie, and see a phone call … [and more] … because now there’s this.”

Many tech companies fail to grasp that simple, everyday speech can be the most intelligent way to present a product. Here, Apple describes iPad using the most ordinary words, but combines them in a way that feels totally fresh — and important.

This spot is actually a continuation of two previous iPad ads, both of which were more lofty presentations of Apple’s philosophy. In this spot, Apple does not stand up to proclaim “we believe…” (which can come off as arrogant to some). It simply describes how iPad changes the way you look at the world.

This is the toughest kind of copy to write — unpretentious, intelligent and compelling. Whoever is responsible should take a very big bow. This ad fits well with the best in Apple history.

A PERFECT STORM OF NOTHINGNESS

When Hollywood directors could no longer bear the thought of being associated with a film, they used to cleanse themselves by giving the director’s credit to the imaginary Alan Smithee.

From the first glimpse of Dell’s new $80 million campaign, this could well end up being the first marketing effort ever credited to Mr. Smithee.

The ad you see here was featured in a recent Advertising Age fluff piece, accompanied by quotes from Dell’s chief marketing person. So I can only assume it’s for real — even though it looks and feels like a placeholder awaiting real photography. And a real designer. And a real writer. And a real strategy.

This ad is significant because it marks the beginning of what is supposed to be Dell’s first-ever brand campaign. It’s meant to provide the big, overarching message for individual product ads yet to come.

In other words, it is supposed to be to Dell what Think different was to Apple. I’ll go out on a limb and predict it won’t have quite the same impact.

The only positive thing one can say about this campaign is that it will provide income for stock photo sites specializing in hackneyed people shots.

There are a total of 34 words in this ad. 15 of them — almost half — are the same five words, repeated three times. The power to do more serves as headline, theme line and last line of copy.

Why pound these words into our thick skulls? Perhaps it’s to distinguish Dell’s use of The power to do more from all the others who are using it — including Norlift Fork Lifts, Belkin High-Performance Routers,  Lenovo Docking Solutions, GE Healthcare, Kensington iPad Batteries and who knows how many others. (The 5.6 million Google results for this line were making me groggy.) This is originality, Dell-style.

And it’s not like the remaining 19 words are jewels either. In Dell’s world, boring words fit like a comfortable shoe:

With a range of solutions in cloud computing, interactive learning, healthcare, efficient IT and global services, Dell gives you…

Basically, Dell is saying that what sets them apart is that they churn out a boatload of stuff. So they choose to deliver an undistinguished message built upon an overused theme.

Makes you want to run right out and buy a Dell, doesn’t it?

dell / observatory — No Comments
16
May 11

Dell’s convenient story

Laptops = billions ... but that was 3 years ago

As Apple will attest, journalists can be your best buddies or your worst nightmare.

Sometimes they buy your story hook, line and sinker. Other times they smell blood and turn into pirhana.

But Apple’s situation is unique. They have to deal with a media frenzy, no matter what they do.

What about Dell? How likely is the press to run the story Dell wants them to run?

Apparently, pretty likely. Recently, Michael Dell gave an interview to the Wall Street Journal, in which he downplayed the importance of consumer sales and up-played Dell’s efforts in the enterprise. This is the way he spun it:

Two-thirds of Dell’s profit is not the PC. Of the one-third that is the PC, the vast majority of that is not consumer. I’m just level-setting what Dell is today, because I think a lot of people look at Dell and they go, “Oh, Dell is a consumer PC company.” That’s not really at all what Dell is today.

Michael must be taking Distortion Field training, because news services and blogs played back his positive spin almost verbatim, with headlines like Michael Dell Looks Beyond PC Business and Don’t Confuse Dell For A PC Maker.

This is what I call a “free ride.” It’s true that Dell makes a lot more money in the business world than they do in the consumer world. But there are two reasons for that: the business side is going up and the consumer side is going down.

The story swept under the carpet is that Dell, who once inspired individuals with its renegade approach, is now playing out a prolonged death scene with consumers.

The headline “Don’t Confuse Dell For A PC Maker” actually gets it right — just not in the sense the author intended. PC makers should have a sense of imagination and an ability to inspire their customers. Dell can no longer be confused with such a company.

When it turned into a commodity manufacturer, echoing the innovations of others and surviving on handouts from Intel and Microsoft, Dell lost its ability to connect on an emotional level. Now they connect only with companies who buy technology by the pound.

Apple’s customers are loyal because they get hooked on innovation, design and quality. Dell tells us that value is king — so their customers only hang around until they see a better value somewhere else.

So despite the way the press covers the story, the real story is that Dell is doing two things at once: growing and shrinking.

That’s why Michael Dell is out there talking about the enterprise. That’s also why the percentage of Dell’s business from consumers will continue to drop — and will keep dropping until “Dell sells off consumer division” becomes the subject of a future WSJ interview.

Update 5/17: Right on cue, Dell reported today that in the last quarter, PC sales were down 8%. Shocker.

dell / iPad / observatory / tablets / technology — 7 Comments
26
Apr 11

Michael Dell’s judicious use of words

Hell, who saw that one coming?

From yesterday’s WSJ’s interview with Michael Dell.

WSJ: What has surprised you most about the evolution of the tech industry [since your return as CEO of Dell four years ago]:

Michael Dell: I’d say [the] rapid rise of the tablet. I didn’t completely see that coming.

I’d truly love to know exactly what parts he didn’t see coming. Maybe it was the hardware and software parts?

Then again, Michael doesn’t always express himself too well. He said “didn’t completely” when he really meant “completely didn’t.”

android / apple / dell / iPad / observatory / streak — 8 Comments
31
Mar 11

Dell: daydreaming of iPad’s failure

Never mind that Dell has been losing its luster for many consecutive years now. Its leadership retains the ability to see the world through Dell-colored glasses.

That is, they use the same reasoning that worked so well in the good old days — when Dell was leading the pack, instead of struggling not to fall farther behind.

Andy Lark, Dell’s global head of large enterprise marketing, recently made waves by predicting iPad will ultimately be overtaken by its competitors in big business.

To be fair, he is talking about the enterprise world, not the consumer marketplace, where the rules are different. Unfortunately, iPad is proving that the rules aren’t quite as different as he wishes.

Think what you will of his conclusion. I was more aghast at the reasoning he used to arrive there:

[Apple has] done a really nice job [with iPad], they’ve got a great product, but the challenge they’ve got is that already Android is outpacing them.
I must have woken up in the wrong dimension today. I could have sworn iPad had 80-90% of the market and Android tablets had barely begun to ship.

Apple is great if you’ve got a lot of money and live on an island…
As everyone knows, the “Apple is too expensive” argument went out the window with iPad. No competitor has figured out how to significantly undercut iPad’s price. Andy might want to look at the pricing of Dell’s own 7-inch Streak tablet. Significantly smaller than iPad, it sells for $449 without contract vs. iPad’s $499.

…It’s not so great if you have to exist in a diverse, open, connected enterprise; simple things become quite complex.
It is also widely reported that iPad is finding lots of friends in the enterprise world. Three reasons: it simplifies things for a great many people, it is successfully being integrated into corporate networks, and while IT departments used to be free to maintain their decades-old allegiances, today they’re being pushed to give people what they want. What people want now are iPads — right up to the executive suite.

We’ve taken a very considered approach to tablets…
 Dell’s “considered” approach to tablets is frighteningly similar to their considered approach to PCs and laptops. They wait until someone else lights the way (normally Apple), then try to copy the other guy’s success at a lower price point — sacrificing quality along the way.

…given that the vast majority of our business isn’t in the consumer space.
Basically, Andy clings to the same hope that RIM does with BlackBerry: “We have a huge audience in business, therefore we will win by being business-oriented.” Good luck to both of them. The flaw in their theory is that most business users are consumers too, and all users are human beings. People want devices that give them the best experience, period — for business and personal use.

An iPad with a keyboard, a mouse and a case [means] you’ll be at $1500 or $1600; that’s double of what you’re paying. That’s not feasible.”
What’s not feasible is Andy’s math. 32GB 3G iPad: $729. Keyboard: $69. Mouse: $69. Fancy case: $100. Total: $967. And — only in Dell’s world would we be talking about tablets that require keyboards and mice. The whole point of iPad is that it lets people accomplish things without a keyboard and mouse. Those who find those things essential are better off with a laptop.

When Andy thinks about winning in the enterprise, I’m sure he means selling more devices. Which, again, is a very Dell-like argument. Dell already sells far more computers and laptops than Apple, yet they make only a fraction of Apple’s profit. This is why Apple’s market capitalization is now over ten times that of Dell.

You can be sure that everyone at Apple hopes Dell continues to “win” like this for years to come.

advertising / creative / dell / observatory / simplicity — 5 Comments
1
Mar 11

Dell rearranges the deck chairs

The marketing business is full of smart people doing it their way.

Then they get fired.

And new people step in to do things their way.

It happens at clients, it happens at agencies. It’s happened before, and you can be pretty sure it’s going to happen again.

In marketing, there is a time-honored tradition of revamping, rejigging and restructuring — and a fairly dismal record of these moves producing desired results.

Far be it from Dell to buck tradition. In 2008, after years of dissatisfaction with their marketing, they boldly consolidated the work of many agencies into one new global entity. Now they’re boldly going back to where they started. They’ve recently named three new agencies to handle consumer, small/medium business and public/govt marketing, leaving “brand strategy” at its current agency (Y&R).

Unfortunately, Dell has proven itself more than capable of floundering under either system. Whether they have one agency or a boatload, they find new ways to run their brand into the ground. They have many ideas about how to fix things, yet they never seem to wake up with that wide-eyed epiphany: “My god! It wasn’t our agencies. It was us all along!”

Given the facts, it’s hard to come to any other conclusion. Dell’s multi-decade record of marketing mediocrity has almost miraculously survived a parade of agencies and internal reorganizations. By sheer chance, you’d expect them to do better at some point.

What Dell suffers is what many brands suffer: a lack of appreciation for great marketing and the power of creativity.

It’s really that simple. They don’t put value on such things, and therefore they don’t invest in such things.

Dell could easily go out and spend a small fraction of what they spent on their agency search (millions) to hire a well-traveled and passionate expert to lead the marketing charge. Of course, they’d have to be willing to give that person real responsibility, and the chances of that are virtually nonexistent.

In a world where the power of simplicity is on display every day, Dell digs in its heels. They’d rather create a grid of agencies that segregates strategy and creative than recognize the power of those things being conceived and implemented together.

Let us not forget that agencies are ruthless creatures. Ultimately they will claw and scratch for a bigger piece of the pie. I think Dell likes it that way though. In their world, this type of competition is a good thing.

Others — Apple and IBM included — would say that partnership is a far more powerful thing.

apple / creative / dell / observatory / simplicity — 10 Comments
24
Feb 11

Great ads vs. laundry lists

As we all know, ads can fail for a number of reasons: bad creative, bad strategy and bad clients.

It takes a special kind of client to understand that the best way to win a customer’s heart is to focus on a single compelling point — not to stuff a commercial full of goodness.

Some clients just have a laundry list of points they want to get into their ad, and they find it impossible to let go.

Even Steve Jobs is capable of having — as Pink Floyd once said — a momentary lapse of reason. I saw it with my own eyes at a meeting when Steve was trying to get the agency to squeeze a few more product benefits into an ad we were about to produce.

Sitting across the table from Steve was Lee Clow, past and current leader of Apple’s agency. Lee crumpled up 4-5 pieces of paper and tossed one to Steve. “This is a good ad,” said Lee, as Steve easily caught it.

Then, all at once, Lee tossed the remaining pile of crumpled balls of paper to Steve and he caught none of them. “That’s a bad ad,” said Lee.

If I’d known that the incident would have become a blog post, I’d have made it a point to remember if Steve then let us have our way. But I do stand behind the principle, as would most every right-thinking marketing person.

Simplicity beats complexity every time.

People tend to remember one thing well said better than a laundry list well recited.

Fortunately, just as I need to illustrate the point, Dell rushes in with a new ad. Or, more accurately, a new laundry list. It goes like this:

If you buy an Inspiron 15R (catchy name, fellas), you’ll get:

(1) More fun, (2) more control, (3) more durability, (4) more sales support, (5) for less, (6) with an Intel Core i3 processor for (7) faster multitasking and (8) McAfee Security Center. It concludes, of course, with the dueling theme lines, “You can tell it’s Dell” and “The power to do more.”

When y0u compare the Dell-style  laundry-list commercial to a more single-minded Apple commercial (like “Mac vs. PC), it’s not hard to understand why Apple is better at winning both customers and advertising awards.

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