There are two ways to make money in the technology business. You can obsess about making great things, and let profit flow as a result — or simply make profit your #1 priority and act accordingly.
My favorite examples of these two extremes, of course, are Apple and Dell. Apple lives or dies by its ability to innovate, while Dell lives or dies by its ability to generate more clicks every quarter. The companies were born for entirely different reasons — and Dell’s DNA is coming back to haunt them.
Yesterday, the New York Times ran an article about a lawsuit against Dell, and the documents that have come to light as a result. I’m not a fan of Dell, but even I felt icky reading this stuff.
Basically, Dell shipped 11.8 million computers between 2003 and 2005 with faulty electrical components that were leaking chemicals. Rather than own up to it, they stooped to the occasion by concealing the problem and putting customers’ businesses at risk. Astonishingly, Dell even tried to sell them more expensive computers to resolve the problem.
As the article states, “The documents chronicling the failure of the PCs also help explain the decline of one of America’s most celebrated and admired companies.” It will leave your head shaking. A few good quotes:
For the last seven years, the company has been plagued by serious problems, including misreading the desires of its customers, poor customer service, suspect product quality and improper accounting. [I continue to be stunned there hasn't been a shareholder revolt.]
A study by Dell found that OptiPlex computers affected by the bad capacitors were expected to cause problems up to 97 percent of the time over a three-year period … Dell hired a contractor to investigate the situation … the contractor found that 10 times more computers were at risk of failing than Dell had estimated. Making problems worse, Dell replaced faulty motherboards with other faulty motherboards… [It's a whole new kind of Ponzi scheme!]
Dell employees went out of their way to conceal these problems. In one e-mail exchange … a Dell worker states, “We need to avoid all language indicating the boards were bad or had ‘issues’ per our discussion this morning.” [Maybe "the boards were electronically challenged"?]
Dell salespeople were told, “Don’t bring this to customer’s attention proactively” and “Emphasize uncertainty.” [Hell yeah, that'll work. People love uncertainty.]
… hundreds of Dell internal documents produced in the lawsuit show a company whose supply chain had collapsed as it failed to find working motherboards for its customers, including the firm representing Dell in the lawsuit, Alston & Bird. [Hey, what are friends for?]
Every company has a culture, and that culture is what guides employees’ thinking. This isn’t the behavior of an isolated few. It’s a group behavior born of an environment where nothing is more important than the numbers. Unfortunately for Dell, the only known cure for such a failure is leadership.
Past midnight, June 24th. I’ve been playing with my new iPhone for a few hours now. Almost as long as I waited in line for it earlier in the day. Some quick thoughts on the challenge of getting an iPhone and the glory of playing with one.
Why I had to get in line in the first place. Don’t remind me. I would have had a home delivery if it weren’t for the server overloads on reservation day. The only way I could get a reservation was through the Apple Store app, and in-store pickup was the only option there. Please, Apple, no more fiascos like that, okay?
A little clarification before I ramble about Android: I think it’s great that iPhone has serious competition. Android has improved quickly. I know people who love their Droids and we’re still friends. All is good.
One juicy part of the new iOS platform is iAds. Presented with much fanfare, iAds let developers put ads inside their apps, so people can plunge into an ad without leaving the app. Apple owns a burgeoning new in-app ad market, and developers own a new revenue stream.
