Posts Tagged: michael dell

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.”

strategy — 6 Comments
2
Nov 10

The day Steve Jobs was wrong

future-crystal-ball2

It happened in 1997. Can’t quite remember exactly when or where. It doesn’t show up on Google, so I’m thinking it came at some internal Apple event or agency meeting.

Though some details are hazy, I remember Steve Jobs’ words precisely, because they were sober and stinging: “The battle for the desktop is over. And we lost.” *

Of course, he wasn’t tossing in the towel. He was simply trying to dispel the “beat Microsoft” mentality that still lingered in the Cupertino halls. What Apple needed more than anything was to be Apple again.

He compared Apple to BMW, which owned less than 5% of the world’s car market, but was still one of the world’s great brands. This was Steve’s vision: to cede quantity, but stun the world with quality and innovation.

Flash forward about 13 years and we find that the vision wasn’t exactly 20/20. It turns out that the desktop war wasn’t lost — it simply became irrelevant.

Technically speaking, the desktop war remains lost. Microsoft continues to own about 90% of it. Yet Apple is the most valuable technology company on the planet, and Microsoft now fights off the perception that it’s on the oblivion express. A thought that was unthinkable just a year or two ago.

Microsoft hauls in the cash with Windows 7, but plays second fiddle to Apple in music players, smartphones and tablets — consumer technologies that are all changing the face of business.

Funny, you don’t hear people talking about how Apple lost the desktop wars anymore. Certainly not Steve.

* At Macworld Boston in 1997, Steve did say “Microsoft won. The OS wars are over.” Close enough.

observatory — No Comments
16
Aug 10

CEOs: feeling the love

In the wake of CEO Mark Hurd’s “resignation” (wink) last week at HP, quite a few stories have popped up about the man’s lovability quotient. Apparently, they weren’t exactly weeping in the halls over there.

This brings up an interesting subject. That is, exactly how do employees feel about their own CEOs at the major technology companies?

Turns out, there’s a site for that. Glassdoor.com offers “a free inside look at over 84,000 companies.” Here, employees can anonymously rate their own places of employment, so perspective employees can hear some straight talk before they sign on the dotted line. It’s hard to draw conclusions from this stuff, since negative voices are usually the loudest. But if you’re comparing one company’s loudest responses to another’s, you have to take notice when the differences are stark. And they are.

Let’s start with Mark Hurd’s pitifully low approval rating: 34%. This is in sharp contrast to Larry Ellison’s high 78% and Steve Jobs’ absurdly high 98%.

Common sense says that employees at successful companies will generally approve of their CEO’s performance. Yet HP has been very successful, and Hurd’s approval rating was in the tank.

Maybe it’s just that he was a tough guy? Well, Ellison and Jobs aren’t the most cuddly CEOs around — and their ratings are sky-high. So it seems that Mark Hurd really did have something special going for himself. He had that rare ability to push his company forward as he pushed his employees away.

Common sense also says that on a site inviting negativity, it would be virtually impossible for a CEO to score 98% approval as Jobs did. Not so difficult to understand, though. (A) Apple’s success is beyond phenomenal, and (B) tough as he can be, Steve Jobs demonstrates respect and responsibility for his employees. Cutting jobs is not the way Steve produces profit, and he does not wall himself off from employee contact.

And let’s not forget our friends Ballmer and Dell. They received 52% and 51% approval ratings, respectively. Sound roughly respectable? Nice middle-of-the-road numbers? Only if you’ve been conditioned by presidential approval polls. Personally, I find 50% to be shockingly low in a corporate poll. Unless your CEO had stolen your wallet or poured sugar in your gas tank, most would support him or her by default. 50% seems like a given, with bonus points for actual performance.

The fact that Ballmer and Dell dwell at the 50% level shows a lot of nothingness. Their failure has not been a matter of months, it’s been a matter of years. And when half your company wishes someone else had your job, it doesn’t bode well for your future.

observatory — 7 Comments
10
Aug 10

Three men and a baby

Dell, Ballmer, Hurd and Torch — doing their best to lower the bar

After a solid month of Apple and Steve jobs being pummeled by the media over Antennagate, it’s refreshing to see other CEOs and companies step forward to take their beatings. Let’s thank them all for their creativity. While they’ve chosen different routes, each gives new meaning to the word “leadership”:

Michael Dell, CEO, Dell
Here’s a guy who made a fortune by breaking the rules in the computer business. Now he’s graduated to breaking S.E.C. rules for financial reporting. Not only does his company get fined $100 million, he personally gets zapped with a $4 million fine for participating in a scheme to mislead Wall Street. This isn’t exactly the inspirational behavior employees (or shareholders, customers and analysts) like to see in a CEO. While Michael fiddles, Dell burns. The Dell brand is fading, as is the value of its stock. But it’s okay. Dell’s board has just reaffirmed its “unanimous support for Michael’s continued leadership, transparent accounting, integrity in financial reporting…” It’s enough to make me believe in alternate universes.

Steve Ballmer, CEO, Microsoft
Steve has done nothing in the last couple of weeks to deserve louder calls for his ouster — but then doing nothing has become his specialty. Under Steve’s leadership, shareholders have received a steady diet of embarrassing delays, often followed by even more embarrassing products. There was the revolutionary Courier tablet, which was in development forever and then killed before release. And the concept-challenged Kin phone that was killed just 60 days after release. Let’s not forget the grand-daddy of them all, the long-delayed and ill-received travesty called Vista. Most damning though, is that in the world’s most important market — mobile technology — Microsoft is but a whisper while Apple and Google have become the superpowers. (Oh, right, I forgot. Windows Phone 7 is coming.) Is there any measure by which Ballmer deserves to keep his job? With the resources available to Microsoft, you have to wonder what the company might be if it had a real visionary at the top.

Mark Hurd, ex-CEO, HP
Justice is harsh, isn’t it. The one guy who was actually doing a good job for his shareholders was sitting on top of the world one day and sent packing the next. The official story is that after marketing contractor Jodie Fisher filed a sexual harassment suit against HP for Hurd’s behavior, an internal investigation revealed discrepancies in his expense reports and payments to Fisher for work she didn’t do. Personally, I love the idea that the CEO of HP was sitting up at night fiddling with his expense reports. Whatever, there’s a lot about this story that just doesn’t add up. Henry Blodget has an interesting take on it this morning in SFGate. All I know is that you or I don’t get severance when we resign from our jobs or when we get fired for cause. Mark got a nice little $40 million severance package for accepting exile.

BlackBerry Torch, Newborn, RIM
Ain’t it cute? Say hi to the new Torch. Hard to remember the last time a non-Apple product got knocked about like this one has been. That RIM released this phone is surprising, given the company’s heritage. It’s not like they’re a newcomer to smartphones — they were literally the first guy in the pool. They’ve had plenty of time to analyze the success of Apple and Google. With all this skill and knowledge, they’ve created a new version of their software and launched it with the “all-new” BlackBerry Torch. Torch might appeal to the BlackBerry crowd but won’t be even remotely tempting to iPhone and Android customers. It has an underpowered processor, a cramped lo-res screen, and it’s thick and heavy. The words “clunky” and “cluttered” seem to pop up often in the reviews. It’s way too early to start writing BlackBerry’s epitaph, but maybe not too early to start checking out gravestone prices, just in case. The latest Nielsen survey says that only 42% of BlackBerry owners plan on buying another BlackBerry — compared to the 89% percent of iPhone owners and 71% of Android owners who plan to remain loyal.

Given the temptations and humiliations people have suffered at the top, you might want to think twice before you go applying for Hurd’s job…

apple / dell — 3 Comments
26
Jul 10

The dark side of the dark side

While many Mac users already see PCs as “the dark side,” Dell has somehow managed to up the ante on darkness.

According to the S.E.C., the company has been dabbling in a little nastiness called disclosure accounting fraud — and they’ve  just coughed up over $100 million in penalties to make it go away.

In a nutshell, Dell lied. They told the world they were meeting their quarterly goals because of their legendary strengths, when in fact it was because of their legendary weakness: an addiction to Intel’s rebate money. Dell received money for using Intel chips, as well as not using A.M.D. chips. Messy.

The S.E.C. said Dell acted “to project financial results that the company wished it had achieved but could not.” They met Wall Street’s expectations “by breaking the rules.”

Okay, so companies get themselves in legal hot water every day. But Dell managed to do something special. The S.E.C. not only fined Dell the company, they took the rare step of fining Dell the person — along with a handful of his former executives. Seems they created their own little Cosa Vostro.

Documents released by the S.E.C. show just how murky this operation was. Former chief executive Kevin Rollins boasted in 2004 that Dell can meet Wall Street expectations because of its “tightly controlled supply chain, highly efficient infrastructure and direct relationships with customers.” Somehow he confused that with “We’re getting a new shipment of cash from Intel.”

He fessed up in an email to Michael Dell, saying that Intel’s money was the only reason they’d made their numbers for three consecutive quarters. It’s “a bad way to run the railroad,” he said, adding “we are going to have to get off their drug…”

Rollins’ behavior was 100% despicable, but his assessment was 100% correct. They do have to get off this drug. All PC makers have to get off this drug — but they can’t. They became addicted ages ago, when PCs became commodities. Since they can’t make a profit on their products, they hungrily take payments from Intel, Microsoft and the software makers who bloat new PCs with dandy demos. According to The New York Times, some of the emails released by the S.E.C. showed Dell begging Intel for money to make their quarterly results.

All of this, of course, is in stark contrast to Apple — to whom Intel is an ingredient, not a paymaster.

Honestly, I don’t get why Michael Dell still runs his company. CEOs are routinely banished for failing to meet goals, and Michael hasn’t come close to restoring the company in the three years he’s been back. As CEO, he should be dumped even if he had nothing to do with the current mess — and in this case it’s obvious he had everything to do with this mess. Where are the angry villagers with their pitchforks and torches?

(Read The New York Times story here.)

strategy — 10 Comments
22
Oct 09

Michael Dell, truth-teller

The buck starts here (but why did he allow that wrong logo to appear behind?)

Apparently he likes almost all of the products he makes



Michael Dell’s remarks at a recent Churchill Club dinner in Silicon Valley shed an interesting light on the values of his company and the state of the PC industry as a whole.

First,  he dumped on the whole idea of netbooks. “Take a user who’s used to a 15-inch notebook and then give him a 10-inch netbook,” Dell said. “He’ll say ‘Hey, this is so fantastic. It’s so cute. It’s so light. I love it. But about 36 hours later, he’s saying ‘The screen’s gonna have to go. Give me my 15-inch screen back.’” Dell also said that “a fair amount of customers” weren’t too crazy about the low performance.

It won’t exactly cause an earthquake that Michael Dell is dissing the concept of an Insprion Mini 10 at the same time he’s selling them by the truckload. But just imagine the news it would make if Steve Jobs stepped up to the mike and said, “You’ll love how thin a MacBook Air is, but once you spend a few days with it, you’ll start missing that MacBook Pro.” We do hold different companies to different standards.

But Dell wasn’t done yet. Moving on to more manly machines, he said that when you get the latest processor technology, along with Windows 7 and Office 2010, “you will love your PC again. We actually have not been able to say that for a long time.” Of course, over the last three years he’s shown no signs of moral dilemma about taking people’s money in exchange for those hard-to-love Vista computers.

Clearly there’s little danger of Michael Dell ever being confused with Steve Jobs. But Dell’s own words shine a thousand-gigawatt spotlight on the stark differences between the two — as personalities and champions of different business models. Dell lives in an ultra-competitive world that’s all about numbers. Jobs lives in an equally competitive world that’s all about innovation.

The difference between the two can be seen in every product they make. If you listen, you can also hear it in every speech they make.