Fake Steve Jobs on the Red Queens' Race that Is a Competitive, Contestable Market--and Why Dell Will Not Bounce Back
You know, I have forgotten whom Fake Steve Jobs really is:
The Secret Diary of Steve Jobs: Why Dell will not bounce back: love Charles Cooper of CNET... but I have to take issue with his latest effort (see here) where he tries to argue that while Dell looks like crap today, in fact Dell could bounce back just the way Apple did....
What people overlook is that the advantages that allowed Dell to prosper for about a decade were all fleeting advantages. Dell was for a while an innovative company, but its innovations did not involve product design. They involved manufacturing and distribution efficiencies. On the distribution side, Dell sidestepped the cumbersome... distribution model... wholesalers like Ingram Micro and Tech Data who in turn sold to retailers who in turn sold to end customers -- Michael Dell early on recognized that this was stupid and simply decided not to play ball.... The other PC makers knew they were caught in an abusive relationship with their channel but it took them a decade or so to unwind the old relationships and sell direct.... Game-changer here was the Internet which made it easy for anyone to set up their own Web store and build direct relationships with customers. Dell's advantage got erased.
On the manufacturing side, Dell figured out faster than the others in its space how to squeeze component suppliers... brought in loads of former Wal-Mart people... you, Mr. Parts Supplier, end up paying rent to Dell for the privilege of carrying its inventory on your books. Nice, right? Trouble with this "innovation" is that the advantages it creates are fleeting. What wiped this one out was a little place called China.... The rise of China means everyone can make PCs pretty much as cheaply as Dell does. And it's not just cheap manufacturing anymore. The real genius and power of China lies in its armies of low-cost and brilliant engineers. Seen a Lenovo box lately? Heck of a lot nicer than anything Dell is pooping out from its factory in Round Rock.
Bottom line is this: the only innovations worth making are the ones involving product ideas and product design.... To sustain an edge in any market you must make better products than your competitors, consistently, over and over and over again. Just making the same products as everyone else but taking a little friction out of the system can give you an advantage, but only a temporary one.
The other reason Dell won't rebound is that the company is yoked to Microsoft. Vista has hurt them tremendously. Don't doubt it. All of the PC makers know this and they are furious about it. But what can they do? They put their future in the hands of the Beastmaster. They figured they could deal with the Borg's evil nature; they didn't anticipate having to deal with the Borg's incompetence.... [I]nstead of putting our future in the hands of the MicroTards we undertook the massive effort of creating a next-generation operating system of our own. A lot of people, including some very smart ones, said this was crazy. Especially for a company with 2% market share. They said we were suicidal, ridiculous, old-fashioned, hubristic, doomed. The effort cost us huge amounts of time and money and was far from a sure bet. But my feeling is if you don't dare bet on yourself and your own people, you shouldn't be in business. So we made the bet. And now it is paying off in spades -- on Macs and iPhones and other devices which we have not yet announced but will restore a sense of childlike wonder to your lives, trust me....
Now as for Dell, well, you know what their big problem is? Dell doesn't have me. Or anyone like me. Mostly because, let's face it, there isn't anyone else like me. I'm one of a kind. Sui generis, as the French say. What Dell has is Michael Dell. Don't get me wrong. He's a nice guy. And a smart guy. But he's not a visionary. He's not an artist. The stuff he's good at -- squeezing suppliers, screwing distributors -- was very cool ten or fifteen years ago. Today? No big deal.... The truth on Dell? Dell is Gateway. Dell is Kaypro. Dell is Osborne Computer. It's DEC and DG and Apollo. It's a flower that bloomed and now must die. It's roadkill. It's mulch. Nothing wrong with that. In fact, it's a good thing.
