Mike -
It makes no sense for Dell to compete with CPQ using the CPQ production and inventory model.
now you're being silly. CPQ is the only company making money in the consumer segment. DELL has finally grown so dominant in the commercial space that they need to move on consumer segment, even though they have not sold there in the past. Why not? Because that segment does not match DELL's BTO model - they have no natural advantage.
How then to proceed? Do what DELL has always done well - look at who is succeeding in the segment, understand why they are succeeding, and develop a version of that model which optimizes for a particular DELL strength. Then cherry-pick the most profitable products in that segment with a minimum of investment and maximum efficiency. This is what they did in the server business - and they modeled their approach exactly on CPQ. They even hired CPQ's former server marketing VP, Mike Lambert, to run the division.
In the consumer space, the clear winner is CPQ. CPQ has consistently managed to wring profit out of a very tough market and has driven almost everyone else out of the business. They have more share than the next 3 vendors combined.
Why would you think that DELL would be too proud to learn how that happened, who the real competitors are going forward, and then devise whatever manufacturing method is required to win in that space?
DELL management has shown a great ability to remain open to outside thinking, to avoid the "not invented here" syndrome, and to take whatever works and perfect it.
You should take a leaf out of their book. If the CPQ methods are so bad, how come they dominate in a tough segment, profitably, with growth rates in the 70% range? Who do you think the competition for DELL will be in the consumer space over the next few years? My guess would be CPQ and SONY.
You need to develop a better understanding of the product dynamics in that space, and perhaps a better appreciation for what DELL is trying to do. Whatever reservations I have about the positioning of Webpc at launch, I have few doubts about the eventual success of the strategy DELL is marching to. They will redefine the segment using their brand and management savvy, and I suspect they will quickly make that a 3-way horse race. But they won't do it with some head-in-the-sand position that says "Everything CPQ does is bad so DELL will not do it that way" when the empirical evidence says that CPQ - and SONY - have an edge in that market precisely because of their manufacturing model. |
