Mike - I am not referring to the past, I am referring to the present. The trend in the commercial PC business has clearly favored DELL - and DELL has done a lot to build that momentum, through field execution, extranets, enhanced configuration services, and leverage of their cost advantage. I was able to predict that trend, and its effect on the market, years ago. That's one of the reasons I bought DELL in the first place.
The trend in the consumer space is equally clear, and does not favor DELL. It is more likely that a company like SONY will make inroads - they already have the manufacturing and distribution model. There is a certain portion of the consumer market who is comfortable buying direct - they also buy from direct mail vendors, catalogs, etc. DELL is getting their share of that customer segment - they have about half of the direct business. The benefit for them to go after the customers who are not interested in Direct today is small.
Despite the e-business hype, the majority of consumer buyers want to see and touch the merchandise, comparison shop between brands, argue with the salespeople, and be able to return the product or have it repaired at a local establishment. There is almost no value to the custom configuration capabilities DELL does so well - people just buy one of the standard packages. The demographics of the consumer market have been largely unaffected by trends to on-line - most of the on-line business to date has been a transfer of traditional direct customers to web-enabled purchases.
While there will doubtless be more people using the direct model for consumer products, most of the shift has been in areas where the cost advantages are clear - B2B and other infrastructure plays.
In addition, there is no cost leverage for DELL in the consumer electronics space - they may even be the high cost producer. CPQ has broken out financial information for their consumer group for the last 2 quarters, and they make better than 4% net on consumer products. Looking at DELL's overall financials, and dropping out the server and high end commercial products, I doubt that DELL can do better. And I'm not sure I would want them to do more of those sales - it will only serve to further depress their Average Selling Price and net margins overall. I would rather see them solidify their enterprise business, which will have the opposite effect.
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