ed. If you read MDell's book, he states that Dell has consciously followed a multiple phase strategy.
(a) The first phase was delivery of assembled parts at a competitive price (building the enterprise from it's first relatively, single niche).
(b) The second phase was streamling the assembly of the products.
(c) The third phase was applying a model of innovation and new product introduction within a much quicker time-to-market cycle than their competitors.
(d) The fourth phase was capturing marketshare through increased market awareness, sales department expansion, and improving product service requirements for breakdowns (24 hour 'attack' model).
(e) The fifth phase was branching out into non-PC centric applications.
Although not in the book, it appears the final sixth phase is price competitive acceleration, or, as it would appear starting over again at phase one. A full circle.
Dell continues to refine and improve on the first four phases; but, from a PC-Centric model, has mastered many of these (relative to incremental percentage improvements).
This "sixth phase" of price deceleration, or competitive acceleration, is what has the analysts shaking their heads. But, really, how does this sixth phase differ from Dell's acceleration during their first phase of operation? They attacked the PC, and beat it. They moved into workstations, won there. On into servers and has slowly become a market leader there, at least at the low end.
They're now in the beginning stages of attacking networking, storage, high-end server applications, and services/software implementation by employing the five stage processes here as well, from the ground up.
Shouldn't we give MDell credit for having conquered the first four phases relative to the PC as he has? MDell states they'll "conquer" the fifth phase individual 'product branches' by employing some of the same methods they utilized to attack the PC. The critics argue that Dell can't employ the same methods because storage, networking, and services are much more inherently complex than building a PC and selling it.
What many of these critics (especially CPQ) seem to forget, though, is that they were saying in 1993 that Dell's Direct Model would never capture significant share because Dell couldn't adequately address the service of their systems. Dell, in turn, developed the 24 hour response to breakdowns.
Many of these same critics then argued that the Direct Model, while good for commodotizing a product, is not so good for streamlining of the service/networking application end.
The critics claim that IBM's application of services is more uniquely applied than, say, anything Dell can conceive.
But, isn't Dell treating IBM's "application of services" within Dell's model as another variable that can be eventually commoditized and run through the five phases? And EDS's networking strengths...isn't this true here as well? The Navy seemed to like the EDS/Dell configuration.
The critics then charge, "but that's the U.S. Navy". And so on.
This sixth phase, then, seems less about becoming King of the PC through price competition and more about rounding out, or coming full circle relative to deploying the Direct Model. The PC happens to be the product of focus at the moment. |
