Will Dell continue to be a great investment?
Dell's performance over the decade has been awesome as your chart demonstrates.
It would appear to have a number of powerful advantages going forward that could make it King of the PC and low-end server business for some time:
1) Awesome CEO - Michael Dell is probably one of the greatest ever in the tech industry;
2) superior business model - Not only did Dell invent and perfect it, but many of its competitors still appear to be plagued by attachments to their inferior distributor/retailer model, despite having recognized why they are losing market share to Dell;
3) Dell has been kicking the ____ out of Compaq and HP both for a while now, and may actually be able to increase the pain for the combined entity as it is forced to divert focus toward integrating people and product lines.
However, my concerns that I am wrestling with for the future are as follows:
a) Does Dell's quality and service suffer from pushing volume hard during a period where it reorganized and laid off a bunch of people? My company's experiences with their products during the last 1 1/2 years would appear to lend some credence to that risk, however, I have not seen evidence of this in computer magazine ratings yet, so could be isolated problems;
b) Does the development and proliferation of a fully integrated handheld PC like the coming MSFT Stinger product, present a disruptive threat to Dell's notebook business where I believe they are the leader? A product like this together with a sophisticated docking station, would appear to provide a potential notebook PC replacement threat. Much like the Notebook became a desktop replacement years ago for many mobile users like myself. Dell has yet to introduce a product in this area, despite significant sales ramp-up by Palm, Handspring, CPQ, HP, etc; and new entries announced by Samsung and Toshiba. Maybe the have plans to be early on the next gen product, but I haven't heard anything yet.
c) To what company size can Dell grow to, before a low margin business like PC's can no longer generate strong profits (regardless of their business model advantage), due to growing disadvantages of scale? This would appear to be part of IBM's problem in the PC industry now. Could it happen to Dell?
Anybody have any thoughts?
Robert H. Chaney |
