Interesting tidbit from a NY Times article on Dell today..
Regards,
John
" The extent of Dell’s long-term structural problems came to light this month in an unusual manner. New York’s attorney general, Andrew M. Cuomo, filed an antitrust lawsuit against Intel that contained numerous internal e-mail messages and exchanges between Dell and Intel executives.
The messages depict a Dell that as far back as 2005 had privately lost faith in the vaunted Dell business model, though publicly proclaiming that it continued to be the exemplar described in business school case studies.
Far from trumping rivals through its efficiency and unique operations, Dell had started to depend more and more on product rebates from Intel to meet its quarterly financial figures and produce higher profits than rivals, according to the lawsuit. The New York lawsuit alleged that Dell’s rebates were so high because it remained loyal to Intel, rather than buying products from the rival chip supplier Advanced Micro Devices.
“If you extract those monster payments, they suddenly don’t look so profitable,” said Roger L. Kay, president of Endpoint Technologies, a consultancy for technology companies.
Dell made the decision to stick with Intel alone despite customer requests for A.M.D.’s products. “We are losing the hearts, minds and wallets of our best customers,” Mr. Dell complained in an e-mail message to Intel’s chief executive Paul S. Otellini, according to the lawsuit.
Today, Dell sells fewer PCs than Hewlett-Packard and Acer.
Dell also finds itself well behind Hewlett-Packard in the services market and in the bid to fine-tune its PC manufacturing operations. While H.P. was shifting production of PCs and other products to contract manufacturers long ago, Dell was still building factories, including a plant in North Carolina that opened in 2005. In its most recent quarter, Dell reported a charge of $123 million that included costs tied to closing that factory this year." |
