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Dell's ho-hum strategy

Filed in archive strategy by leon on March 4, 2008

dell.jpg

Dell's woes continue. Last week, it announced a fall in net income, wiping out completely any increase in sales. The share price, which was up around $30 in November, hit lows at the end of the week and more falls are expected.

A big turnaround from the time when Dell was the market's darling. Founded by Michael Dell in his University of Texas dorm room in 1984, the company was loved by investors, analysts and business journalists. How things change. AS CNET's Charles Cooper writes, Dell's business model might be yesterday's story.

"The problem is that Dell's far removed from the days when its manufacturing and distribution system was the envy of the industry. Over at Hewlett-Packard, now the world's largest PC maker, Mark Hurd has proved a master at maintaining a relatively lean cost structure while pushing his sales force to ring up bigger numbers.

"The company's no longer a pure playlinks direct seller. There was a time when price and distribution were good enough. But with buying tastes evolving, Dell's been branching out into retailers including Best Buy, Wal-Mart and Staples. That may work out to Dell's advantage but management is going to face a new set of business issues associated with an increasingly hybrid distribution system."







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