Dell founder pushes for new ways to sell
Coming soon to a computer store near you -- a Dell?
On Friday, Michael Dell, founder and chief executive of Dell Inc., suggested that the company famous for selling directly to consumers and businesses might find a new way to peddle its PCs.
“The direct model has been a revolution but is not a religion,” Dell wrote in an internal memo obtained by The Times. “We will continue to improve our business model and go beyond it to give our customers what they need.” He gave no details about the new model.
In the 1990s, the Round Rock, Texas, company found success by cutting out intermediaries. But in the last year, Dell stumbled badly, losing market share in the U.S. and globally to its chief competitor, Hewlett-Packard Co. of Palo Alto.
At the end of last year, HP overtook Dell as the leader in global personal computer sales and enlarged its lead in the first quarter by gaining market share.
According to market research firm IDC, HP’s global market share was 19.1% in the first quarter of 2007 compared with Dell’s 15.2%. In the U.S., Dell is still the dominant PC maker with 26.8% of the market, but that is down from 32.4% in the same period a year earlier. HP is fast on Dell’s heels with 24.2%, up from 20% in the first quarter of 2006.
In January, Michael Dell -- who stepped down as CEO in 2004 but remained chairman -- reclaimed the title of CEO, jettisoning his handpicked replacement, Kevin Rollins.
In March, the firm reported that sales in its fiscal fourth quarter that ended Feb. 2 had declined for the first time in five years. The company also reported that an internal probe had found accounting errors, “evidence of misconduct and deficiencies in the financial control environment.”
In his memo Friday, Michael Dell said the company was trying to expand internationally with a new computer in the China market and new factories in Brazil and India, “to be closer to those huge customer bases.” In June, the company will sell computers in a variety of colors.
A Dell spokeswoman declined to comment about the memo.
Industry analysts say Dell’s direct-sales model hasn’t kept up with consumers’ changing shopping patterns. With the popularity of the notebook computer, consumers are researching their options online and in stores -- where they don’t encounter a Dell computer.
Analysts say that even if Dell wants to be in stores, retailers -- who view Dell as a big competitor -- might not make it easy for the company to find shelf space.
Dell might try to expand its website to become more of a destination like Amazon.com, said Rob Enderle, principal analyst at Enderle Group in San Jose. “They have to be creative.”
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