Dell has announce that it wants to outsource its factories, thereby putting even greater strains on its belief in the power of its brand.
Not many years have passed since Dell’s brand had real, substantive meaning: the company brilliantly assembled and shipped beige PCs for less than you’d pay at a retailer or other manufacturer. There was a robust customer service function that supported this distribution model. It made founder Michael Dell a gazillionarie.
The company has since moved away from tangible attributes influencing its strategic decisions, and instead chosen to pursue brand as something utterly divorced from reality. It’s far easier to identify what Dell doesn’t represent versus what it does:
- Customer service: Many of the vaunted customer service locations have been closed, and the remainder of human interaction appears to have been outsourced to India (or somewhere else where the accents are distinctly non-Texan). There’s nothing inherently wrong with such a strategy, but Dell forsakes 1) the happy hand-holding that folks who got their computers shipped directly to their homes (or offices) require, and 2) replaces it with reasonably aggressive upselling. Further, Dell has experimented a lot with outsourcing service to its users via forums and blogs. So forget about relying on it for help
- Distribution: Dell now hawks its wares in most of the same stores as the other PC makers, so it really isn’t a "direct" play anymore. So there’s no longer any compelling differentiation due to how you buy it. Further, one of the worst shortcomings of the direct model was that its machines weren’t serviceable at retail locations (it would break the warranty), which was a terribly customer-hostile policy. The flip side, of course, is that its machines can now be fixed/improved with non-Dell parts, so they’re not really Dell machines when they’re sold/repaired at retail. They’re just boxes with commodity guts in ’em
- Product innovation: Playing also-ran to Apple seems to be about as innovative as Dell, or any of the other beige-loving PC companies, can muster. External styling/design was never its forte anyway; Dell’s miracle was how it designed and built PCs on the inside, so it could wring profits from more efficiently-made machines. Its latest laptops (or leaked strategy for another mp3 player) do a bad job of copying Apple’s look-and-feel, without also copying the core attribute of innovation, which is use/relevance. Apple doesn’t just lookcool; it weds function with design. There’s no reason to expect Dell to do this
- Price leadership: The company doesn’t want to be the low-cost leader, as that’s where the commodity PC business already wallows, yet I wonder if it has the capacity to do so anyway?
Dell also want to actually make its computers anymore, either. So what does the brand represent now?
Creative marketing communications. It’s going to be the product of pure invention. Contrivance. Imagination.
Branding.
I find it contradictory that any company would profess to stand for more by doing less, but it’s not uncommon in businesses where the brand theology has really taken hold. I’m sure there are some agencies and consultants who have worked long hours — and collected mucho fees — to convince Mr. Dell and his leadership team that their company really isn’t a company at all, but rather an idea.
This is while every indicator from the social media space, not to mention actual consumer purchases, is that reality is absolutely the driver of product preference. Nuance and associations of brand are interesting, but emotional and material attachments to brands are borne of experience, not the ether. Believing otherwise is misplaced strategy, at best, and utterly stupid, more than likely.
It takes lots of fortitude for Dell to keep the faith.
Original Post: http://dimbulb.typepad.com/my_weblog/2008/09/keeping-the-fai.html
