Michael Dell does not need a strategy as trite as "Dell 2.0" -- he needs a completely brand new Dell Inc. (NASDAQ: DELL) .
As Zac Bissonnette wrote earlier, Dell's model of direct selling may change soon unless the company wants to become less and less relevant. I've blogged on where Dell is headed numerous times recently, as the "direct" model that put the company on the map was giving way to changing tides in consumer demand. Although many businesses buy computer technology using direct channels, more and more consumers don't. They are increasingly preferring the "touchy and fee" experience of a retail store.
What changed?
Well, Dell used to offer the best prices on most of its computer products based on the immense cost advantages it spent decades perfecting. One of those was the costs saved by selling direct (no middleman) and lower inventories (build to order). Competitors have replicated pieces of that strategy and are as cheap as Dell now.
Add to that the design advantage Hewlett Packard Co. (NASDAQ: HPQ) has in many mainstream consumer laptops, which are more popular than desktop PCs now, and it's not hard to see why Dell has suffered. Long-standing issues with its substandard customer support have knocked Dell as well, although the company has begun showing improvements in that area.
What is left? Dell's previous advantages have melted away. Operating in a commodity business, what can the manufacturer do? Try to branch into other areas? It's tried that with flat-screen TVs and other consumer electronics -- but customers didn't bite. Get more into the services sector? Fierce competition awaits them there as well, so that's no small order. Differentiate yourself with service? Good call -- but how?
Do consumers buy on "service levels" when shopping for a PC? Highly doubtful. I suspect that the lowest price for the most bang gets the business.
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