Dell's main 'category' sinking and taking brand with it

Posted Jul 23rd 2007 6:36PM by Brian White
Filed under: Bad News, Rumors

Are consumers attached to "brands" like baby koala bears are to their mothers? At first sight, there is a good case for saying this. The words "Apple" and "Nike" and "Kleenex" are all brands that describe product categories. But, do customers love the categories of brands represented by the brands -- or the brand names themselves? Dell, here in the middle of 2007, seems to be a boring brand from many perspectives. Perhaps it is just participating in a boring product category?

Branding experts and marketing professionals like to believe that the brands they represent are what the consumer is looking for. Hmm, not quite. Is Dell Inc. (NASDAQ: DELL) in the midst of being turned around because it is a brand in trouble? To this writer's point, I have to agree somewhat that Dell represents a category in trouble. It sells more desktop computers than anything else, and that is a dying category (and has been). Does Dell need to supercharge its laptop computer category during the final half of 2007 and really attack the retail presence outside of selling "dying" desktop PCs at Wal-Mart? If you're a Dell shareholder, you should be asking this question as Dell sits precariously during the latter half of 2007.

What are customers buying more and more these days? Laptop computers, not desktop computers. The reason competitor Hewlett-Packard Company (NYSE: HPQ) did well in toppling Dell this past year as the world's largest computer maker was because it had a full line of laptop computers at retailers everywhere in the U.S. exactly at a time when Dell did not. Hence, HP overtakes Dell.

Does the "Dell" brand mean "retail laptop performance PC" toy you? It doesn't to me. Just like Wal-Mart Stores, Inc. (NYSE: WMT) does not speak "cheap chic" to most consumers (that's Target Corporation's (NYSE: TGT) domain!), Dell's brand needs, now more than ever, to be defined outside its limited (but recently successful) "desktop computer sold direct" image. Here's where Toyota Motor Corporation's (NYSE: TM) efforts can be viewed under the microscope: remember when the Lexus and Scion brands did not exist? They do today, with specific branding niches for a specific consumer. It's all still Toyota, but the brands are different -- and they have worked wonders for Toyota. What will Dell's new brand be?

Tags: brands, retail brands, RetailBrands

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Reader Comments (Page 1 of 1)

7-23-2007 @ 6:46PM

Sheldon L said...

If you are a Dell shareholder, you might want to considering becoming the shareholder of something with a brighter future. Dell has made it's contribution to the world. It helped make the computer industry more efficient, cost effective, and consolidated. It's job is done. Michael Dell is a great businessman and business leader, but he is not Steve Jobs and never has been. There is nothing new on the horizon. It's over, just like other companies before it that were slow to adopt or innovate. Wang gone, Digital Equipment gone, Dell soon to be gone.

7-24-2007 @ 6:50PM

RichardatDELL said...

I think if you look carefully at the plan for transforming Dell, as well as some of the new products, market positioning and the personalization of "yours is here," I believe the makeover is underway... Also think its worth noting that historically, every time Dell has hit a curve in the road (and whose path is perfectly linear and doent hit curves) we learned, made changes and came on stronger and better. While only time will tell, there is more to come in retail, products and other initiatives