Dell Inc. (NASDAQ: DELL) indicated on Tuesday that it wold continue outsourcing what it could in relation to new product launches. As the company continues to try and save another billion in costs, Dell's CFO told an audience that "one new computer or server at a time" would be thrown to a manufacturing partner for production. What used to be Dell's bread-and-butter -- internal, made-to-order product manufacturing -- is slowly falling by the wayside.
No matter what PC makers try to say, the fact is that most laptops, desktops and entry-level servers are commodity products. The differentiator is generally software capability. So, it makes sense for Dell to outsource every piece of hardware it can. Too bad it's not 2005, when Dell really should have had all new products (that made sense) tossed to an ODM to actually make.
Right now, only about 25% of the hardware bearing Dell's name is outsourced for manufacturing. Going to a level of 50% or more of existing and new products would certainly help Dell's costs, but at the same time it's becoming more of a grocery store instead of a specialty food store. That's the way all PC manufacturing may be going, and Dell's precarious position makes it all the more timely that it keep ahead of the curve on costs while becoming less special as a brand that customers will vie for.
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Reader Comments (Page 1 of 1)
3-05-2009 @ 2:41AM
BHarrison said...
So, doe that mean that Dell's "made and/or assembled in the USA" is now going to be outsourced to foreign manufacturers?
This wouldn't seem to be a smart move by Dell at this point in time.
3-05-2009 @ 7:12AM
bill said...
what part of outsourcing don't you understand.
3-05-2009 @ 2:53PM
cpayne said...
Finding ways to create vast wealth has very little to do with keeping jobs in America. This is a hard pill to swallow, for Americans to realize that their fellow man will gladly tromp on anyone (including you), just to make money.
The trend is slowly rearing its ugly head in the business news reports, and it likely won't go away.
Shareholders are the instigators here. They demand the "company to always perform" with their investment dollar, and they also demand a share of the company profits from those same investment dollars.
The CEO's and COO's and CFO's are going to do the sneaky, underhanded things to make shareholders happy (and fill their own wallets as well).
Keeping jobs in America is not the first order of business. Maybe it SHOULD be a requirement in this "new era of change" ushered in by Mr. Obama. But don't get your hopes up that businesses will change anytime soon.