Could We Be Surprisingly Close To Dell's Demise?
Thursday, December 10, 2009 at 8:51AM 
image: Baltimore SunThose of us who've followed Apple for years should know better than to write off a technology company when all hope seems lost, let alone at the smallest sign of trouble.
But indulge me for just a minute. Analysis of Dell's latest 10Q filing indicates there could be trouble ahead. Electronista uncovered that the average selling price for Dell's home systems dropped 23% compared to a year ago. At the same time, warranty costs increased $42 million. Oh, and Apple quadrupled its profit relative to Dell.
Dell's fortunes might show Apple's shrewdness in sitting out on the netbook fad. Netbooks mean tighter margins, more repairs, and less profit. Where can Dell go from here? I don't think they have an innovative, groundbreaking, product sitting in the wings, and it doesn't look like consumers are going to decide en masse that they want higher margin laptops and desktops.
If Apple can bring out a new device, in a new category (tablet) they can generate impressive revenue while Dell and other PC makers go further down the high volume, but low profit netbook path.
Dell was once an innovator in internet order fulfillment, but those days are long gone: today every computer maker allows for online customization. Their attempts at a music jukebox (Dell DJ) never really got off the ground. A Dell phone? It's unlikely. Where can you go when your reputation is built on a distribution model everyone else does now, and there's not so much as a hint of a novel product to come?
Dell? We give them five years. You heard it here. (Update: Dell could reveal a tablet at CES, but we're sticking by the prdiction.)
Reader Comments (2)
Dell tablets - yes. Alka Seltzer with an ibuprofen chaser.
Another reason not to buy a (Dell) cheap system.