"Dark Days at Dell" | BusinessWeek (24 Aug 2006)
Nanette Byrnes, Peter Burrows & Louise Lee
Dell's eroding profitability is attracting a media pile-on. Ultra-successes attract jealousy equal to devotion. But I'd like to believe that Dell's problems signal a shift in the PC business, that they are not restricted to Dell's moribund culture or slipping "execution."
hp will be taking share from Dell and Apple will too, now that the Intel-based Macs are rolling through the channel. I expect the Intel Macs to accelerate in share gains this year. That's because youths & adolescents as well as high-functioning adults are getting tired of WinXP because it is so old, going on its 6th year.
In the server market, Dell seems to have its work cut out as Sun recovers strongly -- while Dell's CTO, Kevin Kettler continues his world tour to market Intel's Virtualization technology. Dell is also poised to miss the inevitable Linux desktop boom, since Kettler's idea of a desktop is so very much like the niche Sun Ray, driven off of Dell servers through virtual partitions.
Back to Apple: the reasoning among the great unwashed to buy the new Macs goes something like this: 'Well, I can have the Mac to run my iPod & iTunes seemlessly and gradually get used to other things (like the amazingly simple and attractive Dashboard), while I will not necessarily be cut off from Windows -- which I can run in emulation or via Boot Camp. My fears are assuaged!'
My wife just got a new MacBook which she will share with our daughter for email, writing and gaming. These new Intel Macs are beaUTIful! And I was struck by how the Mac OS -- now Tiger -- is evolving underneath (more automation, fewer & fewer reasons to engage Preferences and configuration gobbledygook) but changing very little at the superfice. Stable underneath -- OS X is built on the NetBSD kernel -- it is stable in its appearance and UI functionality, too. This reflects the confidence at Apple that they've got it right: a system people really like that works exceptionally well for what people want to do. The Mac is the best home system by such a far margin that you would think Apple is a decade ahead in thought as well as delivery.
Even more significant than the Intel Mac factor, in my opinion, is above noted age of XP and the high cost of PCs which pack enough power to run the new Windows Vista system. This indicates the Vista upgrade cycle will spark bright -- due to the long pent up demand for something new -- but will moderate rapidly and grind to a crawl over the aggregate first few years.
Dell, as Intel's & Microsoft sales arm, will need some radical thinking and a different kind of energy to play in the new PC markets during Vista's Syssiphaean climb and Microsoft's recovery from Existential Crisis driven by their loss of control of their old and their new document file formats.