Dell used to be growing so fast that no one else could keep up - but that’s all changing now as people are getting fed up with the lousy support they’re getting (and the burning laptops aren’t helping either).  

According to Nicolas Carr

"The direct sales model provides a cost advantage on the production side, in other words, but brings a cost disadvantage on the support side.

"So on the production/distribution side of the PC business, Dell’s direct model has given it a big cost advantage, which in the past enabled it to make lots of money selling machines at prices that competitors could match only by taking a loss.

But there’s another side to the PC business: the support side. And here, the direct model looks less attractive. If, after all, you’re selling directly to customers, you have to shoulder all the related support costs, from handling information requests before the sale to taking and tracking orders to handling service inquiries after the sale. You can’t offload any of those costs onto resellers or retailers or other distribution partners - because you don’t have any distribution partners."

"…..as the price of your product falls, due to savings on the production side, support begins to represent an ever larger percentage of its cost. At some point, you cross the line: The direct model’s cost advantage disappears. Dell hasn’t reached that line yet, but it seems to be edging a little bit closer to it every day.

In other words…..Dell is being too much……Dell, and the advantage it had in bringing down the cost of producing PC’s are upping the price of support (and as they lower costs - the quality might be going down the tubes too - I might add).

 BL Ochman has an interesting post today about Dell’s recent business problems.

The brouhaha over Dell’s terrible customer service is playing out not just in the blogosphere, but also on Wall Street, where Dell stock has plunged….

The Wall Street Journal reports:

"Dell Inc. [the world's largest computer maker] said it expects revenue and earnings in the second quarter to come in lower than forecast, amid aggressive pricing in a slowing computer market. Shares of Dell tumbled more than 10% to five-year lows.

 

"The Round Rock, Texas, company, which issued a similar warning for the first quarter, has struggled lately to generate growth in its U.S. business amid increased competition from the likes of Hewlett-Packard Co. and Asian PC makers. Dell recently has also suffered from customer-service complaints."

According to B.L.  Michael Dell ….

He hasn’t said a word on the company’s new Dell one2one blog. He wasn’t quoted in the Journal article. He’s not on the cover of Forbes or Fortune defending his company and he’s not talking about Dell’s new thrust to be the best at customer service.

Wake up Michael Dell! Your company is sick and you’re the guy who can restore confidence in it.

Michael Dell probably does not care anymore if his Laptops burn or if he offshores all his support to India - he’s made his money ten times over again and when he buys a laptop - ….i mean, if he ever has to buy one …. .it probably won’t be a Dell laptop (or he’ll have a bad time getting support for it).