Dell’s business model is one that is commonly spoken about in the business world. Michael Dell, the founder of the brand, somewhat revolutionized the way to do business by offering PC’s online and made them customizable. Paired with this, Dell also became a supplier of IT consulting through partnership with enterprise planning specialists like software suppliers, system integrators and business consulting firms.
Dell furthered its dominance by introducing www.ideastorm.com, which is essentially an online feedback forum (something which is relatively common or necessary in today’s market, but was not so common when introduced). This enabled Dell to show that they valued their consumer’s opinion, and gave them the opportunity to change products according to general observations about user requirements.
An example of a question posed by a user on Dell’s feedback website: Ideastorm
David Johnson of business insider believes that Dell’s shortcomings were brought about by the successes of Apple and the failures of Dell’s partner: Microsoft.
Everyone knows how big of a player Apple is in the tech game, they changed everything by appealing to the ‘creatives’ and offering aesthetics paired with great computing power; something which Dell failed to recognise as a good idea.
Apple revolutionised the industry with its ground breaking design – Source: http://gxtech.gxcad.com/?p=14
Dell and Microsoft were partners in the 80’s and 90’s and maintained a strong hold on the market, appealing to enterprise rather than consumers. Dell provided the boxes that ran Microsoft software (Word, MS DOS, Powerpoint, Windows). However, Apple soon arrived and introduced iPod’s, iPad’s, Macbooks etc. They targeted creative people and established an understanding in pop culture that owning a Mac made you ‘cool’. This strategy was successful and it kick-started their road to market dominance which is still prevalent today.
Another reason for the fall from grace for Dell was a shrinking of demand for business through direct sales channels selling customizable PC’s and a shift towards standardised off-the-shelf PC’s.
Chopra (2007) noted that companies cant select one channel and expect it to work 100% of the time, he instead suggests the use of a hybrid model that utilizes direct channels as well as reseller channels. This would maximize Dell’s reach and allow them to cater to different types of customers, e.g. those after customization (use direct channel) and those after a standardized PC (use reseller channel, like JB HI FI for example).
There are lessons to be learnt from Dell’s story, the most valuable of these all is to be aware and constantly proactive in your environment. Dell’s failure to update its strategies resulted in a dramatic decline in market share and allowed Apple to position itself as the ‘top dog’ of the computing industry.
Chaffey, D & Ellis-Chadwick, F. 2016. Digital marketing, 6th edition.
Chopra, S. 2007. A New Channel Strategy for Dell. <http://insight.kellogg.northwestern.edu/article/a_new_channel_strategy_for_dell>
Dell 2016, The Birth of a Company. <http://www.dell.com/learn/us/en/uscorp1/birth-of-company?c=us&l=en&s=corp&cs=uscorp1>>
Johnson, D. 2013. How the Dell business model died. <http://www.businessinsider.com.au/dell-victim-of-the-zeitgeist-2013-2?r=US&IR=T>