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Saturday, April 28, 2007

Michael Dell : Direct Sales Not A Religion

The direct model has been a revolution, but is not a religion, says Michael Dell in an internal memo. He positions this thinking as an improvement to its business model, and go beyond it, to give its customers what they really need. This is done, he claims by making improvements in pricing, product development and fulfillment, and customer experience. (Months back, his predecessor Kevin Rollins defended the direct sales model that Dell had embraced for a long time).
I like this part of the memo where he talks about embarking on a bold, long term initiative to radically simplify IT for our commercial customers. Centered around, what he claims as a set core beliefs of Dell, he outlines it :
• Information Technology shouldn't be as complex as it is.

• You should spend less on maintaining I/T and more on innovation.

• Every IT project should not require an army of consultants.

• Computing should have minimal environmental impact.

• Superior information drives efficiency in your IT environment.

We know our competitors drive complexity and needless cost into customers' environments. These so-called "service divisions" create a never-ending cycle of activity with unclear return on investment. We intend to break this cycle. We will build different kinds of services and offer key technologies that will help customers escape this complexity trap and unlock the true potential of technology.

Can Dell really move from a supply chain winner to that of a services player? Can its research efforts rise wide and fast enough to match those of IBM, HP and Sun? From pricing as a weapon in its armoury, it used to muscle in – a game which players like Acer and HP are getting better at.

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