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ThoughtsOnline

Tuesday, December 20, 2005


I have long been a fan of Dell. Not their products, as PCs are pretty indistiguishable, but of the company... Michael Dell was a genius in developing his business model of build-to-order PCs and bypassing the more-expensive retail market, as well as in leading the way in migrating the sales function to the web and expanding their base PC product line into servers, pdas, printers, TVs and so on. I made a bunch of money investing in Dell, first buying after their debacle in laptops and foreign currency exchanges, correctly betting that Dell would recover.

But for a while now, I've been wondering about the company's prospects. They are now so big that I believe they've reached the point where no single customer - individual or business - is important enough to put in the effort to keep their customers happy. They sell so many computers to so many people that maintaining the infrastructure to support those customers is an incredibly expensive undertaking. And, with their growth prospects not very bright (just where does a $50 billion a year company find another $10 billion in revenues each year to maintain its growth rates?), there's even more pressure on them than normal to keep their operational costs as low as possible.

And the result is stories such as Jane Galt's experience in ordering a Dell computer, only to wait and wait for it, only then to find out that Dell had discontinued the model and would only refund her money. Not only did she not get what she wanted, her experience in dealing with Dell's outsourced customer support made a bad experience even worse.

Contrast the details of her experience with the way things used to be.... where computers were on your doorstep within days of being ordered.... where customer service genuinely was interested in - and capable of - resolving questions you had about the order, about using the computer, about taking care of any problems you might have had with the computer itself.

Becuase Dell's stock was down for the year, I sold my holdings in Dell last week in order to lock in the tax loss (silver lining). I had been figuring that I would repurchase those shares after the 30 day wash-sale clock had passed... but now I am starting to think that there are better companies for me to express my support....