Dell pays for strategy change - 18 Jan 2007 - IT Week
Just yesterday we reiterated our concern that the prices for PCs have gotten so low that DELL’s world-famous direct selling model is no longer the most efficient (with shipping making up a larger portion of the total cost, shipping in bulk to retailers could result in a lower price than direct sales shipped to end users.) IT Week summarizes the recent share loss studies, and find various explanations from other analysts, all of which essentially say the same thing.
Dell pays for strategy change - 18 Jan 2007 - IT Week
Analysts suggested, however, that Dell’s market share is dropping simply because it has stopped pursuing a large share of the market.”They might not want to play in a low end price area,” suggested Mikako Kitagawa, principal analyst for Gartner Dataquest’s Client Computing Markets Group.
“Vendors really have to lower the price to gain the market, so it is highly possible that they didn’t want to play in that area,” Kitagawa told vnunet.com.
David Daoud, manager of the Personal Computing and PC Tracker Programs at IDC, explained that Dell may be considering shifting its focus away from entry-level machines to its business computers and more customizable, high-end PCs, such as its Alienware gaming machines.
Whether it is a strategic decision not to sell low-end products or that low prices have simply made DELL’s business model less attractive, the end result is the same.
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