On Jan 31 this year, after two and a half years away, Michael Dell made a high-profile comeback to try and save the company he founded more than 20 years ago. Dell's performance is at a standstill: its turnover increased by 2% in 2006, but its profits went down from €3.6m in 2005 to €2.6m in 2006.
At the heart of the problem lies Dell's model, the very thing that made it so big in earlier days. Wisely, Michael Dell decided not to hang on to this sacred cow: "The direct model was a revolution but it's not a religion," he wrote in a letter to his employees. Customers like to see before they buy. The company's massive outsourcing to Asia probably didn't help their sales either: 75% of their staff were under temporary contracts, with little incentive from Dell to do well.
Over the last three months the firm has therefore opened 180 kiosks where its machines were on display. Dell also opened three shops in the US, a concept which they will roll out to Europe.
To inject a new lease of life to the company, Michael Dell has also brought in some fresh names, in particular Ron Garriques, who will head the consumer division. Garriques, the former president of the mobile division of Motorola, is credited with turning around its mobile phone business. At Dell, he's got his work cut out with competition from HP, the world's number one, and Taiwanese Acer who is number two in Europe.
Finally, Dell will invest in R&D and design to bring new products to the market. The stakes are high: Michael Dell is aiming for a €80m turnover in the short term.
Source: Fragilisé, Dell se cherche un nouveau modèle
Le Monde, 03/05/07
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