Can Dell Be Dell Without Factories?

By  |  Friday, September 5, 2008 at 12:02 pm

This is startling: The Wall Street Journal is reporting that Dell is trying to sell at least some of its factories to contract manufacturers–and maybe all of ‘em. For any other computer company, the news would not be all that striking; these days, such a high percentage of electronics manufacturing is done by third parties that it’s more noteworthy when a computer manufacturer is actually…well, a computer manufacturer.

But this is Dell we’re talking about–the company that’s been, at its high points, the biggest computer on the planet based on the excellence of its factories and the efficiency of its direct-to-customer model. For more than twenty years, it’s obsessively refined its manufacturing and logistics processes to build PCs as efficiently and cheaply as possible. It is, in other words, a control freak of a company; it’s hard to imagine it letting go of the very process of making Dell PCs.

The Journal says that the notion of Dell selling factories stems in part from the ongoing shift from a world dominated by desktop PCs to one where most computers are mobile. With desktops, Dell truly does build computers to order, assembling all the components into a custom PC. With laptops, though, its factories are essentially doing final customization of laptop shells that are shipped in from overseas; those Dell factories just don’t do as much manufacturing as with a desktop. When I’ve visited Dell factories in the past, the contrast between the two processes has been obvious.

Of course, the possible sale of its factories isn’t the only sign of a Dell that’s shifting strategy from the philosophies that it built its success on. For years, it sold only custom PCs direct to customers, and told the world why it was a vastly better way to do so than through retailers. Today, you can find off-the-shelf Dells in Best Buy, Wal-Mart, Sam’s Club, and Staples alongside the HPs, Acers, and Sonys. We’re probably a very long way from Dell going entirely indirect, like Gateway has done, but seeing Dell in stores at all is still a tad disorienting.

If Dell were a political candidate, its rival would accuse it of flip-flopping. I wouldn’t: As the world changes, it’s not only permissable to change with it in some cases but absolutely necessary. It makes sense for Dell to sell some of its PCs in a retail setting; as its site says, that’s the one way you can shop with all five of your senses. And if Dell were to continue on as a true PC manufacturer headquarted in the U.S., it would be following a path unlike that of any other computer company.

But I’m allowed to be nostalgic–and right now, I’m feeling nostalgic for the old, single-minded Dell. The one that had an absolutist approach when it came to making and selling its own stuff.

Dell customers, do you care about any of this? Or does it not matter as long as it makes good computers which sell for fair prices and which come with satisfactory service and support?

 
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