Michael Dell Recognizes Blocking What Customers Want To Protect Your Own Biz Model Is Dumb

from the smart-man dept

There have been lots of different writeups on Michael Dell's recent Churchill Club talk, with most focusing on his trashing of netbooks or talking up Windows 7. But at the end of that article there was something even more interesting, which Derek pointed out to us:
Clark asked Dell about the fact that, through virtualization, many companies end up buying fewer servers, and less hardware in general. "The first thing you have to remember is that any time a new technology comes along that's good for customers, you get in the way of it at your own peril," Dell said.
Indeed. This is a point that so few companies seem to recognize. Instead of focusing on what the customers actually want, they freak out about how it may cause them to sell less of what they currently offer. This is the key in avoiding the innovator's dilemma and marketing myopia. You have to focus on what benefits the customer actually gets -- and if you try and get in the way of that, they'll just go somewhere else instead. But it's so rare to hear execs actually recognize that point -- so, kudos to Michael Dell for acknowledging it.


Reader Comments (rss)

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    Anonymous Coward, Oct 15th, 2009 @ 7:26pm

    "He characterized netbooks as ... and noted their “slower performance.”"

    Perhaps he has a point about screen size (I haven't really used a netbook to know) but regarding the slower performance, so long as intellectual property doesn't hinder innovation, netbooks will invariably become faster with more disk space. But he can trash the netbook all he wants, that's his opinion, so long as he doesn't try to in any way prevent others from producing and buying them or restrict the open market. I may not like laptops, I may not like a particular brand of car, I may not like to drive trucks or maybe I don't like to drive small cars. That's just my preference, and I can announce it to the world or not. Nothing wrong with that.

    Though I did find this interesting.

    "Microsoft doesn’t allow companies to sell netbooks with the Windows XP home edition with more than 1 GB memory"

    http://gigaom.com/2009/10/12/notebooks-vs-netbooks-can-you-tell-the-difference/

    and since when does Microsoft have such authority?

     

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    Steve (profile), Oct 15th, 2009 @ 7:45pm

    Nice to see Dell realistic unlike other big tech companies. I'm glaring at YOU Apple. Bring me Google Voice or I have no use for your silly iPhone.

     

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    senshikaze (profile), Oct 15th, 2009 @ 7:59pm

    now,,,,

    Let's get Linux on an equal footing and we will talk, Mr. Dell. You are doing great, but there is always more you could be doing.

    (oh and stop hiring crappy support techs.)

     

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      senshikaze (profile), Oct 15th, 2009 @ 8:00pm

      Re: now....

      those were supposed to be periods, not commas.
      Typing FAIL.

       

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      hegemon13, Oct 16th, 2009 @ 7:21am

      Re: now,,,,

      Let's see Linux actually reach equal footing with the big two, and that may happen. Much as I reeeeeaaally want to love Linux, it is a pain in the ass. I love the interfaces available. I love the scalability. I love the feeling of control and access to my hardware. But even those things are not worth the headaches of poor/nonexistent hardware drivers, lack of software, and extra hours upon hours of configuration time.

      That's coming from someone who loves to tinker, loves open source, loves alternative software, and loves to operate outside of the norm. Think about the general public's reaction. When Linux is as accessible as Windows, you can expect the big companies to start offering it on equal footing, but not until.

       

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        Anonymous Coward, Oct 16th, 2009 @ 1:05pm

        Re: Re: now,,,,

        Let's see Linux actually reach equal footing with the big two, and that may happen. Much as I reeeeeaaally want to love Linux, it is a pain in the ass. I love the interfaces available. I love the scalability. I love the feeling of control and access to my hardware. But even those things are not worth the headaches of poor/nonexistent hardware drivers, lack of software, and extra hours upon hours of configuration time.
        Well here's the thing: with machines that are preinstalled with Linux, you don't have to spend time configuring anything. You need never see a conf file again. Even when installing it yourself, popular baby-distros such as Ubuntu hide a lot of the more terminal-oriented stuff behind flashy GUIs--just like Windows does, in fact. You needn't worry about drivers for machines that have been properly configured already, either. Seriously, 99% of the things people complain about with Linux can be solved with pre-installs. Windows suffers the same fate a lot of the time (try installing vanilla XP on to a SATA hdd anyone?); but then people don't really install it, do they? They buy computers that have already been set-up for them. That only leaves lack of software to complain about, and Linux lacks games, Microsoft products, Photoshop AutoCAD and Quicken. If you can live without those, then life is grand.

         

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    Anonymous Coward, Oct 15th, 2009 @ 8:24pm

    Netbooks

    Netbooks are a money-loser for Microsoft. The reason they stipulated that netbooks had to have less than 1gb RAM was to save money. They were practically giving away XP for free to compete on price against the early models which all ran Linux; so they made a bunch of rules as to what sort of machine could get the discounted operating systems to save some cash. Naturally, manufacturers didn't even bother building machines with higher specifications: customers would complain if they couldn't get Windows XP on them. Netbooks have a reputation for being slow and crappy. This reputation is an entirely arbitrary consequences of Microsoft's attempt to rig the game.

    Even Windows 7 is sluggish on today's netbooks. And Microsoft can't keep giving away XP forever. Linux operating systems run perfectly well on netbooks if they have been built and configured properly. The early netbooks that came with Linux were not built properly, however. Their early success is quite remarkable, if you think about it, considering how awful some of the early models were. This is beginning to change. Dell have an Ubuntu netbook line that's actually pretty good, for instance. But it doesn't make them as much money to sell them as it does for them to sell Windows machines. Linux on netbooks is a legitimate threat to the profits of many people. Microsoft knows it; Michael Dell knows it. That's one of the reasons both of them would much rather netbooks just went away.

     

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      Jake, Oct 16th, 2009 @ 5:22am

      Re: Netbooks

      Netbooks have a reputation for being slow and crappy. This reputation is an entirely arbitrary consequences of Microsoft's attempt to rig the game.
      It's also, based on my own experience, totally unjustified. I wouldn't try using Photoshop, editing 3D graphics or playing Crysis on one, but they were never really designed for that. For getting your email and typing up some sales report or homework assignment on a train or in a cafe, however, they're perfect; 1GB of RAM is actually overkill for that sort of role, and they're also cheap enough that having one go missing or get trashed isn't a bank-breaking disaster.

       

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    sehlat (profile), Oct 15th, 2009 @ 8:33pm

    Value for the Customer

    Author Christopher Anvil, in his story Top Line, reprinted by Baen Books in War Games (Amazon), had what I think is the best exchange ever on the topic of businesses and customers. It's a scene where an inventor is answering questions about how he runs his business:

    Q: "If your car is too durable, there go your replacement sales."

    A: "I got a little tired of cars wearing out every three years, didn't you? The idea is to give solid value, not plant a suction pump in the customer's wallet."

    Q: "You'll cut your bottom line, won't you?"

    A: "We haven't forgotten the bottom line. But there's another line you don't want to forget, either."

    Q: "What's that?"

    A: "The bottom line is the gain you get. The top line is the gain you deliver in return. If you provide the customer with a buy well worth having, you've taken care of the top line. That doesn't guarantee a profit, but Ford, Edison, Bell, Land, and a host of others have done right by the top line, and everyone was better off because of it. Naturally, the bottom line is important. But there needs to be something on the top line first!"

     

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    Michael Long, Oct 15th, 2009 @ 10:33pm

    Servers

    "Clark asked Dell about the fact that, through virtualization, many companies end up buying fewer servers, and less hardware in general."

    Once company I worked with did exactly that. However, they ended up buying several high-end dual quad-core high-availabilty servers with a boatload of RAM on which to run the virtual images, as opposed to buying a dozen or more low-end commodity pizza boxes.

    I suspect that margins on the high-end severs were perhaps just "slightly" better...

     

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      senshikaze (profile), Oct 16th, 2009 @ 4:50am

      Re: Servers

      Bingo.
      And if you have ever spec'd out a fully loaded blade system (just one chassis, mind you) then you will see that virtualization isn't hurting the big 'D'

       

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    Bradley Stewart, Oct 16th, 2009 @ 4:05am

    Smart Thinking

    Michael Dell has it just right. Owning two computers myself and one being a Dell having both a hardware and a service contract with this company I can tell you all having to have used both of these two agreements at some time their customer service is Knock Your Socks Off. I believe Michael Dell really believes what he
    has professed to have said in this article. Not just because of my good fortune with this company but also I have seen him interviewed several times on television and he seems like a pretty decent guy to me.

     

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    Nelson Cruz (profile), Oct 16th, 2009 @ 5:48am

    Smart on virtualization, not so smart on netbooks

    When I read his comments on Netbooks, I rolled my eyes and said "duhhh". He is defining a product on the negative. That's not good marketing.

    Yes, netbooks have small screens and the performance is far from amazing, but so what?? Nobody said they are supposed to be good replacements for desktop PCs! Or even 14" or 15.4" laptops. They are different products, and good for different things.

    In fact Dell could say the same things about average laptops compared with a desktop PC. Does that mean laptops are useless? Laptops have mobility, desktops don't. Netbooks take that further by being smaller, cheaper, and having longer battery life.

     

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    hegemon13, Oct 16th, 2009 @ 7:15am

    Hypocrite

    Does anyone else see a bit of hypocrisy in his statement, given that he just got done trashing netbooks, a technology that serves the needs of many consumers at a low price? How is his attitude toward netbooks not "getting in the way" of something that is good for consumers?

     

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    Almost Anonymous (profile), Oct 16th, 2009 @ 8:36am

    Very awkward title

    """
    Michael Dell Recognizes Blocking What Customers Want To Protect Your Own Biz Model Is Dumb
    """

    Mike, sorry to be pedantic, but it took me about three re-reads of that title to finally comprehend what you were trying to say. Might I suggest adding three words:

    Michael Dell Recognizes That Blocking What Customers Want In Order To Protect Your Own Biz Model Is Dumb

    On topic, good to see someone as high up as Michael Dell recognizing this simple truth.

     

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    lisa, Oct 16th, 2009 @ 3:52pm

    If Dell feels that way then why can't I purchase a non business laptop without all that useless bundled software?

     

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