Dell is in a bad slump, but the PC manufacturer is not sitting on its hands: it recently announced the company will expand to retail outlets in Canada in an attempt to catch up to HP’s pole position in PC market share.
Digital Journal — Dell’s legendary direct-to-consumer PC sales strategy is in the midst of a massive overhaul: as its global market share slips, Dell is slowly becoming a bricks-and-mortar retailer, evidenced by its recent announcement to make its products available in 51 Best Buy locations across Canada. Also, Future Shop customers can buy Dell units at 131 Canadian outlets.
The Canadian announcement follows news last year that Wal-Mart stores would sell several Dell desktops in North America. Also, in September 2007 Dell opened a retail outlet in Moscow in order to make “additional investments in its business in Russia.”
Regarding Dell’s announcement with Best Buy and Future Shop, Louis Houde, director of consumer retail for Dell Canada, told DigitalJournal.com: “We have to respond to customers who want to touch and feel our products, and compare them side-by-side with our competitors.”
Best Buy Canada will offer the following models: Dell XPS 420 desktop gaming PC, Dell XPS M1330 and M1530 notebooks, Dell Inspirion 530 and 530s desktop PCs, Dell Inspirion 1525 notebook, and Dell 12”, 22” and 24” widescreen LCD monitors.
Dell is attempting to play catch-up with Hewlett-Packard, which held 18 per cent of the worldwide PC market in 2007. Dell is clinging on to 14 per cent, slipping from 2006’s market share of 15.9 per cent. Expanding to major retail outlets is obviously part of Dell’s new business strategy, but is it enough? Dell’s stock has sunk in the past six months and its method of selling computers direct to customers is outdated.
In order to compete in this cutthroat PC market, Dell is looking beyond the same-old: in December, it debuted its first tablet PC, and the company is reportedly launching an ultramobile PC to rival Asustek Computer’s Eee PC, a low-end portable starting at $299. Dell spokeswoman Colleen Ryan told Wall Street Journal: “The bottom line is that we are going to enter the market with products that are smaller and lighter and address the more mobile users in a very cost-effective way.”
Is it dire times for Dell? Take this recent statement from CEO Michael Dell: “To be very clear, we are not satisfied with the current state of affairs and we are on a mission to address this.” Some of those measures including layoffs — Dell has already fired 5,500 employees to cut costs in an attempt to slash $3 billion over the next several years.
So what can Dell do? Venturing into retail space is the first smart move, and selling products in Canadian Best Buy and Future Shop outlets should boost market share. But Dell will have to anticipate consumer needs this time, instead of fulfilling custom requests as it’s accustomed to doing.
Houde remarked, “We need to anticipate consumer demands months ahead now, instead of weeks ahead with our direct business. To get back to the top position, Dell has to grow and sell our products through various channels.”
Also, Dell wants to muscle into foreign markets by partnering with local companies. For instance, Dell is seeking Chinese partners to launch a new commercial PC in order to tap into an incredibly lucrative computer market. It’s a fine strategy, if it works. It would be short-sighted to simply focus on North America, and also naïve to expect desktop PCs to rebound from 2007’s slump. As Gartner noted, notebook sales are on the rise.
Whatever Dell wants to do to get out of its funk, it has to do it fast. HP will extend its market lead if Dell continues to limp on its hobbled business strategy, but it seems Michael Dell is not content to let history judge his company’s legacy. He wants change and judging by recent announcements, he wants it now.
