Dell Plans to Sell Factories In Effort to Cut Costs

The Wall Street Journal (excerpt) (subscription required) ^ | September 4, 2008 | Justin Scheck

[HAL9000]

Excerpt -

Dell Inc. is trying to sell its computer factories around the world, a move to sharply overhaul a production model that was long a hallmark of the PC giant's strategy but is no longer competitive.

In recent months, according to people familiar with the matter, Dell has approached contract computer manufacturers with offers to sell the plants. One person briefed on the plan said he expects the company to sell most -- and possibly all -- of its factories "within the next 18 months." Other factories could close, this person said. Dell would enter into agreements with the contract manufacturers to produce its PCs.

~ snip ~

[HAL9000]

With each passing day, computer hardware becomes more irrelevant to the user experience. Nowadays, all of the systems have enough raw power, but that's not enough to assure success.

The important things now are the operating system and application software. Dell has nothing to offer there. They failed to invest in the future, and they've missed their chance to bring something innovative and compelling to the market.

[Spktyr]

Instead, Dell is planning on bringing out a new iPod competitor by bringing back the Dell DJ name. That’s going to work well... not.

Wasn’t one of Michael Dell’s criticisms of Apple and one of the “sure signs of failure” that Apple didn’t own a significant number of factories? Well, if Dell sells off their factories, they should probably just fold up shop and give the money back to their shareholders. I mean, that’s what Michael Dell said in the past that he’d do with another company if it was in a similar situation....

[neb52]

They tried to muscle in on the business support services against HP and IBM. But I think they had to admit that the push had failed. They were hoping to expand into other parts of the business to create reoccurring revenue that IBM gets so fat on. But without big Unix servers that run production databases like IBM, Sun and HP they didn’t have a chance. More businesses on the Windows side are just buying the hardware than slapping VMWare ESX on top. So I would assume the number of Windows Server licenses purchased from Dell has shrunk thus negating the need for Dell Server Support other than hardware warranty. Essentially they are becoming just a hardware only company.

Perhaps they should think about buying out Canonical so that they have a Linux version to push support contracts on.

[Spktyr]

There’s also the Windows Vista factor, which didn’t help them much..

If Dell was smart, they *would* invest in a Linux of their own. Being at the mercy of Microsoft and their vagaries is proving to be a *bad* idea. See the PlaysForSure initiative and how fast Microsoft threw all the P4S partners under the bus when they brought out the Zune.

[Swordmaker]

Dell to sell all of its computer factories... PING!

Are they finally planning to take Michael Dell's advice to Steve Jobs and Apple to heart?

MacPing!

If you want on or off the Mac Ping List, Freepmail me.

[SunkenCiv]

One way I’ve seen it put goes something like, ‘It’s difficult to make a living with a product that has the same markup as bananas.’ Apple is beating with better products.

[Spktyr]

Here’s the original citation:

http://news.cnet.com/Dell-Apple-should-close-shop/2100-1001_3-203937.html

October 6, 1997 2:00 PM PDT
Dell: Apple should close shop

By Jai Singh
Staff Writer, CNET News

ORLANDO, Florida—When it comes to the state of Apple Computer, everyone has an opinion.

And at the Gartner Symposium and ITxpo97 here today, the CEO of competitor Dell Computer added his voice to the chorus when asked what could be done to fix the Mac maker. His solution was a drastic one.

“What would I do? I’d shut it down and give the money back to the shareholders,” Michael Dell said before a crowd of several thousand IT executives.

*****

Michael Dell should follow his own advice. Apple is worth over FOUR times what Dell is right now.

[antiRepublicrat]

Ouch. I wonder what’s going to happen with those huge tax incentives cities gave them to build there to create local jobs — that now may be going away.

[HAL9000]

I was wondering about those tax incentives too. There was some controversy about them a few years ago.

[dennisw]

Lets see if Dell is able to worm out of the performance contracts they signed. For some of the towns and counties Dell received nice tax breaks but has to employ X number of people by a certain date

[Swordmaker]

Lets see if Dell is able to worm out of the performance contracts they signed.

They may not have to. If the factories are sold to a computer maker who keeps them operational, the jobs may stay. I would imagine that the sales of the property may carry with them the obligations and the tax advantages.

[dennisw]

So who would take over Dell factories in USA?
Lenovo?
Acer?
Both are Asian. Lenovo commie Chinese while Acer is Taiwanese and now owns Gateway and E-Machines

I think this means Dell is out of the assembly business and partly out of the component buying business where it has to argue and negotiate with Asian/Chinese suppliers. Dell will spec order computers and market them. Also support them. Building a Dell desktop will become similar to the manufacturing of a Dell laptop

[Golden Eagle]

Like dominoes the US PC vendors are falling to the Asians. IBM sells it’s PC division to the Chicomm government, Gateway to Acer, Dell will now be outsourcing everything too it appears. Once the Asians get good at design even that will start leaving our shores.