So former Dell Chief Executive Kevin Rollins is out after a rough 18 months. And no surprise whose stepping back into the fold..... founder Michael Dell.
Since mid-2005, PC maker Dell has been battling problems with customer service, quality, and the effectiveness of its direct-sales model. Key competitors Hewlett-Packard are resurgent and Apple are riding the wave of innovation led by their ipod mega-success. Bottom line is that both have been gaining sales and market share at the expense of Dell. As a result, Dell has announced its fourth-quarter earnings and sales would fall short of analyst estimates.
When Michael Dell's return was announced, the company's share price jumped 3.6%. However, getting Dell back on track may not be so easy. According to a Goldman Sachs study, Dell is losing share in business spending for PCs to Lenovo and Apple (Hewlett-Packard is also a loser). Dell has also lost top spot in worldwide PC market-share rankings. In the fourth quarter, Hewlett-Packard's worldwide market share grew to 18.1%, while Dell's share dropped to 14.7% (source IDC).
Meantime, greater success in the consumer market (the fastest growing part of the market) may require a move away from the direct sales approach and into retail. Dell has no experience in retail and the cost of setting up a retail network would be substantial.
Michael Dell has proven himself a formidable competitor before. Now back on the front line, he has his work cut out to prove he can do so again.
garye
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