Cold-Dell Coupons might be drying up...

[XmagusX]

Not sure if this is the right area or not, but I know you all would be interested.

Dell stock was down 10% today after 1st quarter earnings fell short due to "overly aggressive pricing." That should read...they were selling shit too cheap.

Here is part of the story from The Wall street Journal.

NEWS AT A GLANCE

Dell loses ground

Dell Inc. shares tumbled this morning after the computer maker warned that its first quarter earnings fell short of its forecast. Dell has been offering discounts of up to 35 percent on some PCs over $999, hoping to win back customers who have defected to Hewlett-Packard and other competitors. "They've been losing customers over service and support issues," said Moors & Cabot analyst Cindy Shaw, "and now they are having to spend to get those customers back." (Bloomberg.com) Dell's share of the U.S. PC market fell in the first quarter to 29.8 percent from 32 percent a year ago.

I suppose the previous thread was locked before it had a chance to be moved, but I figured I'd still toss in my two cents:

All of Dell's support (across all lines and business levels) is at least partially outsourced overseas, though not just to India. However, the most recent addition is Enterprise support (servers, storage, etc), and I personally think this is more likely when Dell got smacked around like a little girl with regard to their stock. You think you're ticked that your $300 Dimension is no POST when it arrives and you have to talk to someone who can only read a locked troubleshooting tree and been force-fed 72 straight hours of MTV to help disguise his accent? Trust me, Exxon is more ticked after they just dropped a few million upgrading their datacenters.

I personally think this will have a minimal impact on the number of Dell "hot deals" for the home/home office line of business simply because the main purpose they serve will remain unchanged -- keeping Dell's name at the forefront when people think of inexpensive machines. The entire Dimension (with the possible exception of the XPS) line is essentially cheap advertising for their target audience -- large businesses. If the CTOs of such companies have a pre-existing mental association that Dell computers are inexpensive, they're going to carry that bias towards Dell when it comes to making purchasing decisions.

I think what is more likely to happen is actually a strong push to continue increasing the number of US-based support centers (Dell has built several even as they were outsourcing more support overseas) as well as a conversion of foreign support centers to "local" support centers as Dell grows internationally, since doing so will increase the perception in both places that Dell support "speaks their language" (both figuratively as well as literally). One of Dell's largest pushes to grow their profits is service and support (especially in Enterprise space), so they really don't have that much of a choice in my opinion, since they simply cannot afford to continue to have their brand tarnished by continuing to have those same CTOs beating their heads into their desk when their new Dimension freezes during POST and they spend the first ten minutes of their call explaining that the computer is in fact plugged in and plugged in "all the way."

I think Dell mainly needs to fight the BPI (Business Process Improvement, though there are several more colorful alternatives) mentality that if they cut costs enough, they can be profitable without generating revenue. Once that clicks in enough of the right executives' minds, Dell should start recovering ground again.

In the mean time though, just buy an Apple.