My comments on DELL at Rahul's blog

Rahul, the CTO of VooDooPC wrote about his exchange with Michael Dell. It is nice to see that Rahul's wisdom made some positive effects on the industry and Michael Dell was open to suggestions after all. Hopefull, he read some of my emails.

I made the following comment:

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Michael Dell is quite young, but his thinking is getting old and outdated. He is stuck with a PC mentality, while the focus of computing has shifted from clients to servers. It's the network computing age. DELL should have focused on enterprise server business and converted its commercial desktop customers into server customers. That requires DELL to have some real understanding of computing and make some serious investment. But DELL is stuck with selling cheap PCes at high volumes and razor thin margins.

All DELL people, Michael Dell, Kevin Rolins and Jim Shneider are very arrogant dudes. They only toned down when their profits were down and stock crashing. They failed to realize that DELL is just a screw driver company. I can give a screw driver to any Joe Bloe and he can learn to make a PC in minutes... Zero barrier of entry.

I gave numerous unsolicited advices to DELL based on my accurate projections:

INTEL and DELL have become each other's liability, Intel's predicament, DELL will spit at INTEL and kneel to AMD soon, Intel should establish a uniform pricing scheme,
on AMD-DELL alliance.... and many many more.

I predicted that unless DELL goes AMD64, it will face a Enron scenario due to lack of growth and subsequent crashing of its stock. You have to realize that DELL has almost zero assets, all its value is based on hyper growth. Once growth is gone, all you see is a company with $3 billion shareholder equity, 6% of DELL's market cap.

I suggested to DELL that he should switch to AMD before Intel makes the inevitable move of establishing a uniform pricing scheme. That way, if Intel stopped giving DELL discounts, it would be viewed as a punishment for DELL going AMD, which would be bad for the lawsuit. By doing that, DELL can enjoy some Intel discounts at the initial stage of transitioning to AMD. But DELL waited too long, Intel made the first strike...

Going forward, DELL's future is quite bleak. Unless it can show double digit growth, its stock will continue to fall, and its cash will continue to burn. AMD64 market presents to DELL a 30% growth oppurtunity. DELL has one last chance, but it needs to act quicker.

I suggest DELL folks go to AMD HQs and take a week of crash course on basics of computer architecture and the future of network computing. AMD camp has all the grand masters in server computing: lead architects of Alpha, PA-RISC, Sun UltraSparc, PA-RISC, Itanium, Power4, PowerPC, RS6000...and Opteron are all in AMD camp. Intel will be totally crushed by AMD. There is an imbalance of brain power there.

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As I wrote previously, the fact that DELL acquired Alienware is a sign of its PC mentality. DELL should have acquired some server startup, such as Fabric 7. A move like that would make SUN very nervous.