Saturday, August 26, 2006

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:

/*********************************************************************

Michael Dell is quite young, but his thinking is getting old and outdated.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.

*/


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.

12 Comments:

Anonymous Anonymous said...

The larger problem will Dell is not desktop PCs vs. servers.

The real problem is that Dell is a zero innovation company whose only competency is building a lot of commodity stuff at low cost so they can drive volume with low prices.

But even here, Dell is failing as many companies need machines that are well designed and well engineered. Dell has next to nothing to offer.

As the computer market is becoming satiated to the point of constipation with "PC" stuff, Dell is in a bad place. There is no more "giant growth wave" to support building loads of commodity stuff.

So no matter what chip Dell uses, unless big fundamental changes are made, Dell is dead.

The AMD deal is much better for AMD than for Dell. The key point here is that Dell never did anything interesting with the Intel chips. There should be very little confidence that Dell will all of a sudden build great, innovative computers with a slightly different chip. That is just a pipe dream.

7:26 PM, August 26, 2006  
Blogger Jeach! said...

"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."

Well I don't think that you can assume just yet that DELL went with AMD after Intel's uniform pricing scheme.

Sometimes due to management or corporate bureaucracy, a major change such as DELL has done by going AMD can take over a year.

I wouldn't be surprised if we later find out that Intel went the uniform pricing way because DELL was planning on going AMD.

Timing is pretty damn close. It doesn't mean that Intel anounced the pricing change before DELL that it occured that way.

Either way, Intel's and DELL's relationship have changed. And DELL has only begun to feel the effects of it's late turnaround... more are to come.

7:35 PM, August 26, 2006  
Blogger Sharikou, Ph. D said...

Timing is pretty damn close. It doesn't mean that Intel anounced the pricing change before DELL that it occured that way.

Good point. But time of official public announcement is all that matters.

8:43 PM, August 26, 2006  
Anonymous Anonymous said...

The PhD pretender got at least one thing right.

Dell is nothing but a screw driver company. A ultra efficient distributor of a boring screw driver of sorts. Nothing more, they do no real R&D, no real customer support, have real high end services. That is the their real business. Having AMD or not makes no difference to Dell's fundamental problem. Offering Opetrons will help them a bit in the high end. It'll look good for the first few quarter, but they just don't have the top to bottom support that HP, Sun, or IBM offer. They never have, never wil, they simply don't have the structure or know how. That is the fundamental problem....

The mistake is thinking AMD can teach Dell squat... again the Phd pretender is wrong.

What happeend is everyone that wanted a cheap computer online bought Dell. Consumer / retail is where continued growth is and HP plays in this space and Dell is non-existent. That is the bottom line and why Dell won't grow. Their kiosks are a pitful poor attempt at retail.

This was your best attempt at a real article.. I give you 3/10..

Maybe someday you will be worthy of using that PhD title.. Keep trying pretender.

8:54 PM, August 26, 2006  
Blogger Eduardo said...

"Maybe someday you will be worthy of using that PhD title.. Keep trying pretender."

- And you can keep pretending someone gives a crap about what you say.

3:51 AM, August 27, 2006  
Anonymous boytoreckonwith said...

i wish sharikou would stop posting other's comments that are only posted to insult or that those people would stop posting. if you have something to say, say it. no need to insult, just comment, like a smart person should. you sound like my 4th grade debate class, idiot this, phd pretender that. "
This was your best attempt at a real article.. I give you 3/10.." sounds to me like your bitter. if you really want us to know how you feel, at least show your face, mr. "anonymous" . i dissagree on about 1/2 of what sharikou says, but i come here for insight on some things, and just to read HIS opinion. It is after all HIS blog. if all you think it is is stupid, make your own blog and just write about how stupid sharikous is and how intel is wonderful. you'll have lots of readers, from the looks of his comment sections. then everyone would be happy, not spewers here, and you can still have your own little laught.

6:42 AM, August 27, 2006  
Anonymous Anonymous said...

As the computer market is becoming satiated to the point of constipation with "PC" stuff, Dell is in a bad place. There is no more "giant growth wave" to support building loads of commodity stuff.
/////////////////////////////////
As NB prices continue to plunge we will see a refresh rate increase dramatically...like exists in the
PDA/mobile phone mkt....tie ins between wireless sign ups and reduced notebook prices etc...it is just beginning I beleive...I know several small businesses that
replace notebooks every 9 months..
this will keep the x86 mkt hopping faster than IDC or gartner beleive...

Paarl

8:00 AM, August 27, 2006  
Anonymous Anonymous said...

jeach...

What does your post mean? I don't quite understand it, what are you calling him "PH.D pretender" about?

8:30 AM, August 27, 2006  
Anonymous Anonymous said...

..
Dell's problem is its ugly PCs, terrible support, cheapo mentality. Do you really think that adding AMD will help? Anyone that buys AMDs now won't go to Dell when HP is superior.

8:54 AM, August 27, 2006  
Blogger Jeach! said...

" jeach...

What does your post mean? I don't quite understand it, what are you calling him "PH.D pretender" about?"


Are you all mixed up about the posts or are you implying that I anonymously wrote that?

7:35 PM, August 27, 2006  
Anonymous Anonymous said...

jeach, just got mixed up with the posts.

1:06 AM, August 28, 2006  
Blogger DBA said...

TO boytoreckonwith,

I totally agree with you. Those anonymous says nothing but insults others should be stopped here.

I come here to read some intelligent comments. I have no problem if comments are pros or cons, but insult people. Sharikou should consider that.

2:57 AM, August 29, 2006  

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