There is a third market missing - business. The machines have to:
- run existing application, sometimes in house developed
- be reliable and of quality
- supported by a manufacturer with support, 3 year replacement programmes, etc.
- satisfy a vertical market from cheap desktops to file and print servers up to clusters

In this market HP and Dell will oontinue to rule, and its not that small a market.

Sanjay

It's what happened with TVs & Stereos . You have a few expensive high end brands that are as much art as appliances and the cheep ones made in the far east that most people buy. Zenith is no more, at least as an american made product.

Good point, Sanjay. I'd also add IBM to your list of corporate IT suppliers. If I recall correctly, that market is actually ranked IBM, HP, Dell. IBM doesn't sell as many units as Dell, but they are known for their corporate support.

--Ricky Spero
The Mac Observer

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Ricky wrote:
Good point, Sanjay. I'd also add IBM to your list of corporate IT suppliers. If I recall correctly, that market is actually ranked IBM, HP, Dell. IBM doesn't sell as many units as Dell, but they are known for their corporate support.

Good point. I'm surprised IBM doesn't sell as many units as dell. This is my first summer on a Thinkpad (at work) and compared to a Dell laptop, it just feels so much sturdier and industrial strength. Y'know, no frills, just the right tool to get business done with a very professional look also. (Although the fisher-price blue xp toolbar kinda contrasts with the nice black thinkpad )

Dell in their SEC filings stated that their margins are so slim in order to take market share. Now, the Chinese are showing that if you want to fight a margin war, you really can't beat them. A well orchestrated marketing campaign by a smart Chinese manufacturer could destroy Dell. Even I can go out and build a very powerful white-box computer cheaper than Dell can currently sell a similar system.

I think Dell will disappear faster than they appeared.

IBM aren't in the "units" sales game - they prefer to sell a complete package which includes ongoing support/consultancy and finance. One of my clients has about 1000 IBM PCs/servers/Thinkpads but they also get an onsite IBM staffer or two to support them, included business-consultancy and other such large-corporate essentials. Most of IBM's revenue-stream comes from services & software not from selling hardware.

Mac market share is below 1.7% and will fall again this quarter. No iMacs, virtually no G5 processors, combined with Apple's price increases and poor quality ensure continued decline and ultimate demise of the Mac, that's why Mac fanatics are called iLemmings, they're all headed off a cliff.

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RealityCheck wrote:
Mac market share is below 1.7% and will fall again this quarter.

I see you're making up numbers again. And so quickly after the most recent real numbers came out, too!

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that's why Mac fanatics are called iLemmings, they're all headed off a cliff.

And of course, lemmings don't really do that. That was a fabrication created by Disney.

Check the facts! (sorry, folks, I had to say it): http://www.snopes.com/disney/films/lemmings.htm

Since when did corporate IT care about the fact that a laptop "just feels so much sturdier and industrial strength. Y'know, no frills, just the right tool to get business done with a very professional look also."?

Business buyers will overlook quality, functionality and performance in favour of saving a few dollars per user, providing their IT people will "support" it (the cost of those IT people and the cost of their support comes from a separate budget). A few years ago, respectable businesses only bought Compaq/HP/IBM, and Dell was for budget-cutters and home users. Now that Dell has joined HP/IBM as "respectable but expensive", how soon will it be before mainstream business can find a way to justify the cost-saving in purchasing China-generic PC's?

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Anonymous wrote:
Since when did corporate IT care about the fact that a laptop "just feels so much sturdier and industrial strength. Y'know, no frills, just the right tool to get business done with a very professional look also."?

Business buyers will overlook quality, functionality and performance in favour of saving a few dollars per user, providing their IT people will "support" it (the cost of those IT people and the cost of their support comes from a separate budget). A few years ago, respectable businesses only bought Compaq/HP/IBM, and Dell was for budget-cutters and home users. Now that Dell has joined HP/IBM as "respectable but expensive", how soon will it be before mainstream business can find a way to justify the cost-saving in purchasing China-generic PC's?

First of all, if a business has any brains, they will only lease their computers in the first place; we have a multi billion dollar company here all stocked with thinkpads. Not only does the leasing cost less, but there is turnover from the old ones to new ones every so often without a big increase in price or old outdated equipment sitting around, which is a huge cost saver. Also, having sturdy no frills equipment saves on cost overall, as you're not having to spend as much money on fixing the freaking things all the time.

Now it may in fact not be too long before some businesses can start looking to the increasingly cheaper chinese made pcs that this article refers to, but for a company such as the one that I'm working at (multi billion dollar bank), it is of paramount importance to have the best equipment because so much is at stake if something goes wrong.

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Guest wrote:
Dell in their SEC filings stated that their margins are so slim in order to take market share. Now, the Chinese are showing that if you want to fight a margin war, you really can't beat them. A well orchestrated marketing campaign by a smart Chinese manufacturer could destroy Dell. Even I can go out and build a very powerful white-box computer cheaper than Dell can currently sell a similar system.

I think Dell will disappear faster than they appeared.

I think if you looked at Dell wrong they could disappear. They're a house of cards waiting for someone to bump the table. Why do you think they're making televisions?

And rebranded. Even the Apple, made by Hop Sing and Son's is rebranded for the Western Markets. Hop Sings started out in the back of Chang Yuk's Noodle Factory and restaurant. Many of the Apple Powerbooks were assembled entirely with chop sticks.. Pretty darn amazing! Of course now they have much better tools for manufacturing.

Dell's Secret Earnings Engine

http://www.fool.com/News/mft/2004/mft04082006.htm

"profits from warranties comprise roughly 13% of Dell's gross profit or about 28% of its operating profit"

This at a time when Dell's customer satisfaction figures are plunging.

Dell have already have a recognised brand and some fans. I doubt they'll disappear, their business will have to change direction but then any business has to adapt.

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RealityCheck wrote:
...that's why Mac fanatics are called iLemmings, they're all headed off a cliff.

You mean that's why you call Mac users iLemmings. This term is used nowhere else except TMO. But we're not surprised that you think your opinion is somehow that of the rest of the world.

I have yet met any Dell users that claim to be fans of Dell. Most all of them (including some people in my own family) just complain about how their Dell computer sucks.

The only reason Dell is where they are at today is because of their great customer service and support, but even that has withered away into nothingness. If I was ever in the market for a PC (from a name brand), Dell would be dead last on my list. Heck I might just resort falling back to an old type writer and adding machine.

Your spin said:

"This is the first time we have encountered the idea that the commiditization process that Dell has worked so hard to achieve could actually hurt the company in the long run"

No, it's not--basically the same thing was said here a year ago by someone commenting on one of your articles:

http://www.macobserver.com/comments/commentindivdisplay.shtml?id=32406

My PowerBook and PowerMac serve all of my personal computing needs, but If I absolutely had to get a PC for personal use (my Dell laptop doesn't count, our company has dictated it as a corporate standard, for this, we get a pretty hefty discount) I'd definitely look at the Sony VAIO series. Every time I see one of our external consultants (or executives, who seem to be able to bend the rules) with one, I'm impressed with the attention to detail, and the features that differentiate it from the other bland PC portables.

The future is not in PCs for businesses, but rather in rack-mount blade PCs that connect to dumb terminals with a keyboard and mouse. An example is ClearCube. We've looked at this in our IT department and the ROI is becoming very attractive. TCO is really lower and downtime minimized.

In the last week or so Dull announced that they were dropping the bottom lines in the China market because they could not compete with the local companies. Dull ADMITTED that they couldn't compete!

The companies in China have to fit a few more pieces into place. An overall package, including some basic software apps (copy iLife?), a good company to service the computers - and do it fast and right the first time - and training local (in China) to provide first rate customer service.

There is also a need to work on design as appearance DOES count to a lot of people. Clean, elegant, simple and exciting - gee, are we talking Macs here?

There is also a need for the manufacturer to focus on making customers (not just shareholders) happy.

I believe that more than one company in China is looking at the US, UK and European continent very closely. I also believe it will take 3 to 5 years of heavy investments to develop something that will blow Dull out of the low priced consumer market.

Add that to the fact that Apple is getting a lot more attractive in the mid and upper levels of the consumer markets and Dull may have some problems.

I am glad that at last people are talking about and recognising the future here. Chinese and other far eastern manufacturers WILL take over the part of the market that the likes of Dell are kings in now. It is a matter of when not if.

Others have mentioned the business expectations in this segment. They are correct but I also feel a little bit of complacency and patronisation at work there. Exactly the same comments were made about the Japanese in the sixties about all sorts of products, they were riduculed and laughed at. It would be foolish to make the same mistakes again in respect of China. At present most of the parts are manufactured in China/Taiwan etc it is only a matter of time till the base design, product conceptualisation and support process takes over there that will wipe the smile off Mr Dells face (after all his company works in a similar base product area). China will of course keep a cheap labour force constantly on tap too by its clever use of development zones excluding the bulk of its population which it milks only as and when it needs. Only those companies who can plug into real inovation and serious design style and fashion will flourish in such an enviroment eventually, selling to the increasing cash rich middle classes that are growing at a massive rate in the far east generally. Innovation, branding, high style, quality and user and interface design will all be the areas that will offer great potential for companies outside of that base market of Dells and Apple are well positioned to exploit it if they chose. Dell certainly are not.

ding dong, the witch is dead

stores, opening a fast food burger bar. And what more can I say. Dell will be in a pickle, as in Dell Pickle. Show is over for Dell.

. . . as long as people like Steve J are around.

The one thing they have in their favor is the fact that they have taken a different road from the other PC makers and as long as they focus on their strengths they will continue to stand out.

The low end is going to be crazy in the PC arena and Wal-Mart will be just a good a place to buy one as Dull is. Actually Wal-Mart will be better because they won't keep pushing you up in price when you buy with this enhancement and that one.

Linux is also going to be a major force as people get tired of the problems with Windows - especially the malware - and find there is no need for huge apps for simple processes like word programming. MS offering a stripped down Windows program or countries with lower average income is just the first step in a long process they need to take. Strip down Windows and Office for the home user or Linux is going to give them the same trouble that Dull is facing.

I believe we are starting to see a major shift from the basic WinTel environment and Asia is going to be a major player. If they look carefully at Apple and learn about design elegance and simple customer use they can bash Dull & MS around a lot faster than we anticipate.

The ironic thing is that this is one are where we are going to wish them well in taking over the commodity market. It could be exciting.

We will be overrun with asian women. And they will make us wear cheap cpu implants to control/experiment with us. China will reach a critical mass soon, and there new middle class will be forced to reform there totalitarian system if they wish to truely "prosper". The "old china" will only get in there way. The new china will take over the world with our own brand of capitolism. We will be forced to attack them in a suprise nuclear strike, justified by a fake Chinese/terrorist attack or somethin. Or we will fade into a second rate nation, pawned off by the secret world government,(CFR,Trilateral,Illuminati, etc,etc.......) Aww Geeeeeeeezzzz. Its a tuff time to be a white american male, at least I get paid to sit at a mac!!!