Memo to Michael: 10 Ways Get Dell Back on Track

Mar.21.07 | About: Dell Inc. (DELL)

Dear Michael: I have held my breath for a bit, giving you ample time to settle back in to the CEO job. As a frequent Dell (NASDAQ:DELL) customer and long-time company watcher, I offer you these unsolicited steps to get Dell back on track.

1. Visit CIOs and Apologize: If Dell had listened to customer demands, you would have embraced AMD (NYSE:AMD) Opteron chips much earlier. Instead, you put your Intel (NASDAQ:INTC) relationship ahead of your customer relationships. That's bad business.

2. Focus: Do you want to compete with Amazon.com or HP? Your Web site says Dell offers over "20,000 electronics and accessories from a wide array of brands." Meanwhile, CIOs and small businesses are running to HP (NYSE:HPQ). Go deep with commodity electronics or business IT--but not both.

3. Exit the TV Business: I actually have two Dell TVs. I like them. A lot. But Dell no longer has a price advantage in this market. It's a distraction for you. Unplug your own TV brands, offer a few third-party LCD TVs--but focus on IT. Another idea: Reposition your TVs for Digital Signage applications within retail stores, airports, etc.

4. Get Serious About Open Source: No, I'm not referring to Linux on the desktop. Let's talk about your higher-margin server business. We know Dell loves selling Linux servers running Oracle (NASDAQ:ORCL). In fact, Dell is the biggest reseller of Oracle databases in the world. Next, Dell should become the largest reseller of MySQL, the open source database. The market is ready.

5. Get Serious About Networking: Bolster Dell's own networking solutions or buy a small networking company that has loyal technology partners. 3Com comes to mind. Or get out of the business and OEM Cisco (NASDAQ:CSCO)/Linksys gear.

6. Recruit More IT Consulting Partners: No, not to build a huge indirect sales channel. Instead, leverage VARs (value-added resellers) and IT consultants to support the gear you sell. Partner or acquire Global 2000 services expertise. And for small business, reach out to companies like OnForce to quickly mobilize a vast network of technology consultants. True consultants won't be threatened by your direct sales model.

7. Call SAP: They want to target more small and midsize business [SMB] accounts. You want to target more SMB accounts. Hmmm.

8. Go Back to Your Dorm Room: Visit college students. See what they're using and why. Tomorrow's corporate innovations emerge from today's college campuses.

9. Cut Staff Fast: If layoffs are coming, make the moves quickly. Don't reward loyalty with multiple rounds of job cuts. Nortel (NT) recently announced its fourth round of layoffs since 2002. That's torture for staff.

10. Pay Shareholders a Dividend: Dell is no longer a rapid-growth company but you still generate loads of cash. HP, IBM (NYSE:IBM), Intel and Microsoft (NASDAQ:MSFT) all pay dividends to shareholders. Dell should, too. Show investors you're focused on long-term loyalty and solid fundamentals. Be the P&G of IT. Pay a dividend.

That's all for now. Other deadlines--from paying clients--loom. All this free advice is hurting my margins.

Disclosure: Author has a long position in DELL.