Sand Spring Advisors LLC

No Marketing Miracle: Dell

January 11, 2003

by, Barclay T. Leib


Chart constructed using Advanced GET End-0f-Day

In a similar fashion as many used to (inappropriately) revere the Japanese way of doing business in the late 1990's, now everyone is abuzz about how direct-marketing-machine Dell is gaining market share on other PC makers.

But anecdotally, here's a true story about how screwed up this company may be.

Toward Christmas time, I wanted to get two of my children a new PC apiece, and worried that Gateway might not be around in three years to honor their service guarantee, I looked in a Dell catalog. There I spotted a model with a DVD player as well as special video editing software to allow VHS home movies to be imported, editing digitally, titled and credited, and then burned onto CDs. I thought this sounded like just the right thing to keep a 14-year old boy and a 12-year old girl busy and creative.

I place a phone order hoping that ordering two PCs might elicit a special discount as opposed to using the more impersonal web. This was likely my first mistake. The salesperson sounded a bit confused -- the promotion configuration I read off to her from the catalog not immediately coming up on her computer terminal.

But eventually an order is placed, and the company promises delivery in 7 days. 7 days turns into 15 days, but eventually the boxes come. When both PCs arrive, we discover that the upper CD drive on one of them is not working, and after two hours on the phone with a technician, determine that the whole PC must be returned. This PC gets swapped out a week later, but then we later determine that neither of the two PCs actually have DVD drives in them.

Now for a teenager who thinks it's cool to watch a movie on the PC, and might eventually take this PC away to boarding school or college, this is a big thing.

"Dad, how could you order a PC without a DVD player?"

"But I did order a DVD drive -- See it's right here in this catalog."

More phone calls back to the company then get us shuffled around between technical support, over to customer service, and then back to sales. Finally, the answer comes: "You have to talk to the original salesperson who took your order." This salesperson does not answer her phone, but instead we leave a voice mail. We also e-mail that person asking her to call us.

10 days have now gone by, and not a word back.

Perhaps this is just a series of bad accidents, but one wonders. From late delivery, to faulty parts, to wrong component/software installation, to no return phone calls upon complaint -- is this the well-executing direct marketing whiz company Dell is supposed to be?

Oh, one other thing: Dell hasn't charged my credit card yet and its been two months since the original order. Perhaps I shouldn't complain too loudly -- at least until they do so. Two PCs for free still works for me -- even if these PCs came incorrectly configured.

As previously espoused, this stock is destined for $12. There is no marketing miracle here.


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