I saw a post on Ziff-Davis (Dell: Turnaround interuptus as share grab hurts net, margins) about how Dell isn’t quite out of it’s problems. There is an infamous quote by Michael Dell in 1997 (“I’d shut it down and give the money back to the shareholders”) that is hard to live down when the tables are turned and now Dell is struggling and Apple is doing very well.

But there is a reason for the disparity. Beyond the marketing and music tie-ins that are often pointed to as the reason for Apple’s phoenix-rise, there is a darker manufacturing reason for Dell’s continued struggle.

Like the Automotive business, the Computer business is all about “The Product”. And products need a certain level of Focus. Too many products and you cannot focus on the key points that differentiate your business from the one down the street. Brands go nowhere when there is no differentiation. When you have too many products, you have too much cost in your system, and your business struggles.

So I did a quick brush across the web sites of Apple and Dell, asking the question of “how many products does each offer?” I was going to do all the products, but after spending enough time in just the computer section offerings I’d had enough – looking at music players, phones, printers, monitors, music sales, and so on were not going to yield any additional insight (imagine if I were looking to buy something on these visits? Sad.). The computer systems tell the story.

Apple has all of three laptops and three desktop offerings on their web site.
Dell has 37 laptops and 60 desktops to choose from. And that is before you can “customize” your order on either site.

Granted, Apple and Dell are very much differently sized companies, Dell has a lot more employees to cover these products (or have this many products because they have so many employees). Half of Dell’s laptops are consumer, the other half are targeted at “businesses”, and 30% of Dell’s desktop machines are consumer while the remainder are traditional desktops plus workstations and servers for businesses. Dell does a lot of corporate sales (otherwise known as low margin high volume). Apple sells to businesses too – but they are the same machines the consumers get – thinning fixed costs there.

I’ve done this type of analysis in the past looking at the automotive companies with similar results. The company with fewer products is more nimble, gets a better brand image, and is more profitable than the company trying to offer something for every niche.

Having too many choices confuses most purchasers. There will be a select few who really enjoy comparing and researching every minute bit about their intended purchase (or some who do it out of fear they will choose incorrectly and might later suffer buyer remorse). But most shoppers do not – they will get an idea what they want, check on a few things and then try placing an order. This is where having too wide of a product portfolio to choose from is a major disadvantage – the potential buyer on one site will get overwhelmed and feel they are wasting time and abandon their shopping cart in the middle of the checkout page.

In the manufacturing realm, this complexity drives potential permutations like one automotive manufacturer I know could produce every variation (color, engine, seat configuration, etc) for a whole month and never repeat the same machine (two plants producing a vehicle every thirty seconds or so, over three shifts and five days a week). A lot of choice, but too much.

So what do you think? How should Dell pare down it’s offerings and restructure its web site/business to make shopping more simple? To reduce their complexity, cut costs, and drive a better business model?

Cheers!