Mike,
How *does* Dell do it? That's a good question! I don't like their machines, I don't like the way they are built or engineered, I don't own them or use them or recommend them or sell them, so in one sense the question is hypothetical and abstract and even irrelevant, at least to me, sitting on my throne at The Ashram. But the question remains, how do they do it?
The usual argument would be extremely large volumes and the ability to negotiate very, very attractive terms with suppliers (Maxtor for hard drives, Intel for chips, Microsoft for the OS, etc). Add slave labor (overseas sweat shops, prisoners in Texas, stateside corporate wage-slaves, whatever) and/or highly-automated manufacturing facilities and hyper-efficient just-in-time inventory etc. Does that explain it? Well, it explains some of it, certainly. But I think there's still more...what Paul Harvey might have called "The rest of the story."
Perhaps more understanding comes in when Dell is looked at as a financial entity instead of simply a computer company. God knows, they watch that stock on Wall Street! Michael Dell is not really a computer guy in the same way that Bill Gates is a software guy, he's a "money guy" that found computers to be an excellent way of earning money, his primary passion and first love. At a different time in history, he'd have gone into mining or audio equipment or fast food franchising. That's not a random statement, by the way, it's true: Gates really is a software guy, a computer guy, a geek, and Mr. Dell really is a money guy. He wouldn't be the first Texan I'd met whose primary passion was money, that is for damn sure. That's probably one of the many reasons I dislike Dell, they are not a computer company in the same way that Apple is a computer company run by computer enthusiasts; Audi is a car company run by people passionate about driving, or Hewlett-Packard, even today in the Fiorina era, is an engineering-driven company.
Think about it: Computer Enthusiasts DON'T buy Dell machines, who'd want one? Dells are for -- well, you said it Mike, not me -- Homer and Marge.
So, looking at Dell as a financial entity, the only thing that matters is that the entire operation makes lots of money as a whole, in the "end," if there is such a thing. That means that they may lose money on various products and product lines, etc., from time to time. They have a very lucrative server business, I'm told; perhaps the server business "carries" other parts of the business? And there are also lots of financial shenanigans involving cash flow and accounting and all the rest of it (think: Enron, Worldcom) that I don't pretend to understand (as a non-economist), but I do know that they exist and I believe I grasp the essentials. If you've ever signed up for rebates and waited months and months for your money, you understand that floating money around and using other people's money for a time is one of the many royal roads to riches.
Now, all this would be fascinating and important if I wanted the damn machines (for myself, or for my customers), but I don't. Dell has nothing to teach us about computers, and nothing fascinating or seductive to offer us except low price. So you see, it would only be interesting if I was an M.B.A. candidate doing my term paper on modern American enterprise/finance. I suppose Dell affects me in many ways, one, by placing extreme pressure on me to offer systems for as little money as I can (although, as you see, I can't really even come close, which paradoxically, takes the pressure off me entirely, sometimes, by pushing me towards the high end rather than the low end, which I can assure you, is where I'd rather be!).
Even if you only see the tip of an iceberg, you know all about the rest of it. T.S. Eliot said you could see the entire universe in a handful of dust. That's not just poetry, it's science, holographic truth. So when a customer (a cute little number named Naomi that I certainly would have liked to get to know in holographic detail!) brought in her brand new Dell P4 Tower (not a cut-rate New York Times Special, but a high-end job for which she paid $ 2,399), and I told her I could put a digital card reader in the front of it so she could do digital photography quickly and easily, and I opened up the case, and there was not a *single* free USB connector on the mainboard, I was reminded once again why Dell is the enemy.
That's not a trivial example, the memory card reader, it's a *typical* example. But as I also mentioned in my previous note to you, there's a place for Dell in the ecosystem, and certainly as regards repairs etc., Dell has been berry, berry good to me.
Dell? I don't buy 'em or sell 'em, I just watch 'em.
SS
9:50:41 AM 
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