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Just a day after Dell launched it’s own line of mini Inspirons, and after CEO Michael Dell said carriers would likely subsidize such netbooks, creating smaller price tags, the Wall Street Journal speculates that Dell will sell its manufacturing plants, shrinking its operations. This would be […]

Just a day after Dell launched it’s own line of mini Inspirons, and after CEO Michael Dell said carriers would likely subsidize such netbooks, creating smaller price tags, the Wall Street Journal speculates that Dell will sell its manufacturing plants, shrinking its operations. This would be good for Dell because it would give it a chance to ditch an aspect of its business with diminishing returns and go after a growth area, like cloud computing.

Dell already outsources some of its manufacturing, but if it gets out of the business entirely it would join its rivals who no longer build their own machines, and give up a key to its past. Dell came on the scene in 1984 with a manufacturing model that drove change across the industry, from requiring just-in-time manufacturing, which cut the costs of rapidly depreciating components, to analyzing how workers moved in the plants in order to shave seconds and pennies off the job of building a PC.

But like any good entrepreneur, Michael Dell can see the changes in the industry and appears ready to abandon what made his company big now that it’s not working anymore. Here is a another test for him as he gears up to make his company over — kind of like a $65 billion startup.

That’s a tall order, but IBM has done it by selling off its iconic PC business and relying on services. Hewlett-Packard focused on a mix of hardware and services for corporate customers while drawing in consumers on the PC side. And Apple shook things up with the iPod and now the iPhone. Dell had tried all of these strategies without huge success, but I think with cloud computing it has a chance.

The hardware and operations that comprise a computing cloud will be a low-margin business for those offering it. If Dell can take the lessons of squeezing the costs from a low-margin business like building computers and translate that into helping build, deliver and operate clouds most efficiently, it could win. By tying its range of consumer and corporate devices back into such clouds, it could become a powerful business generator for cloud providers.

When it comes to the utility industry (which is what many cloud providers like to compare their business to), GE sells billions in equipment and services to providers. Dell has made some acquisitions that get it started down that road offering both services and equipment to clouds, but it also has a company culture of exactitude and discipline that can’t be bought. I think if Dell can dump its manufacturing plants, it will head for the clouds.

image of the Inspiron Mini 9 courtesy of Dell

  1. [...] Today I read from Stacey Higginbotham that they’re moving towards outsourced manufacturing.  The scoop came from the WSJ, which reports sources saying Dell is approaching contract manufacturers all over the world to see if they’d like to buy Dell’s plants. [...]

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  2. [...] reikia kam gamyklų, galite kreiptis. O jei rimčiau, tai Dell yra bene paskutinė JAV kompiuterių gamintoja „iškomplektuojanti“ tradicinį kompiuterių… ir perleidžianti gamyklas subkontraktoriams. Nauja prioritetinė Dell kryptis – techninės [...]

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  3. This information is intended to Mr. Michel Dell to be informed what is hidden from his office

    Customer care department is sending me back to Dell on Call and I am not being help.
    Please inform the appropriate party of my problem which is being ignored.

    I have spoken to 800-624-9896
    Mr. Prateer
    Mr. Asif
    Mr. Mark
    Mr. Joseph
    Mr. Assh
    Mr., Hamal

    Mr. Hamal in Customer Care Dept from the India Office was not only rude but will not help in my problem.

    A complete break down in customer service, and a lack of care.

    I (E. Durity) can be contacted using 239-455-0826 referencing case number 621532750

    Thanks in advance, for your help in this matter.

    Sincerely,

    Your Very Angry Customer

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  4. [...] said reports the company would shrink its manufacturing operations were speculation. But he said Dell’s ongoing move into providing infrastructure as a service [...]

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  5. [...] Computing” To Be $100 Billion Market [↩]A Reader Rants About Cloud Computing [↩]Dell Shrinks Computers and Operations [...]

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