The relationship between Dell and Apple has historically been hit-or-miss. Mostly miss. At times the companies have seemed on the verge of a friendly relationship, while more often the strong-headed leaders of each firm have gone public with the extent of their disdain for each other.
This charming interplay will be missed – because 2006 will mark the beginning of the end for Dell Inc.
When Dell gets desperate, they try to imitate Apple. Way back in 1993, Apple had just lost their head of Powerbook Engineering, John Medica, who left to head up Dell’s flagging laptop division. While Dell was out shopping they also picked up Eric Harslem, at that time the head of Apple’s desktop division. Apparently Dell thought they could buy the leaders of these talented groups and walk away with some of Apple’s computer design magic. Medica knew better than this, and immediately upon joining Dell entered into negotiations with Apple to license PowerBook design technology for Dell’s upcoming 486 laptop.1 I don’t think this deal ever came to fruition – if it had, the Dell laptops might be less of a friggin’ nightmare than they are.
To be fair, the copycat game has gone both ways. One thing Dell has been widely praised for is its manufacturing expertise. The above-cited article mentions in passing Dell’s “totally integrated manufacturing resource-planning system,” which had recently been overhauled with brand-spanking new “logistics, order-fulfillment and quality-control systems.” Taking an early lead in these areas made it easier for Dell to become an early leader in online direct-to-consumer sales. These systems at Dell possessed all the qualities that Steve Jobs, in 1997, must have noticed were lacking in Apple’s own manufacturing operations.
In 1997, journalists were running around patting each other on the back for brilliantly predicting the imminent demise of then-struggling Apple. It became so de rigueur to lambast Apple, that even high-ranking executives who usually act with decorum found it irresistible to launch a hearty guffaw and spittle in Apple’s direction. Such was the case for Michael Dell, when he made the famously arrogant statement that the best strategy for “fixing Apple” would be to “shut it down and give the money back to the shareholders.”2 Ouch!
Steve Jobs felt the sting, as well. In a press event held shortly after Dell’s comments were made, Apple announced their own revamped manufacturing and online sales apparatuses. In schoolyard fashion, the event culminated in the presentation of a large graphic of Michael Dell’s face superimposed over a bulls-eye target symbol. “We’re coming after you, buddy,” Jobs said to a titillated crowd.3 At the time, I was 22 years old and working in the Mac OS System Updates group. We watched the event over closed-circuit Apple television, and were charged by the comments. It was true – times were tough for Apple, and we needed a forceful leader. We didn’t want to give the money back to the shareholders. We wanted to kick Dell’s butt!
Dell’s comments have lived on in infamy as Apple has steadily risen from the smoldering ashes of 1997. The successes of the iMac, Mac OS X, and the iPod have made Apple one of the most successful technology companies in recent history. As Apple has healed its wounds, Dell has desperately tried to imitate its success, peppering its product line with Apple knockoffs like the G5-ish PowerEdge 6500 and the Shuffle-ish DJ Ditty. (Actually, the DJ Ditty may owe more to BIC Lighters for its design philosophy.) What’s most intriguing is that Apple’s momentum hasn’t slowed down. In fact, it seems to be gaining with each passing month. Dell was wrong.
But what’s more interesting is that Jobs was right! Apple is “coming after you, buddy.” In 2005, with Apple on the brink of releasing Intel-powered Macintosh computers, Dell has once again taken to making public commentary on Apple’s future. This time, it’s with a distinctly higher level of ass-kissing, as he senses the impending doom of his own company (hyperbole mine). In June, Dell apparently told Fortune columnist David Kirkpatrick that he would be happy to offer Mac OS to his customers (full text subscription only). Yeah, I bet you would! Before your company goes under!
So, when am I going to get to my point about the demise of Dell? It’s pretty simple. I don’t believe Dell can compete with Apple in the consumer PC market. Same goes for all the other vendors whose selling points are “relative ease of use and reliability.” Nobody buys Dell computers because they are cheap. They aren’t that cheap! They buy Dell, or HP, or Sony, because they’re afraid to put together their own computer. These PC manufacturers capitalize on the fact that even PC users want things to be as simple as possible. They don’t want to shop around for graphics cards and hard drives and ethernet cards that work well together. To the extent that the PC world has needed a “good to go” manufacturer, these companies have filled the order. But none of them can fill the order like Apple can.
A much under-discussed aspect of the new Intel Macs is that, as far as I have been able to glean, Apple has no plans to restrict the ability of users to install Windows on the machines. And why would they? That’s the secret weapon! In the market for a new laptop? Has to run Windows? Why buy a Dell when you can buy a Powerbook with all the same abilities, a sexier design, and the added bonus of being capable of running Mac OS X? Apple is about start selling PCs, and the slightest bit of marketing or consumer word-of-mouth about this fact should ignite a huge increase in hardware sales for Apple at the expense of other Intel-based computer manufacturers.
When’s the last time you sat in a room with a bunch of Linux/Unix nerds? Have you noticed what kind of computers they use? Sure, there are a bunch of PC-compatible laptops, but in many rooms I’ve observed that perhaps the majority of these users are using Apple Powerbooks. Why? Because people like nice hardware. Apple gained many of these customers without selling them on Mac OS X. They install Linux, BSD, or Darwin on their machine and otherwise continue their GTK/X-Windows/Whatever lifestyle as they did before. These users are the warning bell for Dell’s collapsing customer base. People who run Windows in 2006 will be doing so more and more often on Apple hardware.
When Apple releases their first Intel-based computer, it will also be the first computer in history that has the ability to triple-boot Windows, Mac OS, and Linux, all with full performance and compatibility. When the computer maker whose designs have been the envy of the technology world for decades suddenly becomes the most compatible player on the block (Apple!?), you’re looking at a dangerous combination.
Let’s imagine a hypothetical analogy. You’ve got all the car makers in the world. The Fords, Toyotas, Porsches, etc. They all make cars, and people don’t love them, but they don’t hate them. They get them from point A to point B, and some of them are even somewhat well designed. Now imagine the “Superlacar” that looks prettier and performs better than any on the market. It’s sexier than a Maserati, safer than a Volvo, and more fuel efficient than a Toyota Prius. The only problem is it runs on corn oil, while every other car on the market runs on gasoline. A small niche of the public buys into the car because it’s just too sexy to pass up. They make excuses for the vats of corn oil they keep in their garage. They argue into the night with Honda owners that the Superlacar is a better choice, because it’s just so sexy, reliable, safe, and (in the long run) affordable. The Honda owner agrees with most of the points, but it’s damn inconvenient to store those giant vats of corn oil! For most people, it’s just not worth it.
When Superlacar announces that, from this day forward the vehicle will run on gasoline, every other car maker in the world is screwed.
Why isn’t everybody talking about this? It could be that I’m wrong and everybody else, who seems to be dancing around like Dell, Sony, HP, Lenovo, etc. are going to stick around indefinitely, is right. I could also just be missing the like-minded commentary, but I’ve seen surprisingly little analysis of just how devastating Apple’s move could be for the existing PC juggernauts.
Andy Serwer raised a question in Fortune Magazine about Dell’s future: “Could this be the end of Dell as we know it?” But his analysis looks only at Dell’s recent slump in the PC market.4 Boy, if he thinks Dell is screwed without Apple in the picture, then Dell may be even worse off than I think!
Tim Beyer’s made good analysis of the Apple situation in his Motley Fool article earlier this year. He speculates that Apple’s intentions are “to lure those buying computers from Dell – or Gateway, or Acer, or even iPod partner Hewlett-Packard – into trying a Mac.” Indeed, with Apple-designed Intel hardware on the market, it’s hard to imagine anybody bothering with the “value added” PC manufacturers. They don’t even have to run Mac OS X. If it’s a matter of spending a few hundred extra dollars to have a PC that looks like their iPod and meets Apple’s high component quality standards, they’ll pick Apple over Dell every time.
The icing on this cake? I own a Dell. It was my first experience with PC hardware ownership, which means it was also my first experience with the “privilege” (necessity) of having to buy industry-standard replacement parts when things “just break.” And this is the “user-friendly” end of the PC hardware spectrum? The damn thing sucks. I have to keep a PC around, particularly for porting work that I do from Windows to the Mac, but everything about this box makes me cringe. It’s been a few years since I bought it, so I’m due for an upgrade. But my next PC will run on Apple hardware. I expect yours will, too.
Adiós Dell, y gracias por las memorias.
(Gratuitous Spanish bookends on this article are sin buena razón.)
Note: This is the first article I’ve posted where footnotes were really appropriate. Formatting and linking style shamelessly stolen from Daring Fireball.