Dell’s Low Prices: Strategic Failure or Lousy Execution?

Last week HBS told us that low prices don't always equal more customers. This week Dell proved that point.

The trouble for Dell is that unit volumes aren't compensating for price reductions. Besides hurting Dell's sales and profit, sluggish unit growth is also eroding market share, another key measure of overall health. In the calendar first quarter, Dell's share slipped for the first time in memory, analysts said. According to market researcher IDC, Dell's worldwide share of the PC market fell to 18.1% from 18.6%, and in the U.S., share fell to 32.3% from 33.9%.

The article focuses on this as a strategic mistake by Dell, but it could just as easily be a failure to execute production improvements or marketing programs that would naturally go along with a price decrease. Dell has consistently been able to find ways around the fact that PCs are moving closer to commodity status all the time, but they seem to be out of ideas at the moment.

How to Have Better Business Meetings

I have been impressed by Kevin Rollins and Michael Dell in the past, and I wouldn't be surprised to see them turn their ship around later this year.

  • I think Dell has missed to target the right market for chap computers. They are just not used to this market yet.