News analysis: The PC 'bad boy' shows soft side

As the biggest computer maker in the world rejigs its European PR account, Adam Hill assesses Dell's corporate image as it prepares to enter adulthood.

College drop-out Michael Dell chose to bypass third-party retail chains when he started selling computers direct to consumers by mail order in 1984 - it was a pioneering move.

Two decades on, in another decision based on simplification, Dell dropped Ogilvy PR Worldwide to make GCI its sole EMEA PR adviser (PRWeek, 6 May). GCI chairman Adrian Wheeler oversees the account, which is managed by director Nicola Taylor, with both reporting to Dell EMEA corporate comms director Roger Wilson.

Dell already used GCI for comms out of its headquarters in Austin, Texas. 'We get a lot of (GCI's) attention,' says Wilson, without any apparent irony in his voice. With global revenues of £25.8bn last year, Dell knows it can command rather more than attention.

Despite the massive revenues on offer in the IT market, last week's announcement by IBM that it is to shed 13,000 jobs, mainly in Europe, points to challenges ahead for all players in this sector, including Dell.

Consolidation, as western markets mature and PCs commoditise, is a major issue. Hewlett-Packard, for example, acquired Compaq two years ago. 'Two of the biggest IT companies needed to get together to combat Dell,' explains Computer Weekly technical editor Cliff Saran. 'Yet Dell is still the biggest company, the one you would rate yourself against.'

Conservative outlook

Dell also has some image problems to address. Its ability to sell relatively cheaply online and allow buyers to customise their computers may be appealing, but it doesn't please everyone. PC Retail editor Scott Bicheno says: 'Dell is the prime driver behind the very tiny margins in retailing.

The customer service aspect pre and post-sale can be a bit sketchy. But that is the trade-off.'

Critics also accuse the company of being boring. 'It is not necessarily seen as a company that will sell you the next big thing; it is a follower,' says Saran. Wheeler agrees: 'Dell is not taking risks with unproven technology.'

While this approach has obvious benefits, Dell is never going to be seen as a brand with which to impress your trendy friends, which limits its media exposure outside of the business and technology press. James Beechinor-Collins, editor of gadget magazine T3, says: 'You wouldn't expect a stream of new and exciting products from Dell in the way you would from Sony, for example.'

It has also upset some in the industry. 'A lot of the PR seems to have been concerned with saying: "We're the big bad guys but we must have done something right",' claims PC Retail's Bicheno. Such terminology may not have featured in many Dell corporate comms meetings, but this outsider's assessment is accurate, according to some. Wilson, at Dell, admits: 'Wanting to kill the competition is fine when you're the upstart but (not) when you find yourself in a leadership position. Three or four years ago there was a subtle change in our comms.'

Dell is also facing a potentially far more problematic issue to deal with among its own employees: with some staff arguing that Dell is in thrall to short-termism and consequently has no interest in career planning.

Growing up

As a result, Dell has developed several messages - explaining that Dell is different, well managed and good value - to satisfy external stakeholders, and claims to have worked hard at the 'softer' side of things internally.

The new comms approach suggests that, while not exactly ready for its pipe and slippers, the company is conscious of the need to grow up - Michael Dell started the company at the age of 19, but turns 40 this year.

It is not the only change. While number one in terms of PC sales, Dell also wants to be seen to have 'enterprise credibility'. This mirrors a definite trend: IBM, the company that effectively invented the PC market, has already sold its PC division to Chinese computer manufacturer Lenovo Group, and Dell says that just 15 per cent of its products go to home users.

'We're number one in PCs but everyone knows that bit,' says Wilson. 'Enterprise is the market where the big spending and profitability is.' Dell diversified into printers in 2003, as well as network switches, servers, storage and notebooks - corporate customers account for 85 per cent of sales. Its biggest clients include Honeywell, Barclays and Royal Philips Electronics, in addition to medium and small UK businesses.

Perhaps this is why Dell products can seem quite staid when put alongside those of, say, Apple. 'The fancy designs and the PR fireworks that (Apple founder) Steve Jobs produces are not in the Dell mentality,' says Wheeler.

As it happens, Dell does have an iPod challenger - the Digital Jukebox - but it is only sold in the US and the firm has rejected the idea of ardently chasing digital-device lovers.

Business cred

Innovation comes in different forms, however. Nick Leonard, creative vice-president at technology PR agency Lewis Communications, says: 'Dell has been pretty innovative in the way it has sold products. It was one of the first companies to embrace the internet, and because it is not going through resellers, it is fully in control of its brand.'

Bicheno's readers are the sort of independent computer retailers who are seeing their margins squeezed by Dell's direct-to-consumer approach. But even he admits: 'People want to hate Dell but they cannot deny the fact that Dell's doing what it's doing very well.'

Not only is this the sort of compliment all brands would kill for, Dell has also proved that the dotcom model really can work. Which, when you think about it, doesn't sound so dull after all.

TWENTY-ONE YEARS OF DELL

- 1984: Michael Dell founds Dell Computer Corporation with $1,000

of investment capital

- 1987: Opens UK subsidiary

- 1988: IPO of 3.5 million shares

- 1990: Opens Limerick manufacturing plant to serve EMEA

- 1992: Dell becomes the youngest CEO of a company on the Fortune 500

list

- 1996: Customers buy Dell online

- 2001 Hit by negative publicity over a decision to outsource technical

support to India

- 2004: Launches hardware recycling scheme after media disquiet over

electronic waste

- 2004: Kevin B Rollins takes over as CEO as Dell becomes chairman

- 2005: Global revenues for the company revealed as £25.8bn

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