Fog Creek Software
Discussion Board




Griping about Dell


OK, Joel.  I agree with most everything you write, but I have to give a little pushback on this one.  You describe the effect as "a local optimization that actually harms your business as a whole".  I prefer to think of it as achieving one specific goal and accepting its natural tradeoffs.

The world is filled with people who don't understand that everything involves a tradeoff.  Almost everything is a double-edged sword, and that other edge is ready to cut our finger off if we don't realize it's sharp.

We get this problem because we don't usually talk about things in pairs like we probably should.  We talk about the benefit we're seeking and rarely mention its attendant downside.  Sometimes we are naive enough to not even know it's there.

For example, we talk about achieving performance in our software and sometimes forget that it involves a tradeoff for things like disk space and developer time.

Perhaps we should use more contractors and hire fewer permanent staff, so we can keep our fixed payroll down?  Great, but the other edge of that sword is reduced core competencies "in house".  When you reduce your fixed costs you reduce your fixed IQ points.

There are lots and lots of examples of this.  The point is that it's okay to accept the downsides if you are aware of them and consider them to be acceptable.  The stupid thing to do is to be unaware or underestimate their effect.

I don't know Michael Dell, but I generally assume that people who can't understand tradeoffs at this level will rarely achieve his net worth.

Eric W. Sink
Wednesday, January 15, 2003

I am sure there is a financial twist to holding inventory! Maybe they can show more revenue or more profit or less expenditure!

I have no knowledge of finance BTW, so this may seem kinda stupid, but am sure there is a financial angle which benifits them greatly.

Prakash S
Wednesday, January 15, 2003

"Compare that to, say, PCConnection, which can overnight a new IBM or HP server to you and you get it the next day, and Dell is at a significant competitive disadvantage. "

It's not so significant that it's stopped Dell from being a leader in terms of market share.

dell fan
Wednesday, January 15, 2003

There is definitely a "financial twist" to holding inventory.  Real businesses (as opposed to absurd software businesses where no-real-assets exist) have to deal with the challenges of inventory management and supply chain problems.  I've never done this, but I observe that it must be at least somewhat difficult, as it has brought many companies into bankruptcy.

The cost of carrying inventory is very high, and it's ridiculously high for PC components because that inventory is depreciating faster than your car.  Dell has become the leader because of its maniacal focus on this one issue.

And yes, they have somewhat compromised the quality of service to their customers by making this tradeoff.  It remains somewhat interesting to ask why the market has not crucified them for this.

BTW, in my own experience with Dell, Joel's story is the exception rather than the rule.  My last big order to Dell arrived very quickly indeed.

Nonetheless, I recently ordered a laptop and could not resist the instant gratification of a Thinkpad through PC Connection with overnight delivery.  :-)

Eric W. Sink
Wednesday, January 15, 2003

I've was reading something someplace recently that Dell stretches their accounts payables out to an average of 76 days.  They've had at least one significant vendor of theirs recently opt out of their business relationship simply because they saw no way to make a reasonable return on their investment doing business with Dell.

Basically they sound like real pricks to do business with.  On the other hand, this Latitude C400 that I'm typing this on is just a fantastic 3 pound laptop!

Sheesh.  "Can't live with 'em, can't live without 'em."

Mitch & Murray (from downtown)
Wednesday, January 15, 2003

Hey Joel & others, try this one on Dell for size:

When the Canon Powershot S200 digital camera was coming out, Dell had a nice price + some e-coupon floating around made the camera very very lower priced.  I am talking like $120 off from retail, and about $50-$70 less than the street price.

  So I order from Dell.

  Becuase I was getting e-mails on when the camera was supposed to arrive (just like you with your Server Joel), I decided to call them and cancel the order. I bought the camera from Target.

    To my surprise several people warned me that Dell will probably ship me the camera and charge my credit card *anyway* so I called THE NEXT DAY to make sure that they are not.  A very nice customer representative tells me that, sure enough, your order is cancelled.
 
    What happens in two days? "Dude, you've got Canon S200.. TWICE!"  Now I have the one I bought at Target and the one Dell shipped me whose order was "for sure" cancelled.

    I can't describe the colors of my face well enough at this point

  So I call Dell and a guy there says, "well. then you have to ship it back to us, no prob." 

    me: "you mean, you guys pay for the shipping right?"

  him: "no, you would have to pay for it, to then get a refund"

  me: "What" <censored > "There's no way on Earth I am paying for your mistake.  YOU pay for it or the next time you hear from me, it will be from Visa lawyers."

    Then he backed down and agreed Dell will pick it up.

  To my surprise on this one they did follow through.  Sure enough, a couple of days later I got an airborne express envelope with self-paid shipping to get the camera back, and Airborne will pick it up where I would say (my work place). After 1 full month, I got my credit back to my credit card.

    The sad story here is that in the interim of originally checking when the camera woudl ship I talked to several fairly helpfull customer representatives (the time I was able to go through their insane ping-pong automated phone system- that alone is just an insult), which seemed to be victims themselves or how their whole system is setup.

    Result: I AM NOT ordering from Dell again.

    My advice is, if you order from Dell on a good offer, just wait and wait until they deliver.

    And Joel, I hope you don't receive a dual Xeon Server mid-February if you already bought from someone else :-)
   

Raist3d
Wednesday, January 15, 2003

Dell does talk up how they use Com+ for all there middle ware, and "Dell runs on Dell" is one of their catch phrases. 

Crusty Admin
Wednesday, January 15, 2003

"I prefer to think of it as achieving one specific goal and accepting its natural tradeoffs."

I think in this case Dell can't really afford to accept this particular tradeoff in the long run.  The only reason Dell is in business like any other business is because they're keeping their customers happy.

If they continue to have problems delivering on the goods to the customer while minimizing their inventory then they'll have some real problems when all of their customers go to someone else. 

However, as another poster mentioned, Joel's situation may just be a minor exception in Dell's ability to deliver, so they may not have nothing too much too worry about.

HeyMacarana
Wednesday, January 15, 2003

A few points.

1.  Dell is only pays when something sells.  If something doesn't sell, it's not Dell that goes broke.

2.  Consumers pay the same price regardless of who holds inventory.

3.  It does not follow that delays in receiving goods is a result of Dell not holding inventory. 

Arguing that the supplier next door is a defacto Dell warehouse, yet claiming that the reason Dell cannot deliver on time is because they don't hold stock doesn't make sense.  If there is not enough stock on hand, then that is the fault of the company next door, not Dell.

like whatever dude
Wednesday, January 15, 2003

I ordered a computer from Dell once.  It arrived in a reasonable amount of time, but I was surprised by how clueless their sales person was.

I bought my most recent desktop from the small, local mom-and-pop computer store.  Cheaper, easier delivery (I picked it up myself at the store), better service.

J. D. Trollinger
Wednesday, January 15, 2003

Hi All,

Just last week I ordered one of their new handhelds to use for testing a new PocketPC app I'm working on. I understood that it usually takes them 2-3 days to ship, which I think sucks, but when I got the email they quoted a ship date of Feb. 3rd. I called to ask if they had their other model available sooner, but no, they don't. So, apparently they aren't making any of their new handhelds either.

So, I cancelled my order and went with a Compaq. (I'll be calling to confirm the cancellation after reading the above message.) With all of their reliability issues, their terrible support systems, and their inability to deliver a product, I don't see how they will continue to remain successful, let alone dominant.

Now, I'm ordering from a small business, as (I believe) Joel is. Maybe they have optimized their sales process to support their large corporate accounts, and just fall so short to everyone else with the general consumer/small business.

As an aside, on Monday at around 3:00pm Central I called HP support to report an apparent short causing intermittent squealing from the speakers in my wife's new TabletPC. At 3:45 a gentleman from Airborne picked it up at my home, and this morning (Wed.) at 9:10am they delivered with the repairs completed. Pretty amazing turnaround to me, and that's not with any special or additional warranties or service plans. This, and their machines are available everywhere for immediate delivery and at less cost than Dell consistently.

I can only imagine that Dell's success is based on its corporate accounts.

  --Josh

JWA
Wednesday, January 15, 2003

I used to think Dell had great computers and service. Last year, though, I have had many Dell problems.

My parents bought a new Dell computer. Two months later, the monitor died. Dell came out and replaced it with a new (refurbished) monitor. It died one week later.

I bought a refurbished laptop from them (strike one). Straight out of the box, the video card did not work (strike two). After two visits from the service person, the motherboard was replaced. Two months later, the hard disk has spontaneously crashed (strike three). They say they will need to either replace the motherboard (again) or the hard disk (and lose all my data). However, they won't send anyone out until after I upgrade to the latest BIOS update, as if that might actually fix something that worked on Sunday night, but not on Monday morning.

So their hardware quality seems to have hit a new low, I must admit that their tech support and service has been better than expected. (I have extremely low expectations.)

runtime
Wednesday, January 15, 2003

I remember in an Asimov story, the world's production was so efficient and intertwined, that any hiccup had global consequences.  Small perturbations made peoples' lives difficult.

In an old interview with Michael Dell, he mentioned that they view their consumer business as pretty much a loss-leader, to attract corporate buyers.

I also had unimpressive results with Dell.  They take too long to ship, shoddy notebook quality (Dell doesn't manufacture notebooks, at least not Inspirons), etc.  On the other hand, there is a large barrier to entry to their industry, many companies implode (like Gateway without Waitt and HP), and it's a fundamentally boring business.

Tj
Thursday, January 16, 2003

The problem with thinking both sides of an issue is that we can appreciate all that on one level but on another, I'm not paying Dell (or whoever) to tell me their problems, I'm paying them to solve my problem. As is Joel. As are the people who've said they have had delays too.

Personally for me, we plan our networking to the extent that we don't need a server in a hurry so the odd delivery delay doesn't worry us at all, so we don't have a problem here.

But its still a case of them hitting you with their problem, when what you actually paid them to do was eliminate some of your problems.

Robert Moir
Thursday, January 16, 2003

Somebody obviously keeps the Dell inventory;if it's the suppliers then they will charge for it.

Low inventory is in practise a way of passing the risk on to the suppliers. It makes some sense. A motherboard company is more likely to be able to dispose of surplus motherboards than a computer assembler.

Incidentally a couple of years ago I found myself needing a copy of English Windows 98SE. I went down to my local computer shop and found that they actually had legit OEM copies of W98 in the window, which in a country where you can pick up a copy of SQL server for $3 but can spend months attempting to contact the national Microsoft office trying to find out how much a legit one costs, is quite an achievment. It was cheap, $33, and had the wording "only to be used on Dell computers" stamped clearly on it. In fact it was W98FE, which explained the price, but it's clear there are some things Dell does keep an inventory of.

Stephen Jones
Thursday, January 16, 2003

"It remains somewhat interesting to ask why the market has not crucified them for this."

Easy. At least here in Sweden, Dell is cheaper than other big brands and thus people are willing to wait a week or two if it saves them a few bucks.

Personally I wouldn't dream of getting a Dell or Compaq or a <Here Be Dragons> when I can build one myself, but for a company it's much different. If you're in a hurry, avoid Dell. If you've got time on your side, Dell is an option.

Lennart Fridén
Thursday, January 16, 2003

"Personally I wouldn't dream of getting a Dell or Compaq or a <Here Be Dragons> when I can build one myself"

Building one yourself as opposed to buying a pre-assembled computer is likely to cost you about 20-30% more.

Remember it takes less than an hour to assemble a PC, and those that do it are paid round about $10 an hour, so the cost saving you make is much less than the extra you are paying for components because you can't biuy in bulk

Stephen Jones
Thursday, January 16, 2003

My Dad was going to buy a Dell machine as his PC (my old one) is a bit long in the tooth.

He was all set for it until he realised that the upgrade options (improved memory/disk etc.) were hugely expensive e.g. upgrading 256MB RAM -> 512MB costs about the same as a 512MB DIMM on its own. Thats not the only example (graphics cards are another case in point where similar economics are the norm).

Its a pattern I have noticed before, and myself and Dad have agreed that buying from Dell is only an option if the vanilla uncustomized options suit your needs.

I am wondering if this is a consequence of their inventory strategy? If they are forcing their inventory problems onto their suppliers, are their suppliers optimising their inventory to meet the statistically most common Dell product offerings? That might explain the exhorbitant customization prices, and also the dificulty in sourcing anything non-standard.

Instead Dad just bought all the bits seperately, and muggins here is going to put it all together. Didn't save any money, but got better kit for the same $$$.

Richard
Thursday, January 16, 2003

Stephen Jones:
"...Building one yourself as opposed to buying a pre-assembled computer is likely to cost you about 20-30% more.

Remember it takes less than an hour to assemble a PC, and those that do it are paid round about $10 an hour, so the cost saving you make is much less than the extra you are paying for components because you can't biuy in bulk ..."

I am not sure of that. If you are trying to get the cheapest deal possible, it is very difficult to undercut the OEM offerings. But you can often get a better machine for the money if your needs are more demanding and you know what to get.

The only real OEM bulk discounts come from big unit purchases of high end processors and operating systems. Frequently OEM pricings are offered to the consumer also on certain products. OEMs typically give you free shipping (which is significant), extended warranties too. If you are going the DIY route you need to be doing nothing else with your evenings/weekends too. Self assembly typically takes an hour or two depending on your confidence and is kinda fun (lego for grown ups). Installing an OS + drivers and initial applications can easily take 2+ hours assuming you have no teething problems or conflicts or funny/old hardware, and is a lot less fun.

As for corporate buyers where uniformity is extremely important for manageability, there are big trends towards laptops. At work here, laptops represent about 80% of the personal workstations (we are software development). The remaining 20% is taken up by college interns, adminsitrators and people with very specialised needs (CAD people etc.).

Richard
Thursday, January 16, 2003

I don't buy brand name desktops for personal use. I'd rather put the system together myself for many reasons.

First, I get to choose good quality parts targeting upgradability. Next, it is cheaper. And it keeps me up to date with latest and greatest on (consumer) hardware. And not the least, it's a lot of fun.

One may argue I don't have support and such ... wrong, all parts are purchased with warranty, so as long as you know what you're doing and find this to be fun, it's ok. In total I must have wasted a total of 2 weeks for 4 machines in the past 8 years.

Dino
Thursday, January 16, 2003

I've only worked at 2 companies, but both relied heavily on Dell w/o problem.  Of course, I'm talking about hundreds of workstations and dozens and dozens of servers, so maybe we got a little bit better customer service.

Bob Greene
Thursday, January 16, 2003

I used to be a fan of self assembly. I stopped this folly and for the past 5 years I have bought from Dell. The main reason is saving time and hassle.
When someting breaks, we call Dell and it is fixed onsite the next day. With homebrew rigs, you have to find out what gave (usually not a problem) and deal yourself with getting the stuff replaced (big hassle).
Delivery of new computers is usually < 10 days after order placement, which is acceptable for our situation.

Just me (Sir to you)
Thursday, January 16, 2003

>You describe the effect as "a local
>optimization that actually harms
>your business as a whole".  I
>prefer to think of it as achieving
>one specific goal and accepting
>its natural tradeoffs.

The thing is, Joel is using a leaky abstraction.  He's pretty much directly quoting from Eli Goldratt's Theory of Constraints, but he isn't giving Goldratt credit.  And without understanding TOC, the statement's don't make a lot of sense.

TOC is a system for process improvement in Manfacturing - it applies DIRECTLY to Dell.  It's been adapted to apply to project management in a book called "Critical Chain" and Sales/Marketing in "It's not lucky."

The original TOC book is "The Goal."  If you read the goal and critical chain (and, uh, it's not luck) you'll get a much better picture of what it means to say "Managers are killing thier companies by trying to achieve local optima."

heh.  That's enough for now.  Joel's right, you just need some context.  The thing is, Dell is optimizing to meet one measurement, with the assumption that increasing that measurement is ALWAYS "good", even at the expense of other things.  Kinda like  Microsoft with lines of code and bugs reported.  This makes gaming the system very easy "I'm gonna go write me a mini-van!!"


regards,

Matt H.
Thursday, January 16, 2003

"Kinda like  Microsoft with lines of code and bugs reported.  This makes gaming the system very easy "I'm gonna go write me a mini-van!!""

Just curious. Can you elaborate on this Matt?

Just me (Sir to you)
Thursday, January 16, 2003

Why buy from these big co.'s unless you need a roomful of the same computer.  You could go to a small computer shop and have them build one for you (non-proprietary).

I build my own PC's, but that would be my second choice.  I worked for one of those big co.'s.  They treated those of us assemblying computers on the assembly line worse than cattle.  Hire and fire and lay off whole lines w/o batting an eyelash. 

Please don't give any of them your business.  Let your nephew or someone build it for you if at all possible. 

Brian R.
Thursday, January 16, 2003

Here in Ottawa Canada, we always go the "pick all your own parts and then get a local computer store (www.rbcomputing.com) to assemble" route.  Not only is the price about the same, but the parts are much better quality. Last time we had occasion to order a computer it was actually cheaper than Dell for a similar (but worse) system than we wanted.

Assembly (+ extended warranty thrown in) costs us Cdn$26.

We can then drive to the store to pick up, or get it delivered. And the owner of the store responds promptly to email in the case of problems and will make them go away without a) requiring navigation of automated menus or b) requiring you to hassle 10 different sales people with no authority a la Dell.

RB Computing Fan
Thursday, January 16, 2003

" I am not sure of that. If you are trying to get the cheapest deal possible, it is very difficult to undercut the OEM offerings. But you can often get a better machine for the money if your needs are more demanding and you know what to get."

It really depends what country you are talking about. In the UK I think you would be very hard=pushed to build a machine yourself at any price range that is cheaper than you get from the big mail-order suppliers. Get the UK edition of Computer Shopper (the best computer magazine there is in my opinion) and you can find almost any configuration you want as standard.

I keep changing the machine pieemeal, so the choice between assembled or DIY doesn't arise. The only part of the machine that is orignal is the floppy drive. I'll probably change on of the HD's in the next month or two, and the only reason I don't buy a DVD writer is the fact that it's only three months that I  replaced the HP CD rewriter I bought as an early adapter in 1999., and the thought of getting $20 for something I paid $400 for still rankles.

Stephen Jones
Thursday, January 16, 2003

In reference to the build your own folks...

Joel is not talking about a desktop machine.  He's talking about a server.

While there is little difference between a desktop produced by one of the big manufactureres and one produced by the local white-box shop, there is a huge difference when it comes to servers.

While I don't have any experience with Dell servers, the amount of engineering that goes into an HP server vs. the local built option is amazing.

Also remember that if Dell can't get the processors for the machine, the local mom and pop probably is not going to be able to get them either (unless they are willing to eat a lot of risk buying gray market).  Rest assured dell is going to get a much higher priority from suppliers than a small local shop.

The problem is not that Dell over optimized, it's that they didn't optimize properly.  Firms that do JIT inventory do not wait until they need a part and then order it, they forecast what they will need based on current demand and historical patterns and order as much as is _necessary_, but no more than what is necessary.

As far as suppliers needing to build huge warehouses to hold their excess inventory, this too is a fallacy.  Dell's suppliers can use JIT the same way that Dell does.  If they are having to build huge warehouses because they cannot properly control their inventory, then they can expect to go out of business soon.  The excess overhead will eat them alive.

Steve Barbour
Thursday, January 16, 2003

Building servers ... hmmm ... that's indeed a bigger undertaking and in most cases business related.

In this case, building your own makes no sense unless this is your companies' business anyway.

I would look around though for serious specialized companies building servers rather than buying brand names - when possible. The machines may cost a bit more but in return you may get a decent level of service - better than premium support packages one has to buy prime $ in order to get any form of attention from companies like Dell, Sun, IBM ...

Dino
Thursday, January 16, 2003


I think there's more to JIT than what's been discussed above, but it's enough for our purposes. (A big part of JIT is shrinking lead times, not the supply chain at all.)

As for "I'm gonna write me a mini-van" - it's an old dilbert strip.  Pointy-haired boss says that from now on, developers will be incentivized by lines of code written and bugs fixed.

Wally says "I'm going to write me a mini-van", implying that he's going to slop together a huge, bloated, buggy program and then fix it.

Overall quality will suffer, and development time will go up, but he'll have lots of lines of code and bug fixes.

Microsoft had this strategy for a short time.  A good search on Ballmer, KLocs, Madness might net a video of him discussing it. :-)

regards,

Matt H.
Thursday, January 16, 2003

"In reference to the build your own folks...

Joel is not talking about a desktop machine.  He's talking about a server."

So was I.  And I'll match my servers against a Dell any day.

One thing though: I am not of the "buy the fastest most expensive processor chip available" crowd - I take the price/performance ratio into account.  And if my supplier tells me that the chip I wanted was backordered - I can then order a slightly slower one (kind of like what Joel tried to do but couldn't).  Heck - I have on occasion ordered the part missing (in that case it was RAM) from a completely different supplier.

RB Computing Fan
Thursday, January 16, 2003

I wish I had a company that was as wrong and as bad as Dell. 

dell fan
Thursday, January 16, 2003

Good one dell fan :)

I used to be of the built-it-yourself camp, and I still build "critical" machines myself. The one reason I like Dell is that their modern desktops are amazingly *quiet* - nothing I build has come out sounding quieter than a jet engine at full blast. They found some way to keep a P4 cool with a slow fan...

BTW does anyone know if Dell will sell you a system for less if you don't want an OS license? I'm about to order a desktop that I'm planning to wipe and install (a free OS) on as soon as it arrives. Dell talks the talk about Linux, but even if it's listed as an option on their website, you don't get a price break :(.

Dan Maas
Thursday, January 16, 2003

I think all big corporations are the same and you simply get unlucky with poor service when something goes wrong and the Dell representative doesn't have the authority, initiative or maybe training to resolve it.

It's damaging to relationships and loyalty. 

Smaller outfits can manouevre so much easier, it's less efficient yes, but they don't see that as costing them - they are making a sale.

The missing CPUs are probably in a box earmarked for a different server range - the rep doesn't know that, but if some enterprising engineer did transfer the CPU to Joel's server it would mean next customer who buys the other server range has to wait because they've run out of CPU.

Dan
Friday, January 17, 2003

I'd agree about the supply-chain problems with Dell.  Having worked as a contractor for $LARGE_GOVERNMENT_AGENCY that switched from Compaq to Dell a few years back, I have never seen the level of "Where was that box shipped?  Hmm, gotta check on that", "So you need an extra rail kit, it'll be there in seven months, no problem", "SAN?  Oh, you wanted that to be reliable and actually cabled correctly", "Suuuuure the servers will be there.  Next year." that I've seen from Dell.

I'm sure there's IT shops and customers that have positive experiences with the company, but I'm very hesitant to recommend Dell as an enterprise solution after the behavior, lack o' timely arrival, poor support, poor system installations, and reliability that I've seen from them.

Now, I can't say that their supply chain is to blame for all this; some of this comes from using a wide variety of system integrators from different companies and sub-contractors, some of this comes from broad sweeping shifts in their storage business ("We love EMC", "We hate EMC", "We love EMC, again!").  All the same, I've never seen behavior like it from any other vendor (IBM, HP, Sun) who cares about enterprise customers.

Eric Dobbs
Friday, January 17, 2003

Joel, you seem to forget that JIT (Just In Time) production has proved very effective in many other industries -- particularly the automotive industry.

As the computer industry matures, we'll probably see more and more JIT models appear (like Dell and say, Eicon) -- JIT means smaller inventories, diminished risk and a smaller financial footprint.

About the point you've raised on delivery delays, well -- most businesses plan ahead, and don't really require the hardware on "next day" delivery -- you might do as an individual, but this probably shows lack of planning on your part, and not a problem with Dell's model.

Best Regards,

Nuno Leitao
Wednesday, January 22, 2003

*  Recent Topics

*  Fog Creek Home