And it's about damn time! Rollins has run this once-dominant organization into the ground, and done absolutely nothing to right the ship. This is what happens when you hire a dumbass consultant to try to run a giant computer company. Hopefully Mikey can turn things around, grow the business, and increase some shareholder value. AP Michael Dell Returns to CEO Role at Dell Wednesday January 31, 6:55 pm ET By Matt Slagle, AP Technology Writer Michael Dell, Founder and Chairman, Returns to CEO Role at Dell; Warns of 4Q Shortfall DALLAS (AP) -- Dell Inc., battered by battery recalls and disappointing earnings, said Wednesday that Chairman Michael Dell will return to run the company he had built into one of the world's largest makers of personal computers. Dell's appointment is effective immediately. He replaces Kevin Rollins, who also resigned as a member of the board. Dell shares, which fell 7 cents to close earlier Wednesday at $24.22 on the Nasdaq Stock Market, jumped 98 cents, or 4 percent, in aftermarket activity. During Rollins' tenure, Dell was battered by a recall of 4.1 million potentially flammable notebook batteries made by Sony Corp. and by disappointing earnings. The company on Wednesday forecast fourth-quarter profit and sales below analysts' consensus estimates of 32 cents per share on sales of $15.30 billion. The company's accounting practices also are the subject of federal scrutiny. The U.S. Attorney for the Southern District of New York has subpoenaed documents related to Dell's financial reporting from 2002 to the present. Dell has served as chairman since founding the company in 1984 and was chief executive until 2004, when he hand-picked Rollins as his successor. Dell defended the beleaguered executive in September, saying Rollins wasn't solely responsible for the company's recent missteps. Rollins joined Dell in 1996 and had a variety of roles before becoming CEO, including chief operating officer, vice chairman and president of Dell Americas. Before Dell, he was vice president and partner of Bain & Co. management consultants. "Kevin has been a great business partner and friend," Dell said in a statement. "He has made significant contributions to our business over the past 10 years. I wish him much success in the future." Dell's direct sales model, which allows business and consumers to buy equipment directly from Dell, turned the company into a leading computer manufacturer and a Wall Street juggernaut with one successful earnings announcement after another. But in recent years Dell has been stung by a glut of low-cost, low-profit PCs and weaker-than-anticipated sales of pricier, more lucrative desktops and notebooks. Just last year Dell lost its No. 1 position in the industry to rival Hewlett-Packard Co. Recent reports from IDC and Gartner Inc. showed HP outgrowing the rest of the PC market and extending its lead over Dell in a worldwide tally of PC sales for the second quarter in a row. HP's sales jumped 24 percent in the fourth quarter -- its best such period since 2000 -- while Dell's sales dropped about 9 percent. The shift left HP with 17 percent to 18 percent of the worldwide market in the fourth quarter, to Dell's 14 percent to 15 percent.
Dell has a bigger issue than their leadership, its the low cost PC business as a whole. Most of Dell's money comes from razor thin margin from PC sales. Most of its competitors are much more diversified in the market and have been able to match both their prices and their direct model in the last couple of years.
Dell is hosed in the short run. The hardware business is gone especially with all the horsepower you are getting for nothing. Thats why all the big names are diversifying by aquiring software companies. IBM HP EMC Dell has too much money and discipline to let Dell fall too far, but it will take sometime for dell to gain back credibility in the enterprise. Just look back on the original notebook fiasco in the early 90's. The future is in utility computing and SOA and Dell doesn't know what those terms mean yet.
It will be interesting to see how this pans out. I don't think Dell's brand loyalty has been tarnished in the past few years. They also branched out into the printer market two years ago and took a bite out of HP's huge market share.
My company recently did a big project with Dell and, I have to say, it's been one of the most frustrating and miserable experiences in my life! Not as bad as when I was caught offshore in a small boat with engine failure in a raging thunder storm or as bad as the time I was kidnapped and carjacked by two guys with a machine gun (both true stories) but pretty bad. Their sales team promises the world and then leaves it to operations who have NO IDEA what sales has promised. Then operations contracts out the actual work to independent consultants who have no idea of what's supposed to happen. I guess I should have expected Sales to make big promises - that's typical - but the way the actually implement a project is ridiculous. There's no written documentation of the plan you supposedly work out in advance. The contractors just get the equipment and are supposed to somehow "just know" what to do. And when they get stuck they call the "Project Manager" who doesn't know what to do (because there's no documentation) so you have to go back to the Sales guys who say "oh yeah, you're supposed to do that too, sorry I forgot to tell you". Not to mention that every contractor Dell has sent out has bad mouthed the work of all the other contractors and has bad mouthed the design that Dell came up with ("I don't know what they were thinking" is a phrase I seemed to hear a lot). Another contractor would say "I've been on over 300 Dell engagements and we've never done that". I'm thinking I don't care what you did or didn't do on the other engagements, this is MY engagement and you need to do what was promised! What Dell calls a "project manager" is not someone who manages the project to make sure that all the equipment is delivered and the stuff is built according to the "design"; he's just a guy to makes sure the contractor shows up. We were led to believe (by sales) that the PM would take care of us and make sure everything went correctly and that the design would be implimented properly. The first question the PM asks us when we have our first meeting is "So, what do you want to do?" I thought we already had a design worked out and he's asking us what to do! Oh, and our PM was on vacation for most of the project! Another guy stood in for her but, of course, he had even less of an idea of what was supposed to happen. After a lot of yelling and screaming (and sales people finally coming in and saying that they did, in fact, promise this stuff) operations finally gets the job done, only it's not taken a week and one trip, it's taken a month and several trips. Then they say "are you happy?" Of course I'm not happy. It's like they are trying to get credit for doing the second time what they should have gotten right the first time! Can you tell I'm pissed?
I have done several projects with Dell Professional Services for software packaging. Here is a basic breakdown of how DPS worked. Dell Computers would try to land a big contract. Typically the PC's were for a new OS rollout (NT to XP). The client would say that they want the PC's but that it is going to take them a while to prepare for the rollout. They can't rollout XP if their software is not ready. Dell says that DPS will come in and package (automate) all of the installs. They have a process that is in place, the contractors to do the work, etc. etc. etc. There is a joint agreement that DPS will get the software ready by X date if Dell can deliver the PC's by X+Y date. The problem is that X date is just insane. Basically Dell and DPS will do and say ANYTHING to get a contract. They definitely over promise and under deliver. I know that every client that I worked at was super pissed at Dell when we were done. On the other hand, I always did well when I worked for DPS because I can work well under pressure but there were a TON of people that quit or were let go because they couldn't perform. DPS is ALL about numbers. I didn't like they way they handled certain things but it was almost always good for me because DPS paid really well. It was very cut throat though. It isn't like they keep the whole team on for the whole project. They let people go ALL the time. I know that the same Dell people that worked on my DPS projects ran the hardware rollout project as well. That isn't a ringing endorsement. I wonder if we know some of the same people.
