The Dell Indicator

I've always had something I've called "The Dell Indicator" for the health and robustness of the computer biz. It's been pretty reliable over time and I just got to check it again this past weekend following the death of my old Precision 360 workstation.

The indicator is simple: If Dell (NasdaqGS:DELL) takes more than one week to complete a custom order on something with the parts fully in stock (per their website), business is pretty good. 4-7 days means business is OK, but not great. 1-3 days and it's pretty weak.

The new T3400 workstation I ordered after-hours on Thursday shipped first thing this morning, meaning it was probably completed sometime over the weekend. Even assuming a worst case, which is that the order wasn't completed until just before it was picked up by FedEx, it's still just under 3 full business days. In reality, I suspect it was finished well before 8:30 this morning.

This is not an off-the-shelf system. I asked for several items to be included that are a bit "weird." They definitely had to custom build it. Which, even with Dell's ongoing improvements in manufacturing times leaves me thinking that demand is a bit weak.

Somewhat off-topic, but still discussing Dell, am I the only one who's noticed that they seem to make the bulk of their money on memory upgrades?

[Non Geeks may wish to stop reading now.]

For upgrading my system's puny 1GB 667Mhz memory to 4GB of 800MHz memory in 2 DIMMs Dell wants $550! Buying the same memory directly from Crucial costs $116. I saved a bit more by skipping the unnecessary ECC memory that Dell forces you into buying, and dropping my memory cost to under $100.

Dell also charges a disproportionately huge markup for 4GB in 2 DIMMs vs. 4GB in 4 DIMMs. $550 vs. $320. Again unjustified by any real analysis of real market prices. (The key difference being that the more expensive scenario leaves two open memory slots for future expansion if necessary.)

For that kind of savings I'm quite happy to toss out the original memory "base" memory they include, which I can put it into my brother's computer, or my mom's, or something.

I've got to believe that most IT managers are on to this, so apparently Dell is just trying to rip-off relatively uneducated individuals and small business owners. Nice going!

-btc

Comments

[Richardatdell]

Hi below the crowd

Appreciated your post and commentary and wanted to provide you with some additional information.

As you likely know, yesterday we released a statement about softening markets. Our investor relations blog post about this is here: www.dell.com/dellshares

Generally speaking, Dell continually seeks to improve general operations and ship times. It is an on-going process at Dell and our direct-model heritage makes this one of those operational priorities that receives regular focus. It is worth noting that in aggregate, ship times are impacted by factors beyond demand. For example, there can be industry shortages for certain components that impact ship dates. These do not necessarily correlate with demand.

Not sure of the details or exactly what you meant about a "weird" configuration. However, I can tell you that single units ordered through our configurator usually include options that our demand/supply teams have ensured the various product configuration choices are available when ordered.

On pricing, our approach is to deliver very competitive pricing for the overall computer bundle, as that is what most of our customers are buying. We review this regularly and adjust it to maintain a competitive position and meet our customers' expectations for value.

We appreciate your feedback and views.

Thanks for sharing with us your "Dell Indicator."

[Gordon]

look at the recent stock price! you were RIGHT, you SOB!!!!!!!