Dell's Failure

Monica Liu

Dell, Inc. is a market leader in computer technology of United States. It is the third largest PC maker in the world after HP and Lenovo. From 1997 to 2004, Dell grew up steadily and gained market share from its competitors even during industry slumps. Based on the Global PC Market Share (1996-2011)1, Dell pushed ahead of Compaq in 2001 but returned back to the second place in 2002 after Compaq and HP merged. In recent years, the key developments have been the battle for the top spot between Dell and HP as well as the rise of Apple and the dwindling share of PCs sold by other companies. However, although Dell became top one in 2006 of global PC market, their sales growth have been slow down since 2005 and they lost 25% of their stock value in the same year. 2006 was the first year that Dell was slower than the PC industry as a whole. The key reasons behind Dell’s slow down can be analyzed due to several main aspects. First of all, Dell failed to capture the mind-set their current and desired customer. Since 2005, the whole PC market has started to shift to laptops market, which means the main product that customers want has been changed. As Keller mentioned in the textbook, marketers would be able to construct detailed “mental maps” of customers to understand exactly what exists in their minds—all their thoughts, feelings, perceptions, images, beliefs, and what attitudes towards different brands. 2 Obviously, Dell didn’t pay enough attention to this significant changing in their customers’ mind. Their price advantage was tied to its ultra-lean manufacturing for

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http://en.wikipedia.org/wiki/Market_share_of_leading_PC_vendors Keller, Kevin Lane, 2008, Strategic Brand Management, ISPN: 9780131888593, pp.356

desktop PCs, which shrunk dramatically and went much cheaper than before. Customers were upgraded their requirement of the performance of their PC. It was hard for Dell to increase their performance and declining in prices at the same...