The Fall of Dell: A Business Model Innovator Loses Its Way

Dell's Side of the Story

Not surprisingly, Dell doesn't think the suit has merit and believes the Times story was misleading. In an email exchange, Dell spokesman David Frink put it this way:

The implication that this situation affects Dell currently is incorrect. The AIT lawsuit is three years old, and the Nichicon capacitors were used by Dell suppliers at certain times from 2003 to 2005. We actively investigated the failures, audited the Nichicon plants and worked directly with customers to fix OptiPlex computers on a case-by-case basis. And Dell extended the warranties on all OptiPlex motherboards to January 2008 in order to address the Nichicon capacitor problem. The AIT lawsuit does not involve any current Dell products.

Frink added, "AIT was using the OptiPlex systems as servers, a use for which they weren't designed." (Dell's website has a fuller statement.)

Years of Problems

Frink has been fielding my questions for years, and he's a decent guy, but in this case, he's full of it. Dell has had truly awful quality control and customer service issues for years. It's also had some serious accounting problems (I covered some of them when I was writing about technology stocks for TheStreet.com), and according to the Times, the Securities and Exchange Commission may file charges against Dell himself.

The accounting and quality issues aren't directly related, but they do form a pattern of bad -- indeed, terrible -- corporate responsibility and governance. As the rest of the industry caught up with Dell's hype-efficient production and sales models, the company defended its margins by cutting corners. Customer service plummeted. Consumers fumed on hold and were finally routed to less-than-competent help-desk technicians. Even that would have been forgivable if Dell owned up and really fixed the inevitable problems.

Every now and then the company trots out a sincere-sounding exec to announce yet another initiative about improved quality and customer service. I don't believe them any more. This is how companies fade away and die.

I welcome your comments, tips, and suggestions. Post them here so that all our readers can share them, or reach me at bill.snyder@sbcglobal.net.

This article, "The ignominious death of Dell," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com.

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