Apple vs. Dell: Who is Beating Whom?

Wednesday Dec 3rd 2008 by Rob Enderle
Share:

As workers bring their personal technology to work, the competition between enterprise and consumer vendors becomes head to head.

It is amazing how quickly things can change in a few short weeks. Several weeks ago I was thinking about changes in how PCs were being purchased that were driving Macs into the enterprise. This week a bunch of us are looking at Apple’s lines and wondering how badly the company is going to be hurting because most of what they sell is priced in excess of what people, under the current economic conditions, are willing to spend.

Dell, historically, hasn’t been that innovative and is often thought of as a firm that waits until others break new ground before they join in the market move. Particularly when it comes to areas of design, Apple and Dell have been at polar opposites with Dell lagging significantly.

However, for much of this year that has been changing, with aggressive changes in Dell design, with the latest focused on a much higher level of physical customization. In short, where Apple is increasingly the Model T of providers, in that you get very few choices, Dell is going in a direction that appears more consistent with where the market is in terms of providing choices where the buyer can create a product that is unique to them.

In a weird way Apple was hitting Dell where Dell lives in the enterprise by providing choices that Dell wasn’t, and Dell is hitting Apple where they live by doing much of the same.

Choices in the Enterprise

One of the new myths is that IT has control of what goes on an employee’s desk. This certainly used to be the case and centralized buying has resulted in products sold to corporations that are distinctly different than those that are sold to individuals.

But, in the end, it is individuals who use these products. And quietly, behind the scenes, the decisions have been moving closer to these individuals.

What has been happening is that, in order to contain costs and increase revenues, purchasing authority has been moving toward the line managers who own the corporation’s revenue. This better allows these managers to make the critical decisions between choices like a new piece of manufacturing equipment that is critical to their line or new PCs for their employees.

IT can’t make these tradeoffs because they aren’t close enough to the problems that need to be solved, and no company has unlimited funds so these tradeoff decisions are common. They were just being made badly.

As a result, in some of the largest companies, Apple computers have been quietly coming in to replace corporate PCs. This appears partially related to the tendency for Apple shops to be self-supporting because they have to be, given that Apple has no corporate support structure to buy from. The strange end result is that where a typical fully supported leased PC from a company like Dell would cost $150 a month or $1,800 for a 2 year live cycle, an Apple Notebook charges through at around half of that, with a cost tied directly to its purchase price.

The employee and department head, given a choice between a generic corporate PC or a currently more unique and attractive Apple offering (coupled with the cost savings), has an easy decision and one that favors Apple. Thus, even though Apple’s prices for hardware are higher, once services are taken into account, they were cheaper and the products more attractive so choice favored them.

That was until the current economic problems tossed a monkey wrench into this trend. The monkey wrench is capital cost, which now likely requires board-level approval given how tight capital is. Leases are expensed but when you buy something it has to be put on the balance sheet as an asset and depreciated, and many companies are on various forms of capital asset purchase restrictions to conserve cash. So this may undo the choice, as continuing with an expense like a PC lease is within the line manager’s authority but buying a bunch of Apple PCs, given it is a capital expense, probably isn’t.

And going to the board with a request for several thousand MacBook Air machines under the current economic climate, regardless of the savings, is probably career limiting.

Dell Steps Up Personal Choice

Dell has always been known for build to order products. But generally the products looked the same, it was just some of the components that could be traded out. This month that changed with the introduction of Dell Design Studio. This is an offering that for an charge of $75 can externally customize a laptop with an initial 100 choices of signed artwork, providing a higher level of customization than has ever been provided outside of true custom PC gaming shops.

People are unique and while there are those that like to have others make their clothing choices for them or have to wear uniforms, most of us adults, and children, like to have clothing, cars, furniture, and homes that reflect our uniqueness. Apple used to have the tag line “Think Different” but if you’ve ever seen a room full of Apple users with their laptops open they look like Stepford Wives in that there is very little distinction between them as they sit behind their little glowing Apple logos.

This has always seemed strange to me, that a company that seems so focused on people being allowed to make a choice between Windows and the MacOS is not focused on allowing people to make more choices between products. Its multi-colored iPod Nanos and Shuffles are more a representation of broad practices than isolated instances of individuality.

So it is fascinating that Dell has moved to provide a level of design customization that appears to be beyond Apple’s capabilities. This, during a time when both vendors will be under heavy economic pressure to bring out increasingly less expensive offerings in response to decreasing buyer income while still providing unique value to their buyers.

Wrapping Up

Life is often about choice and whether it is a line manager trying to make choices to contain operating costs and prevent (or at least offset) potential layoffs, or individuals choosing products that uniquely reflect them, it is these choices that define most markets.

It is interesting that in these two cases, Apple was lucky to be in the right place to benefit from choices they were accidently creating, while Dell was actively creating choices to differentiate their offerings in the market. Of the two, the first may actually have a bigger market impact but it implies, over time, that the second may eventually move broadly into corporations. And the decision with regard to which PC to buy moves closer and closer to the person that will use it.

What if we ask, so far who is beating whom? That will remain to be seen as the economic conditions rapidly changing the PC market in powerful ways that won’t become evident for several months yet. Apple suddenly appears priced out of the market at the moment and Dell has moved aggressively on Netbooks, at least suggesting Dell may be better positioned, at least initially, for the market downturn.

In the end, however, choice is good no matter how you get there and the trend is toward more of it. Regardless of who is providing that, choice means more of the variety the tech market (and folks like me) thrives on. And that has to be a good thing.

Share:
Home
Mobile Site | Full Site
Copyright 2017 © QuinStreet Inc. All Rights Reserved