It is no secret that Dell has built their business on direct sales to consumers and businesses. Combined with a finely-tuned manufacturing process, Dell rocketed to the number 1 position in PC sales globally. However, over the past few years Dell has hit a downturn which may become an absolute freefall.
First, they lost their lead to HP. Sales had actually grown for Dell in the PC market, but their meager 3% increase offered little competition for HP's meteoric 15% rise. Then they lost more of their market share in servers. Arguably worse than declining sales, declining support services triggered widespread customer dissatisfaction. In fact, the New York Attorney General stated in 2007 that they now receive more complaints directed at Dell than anything else. They have even set up a dedicated website and filed a class-action lawsuit.
This, however, is only one of several ongoing lawsuits and investigations. In 2007 Dell was hit from almost every aspect of their business. The SEC investigated questionable financial reports. Dell hid poor performance from 2003 to 2006 by funneling cash from Intel kickbacks and recouped expenses from cutbacks into "sales". During this period of falsely inflated stock prices, many Dell Executives sold between 90% and 100% of their personal stock. Michael Dell himself sold his shares for a total of $2.5 billion.
Several employees at one Dell facility sued for unethical treatment. Hourly workers had to put in time "off the clock". Employees weren't properly provided breaks and lunch periods were incorrectly recorded. Apparently, Dell was determined to prove that they do, in fact, treat their employees unethically. A few months after the suit was filed they closed down the entire facility without warning.
The deceptive business practices of DFS, the separate financial arm of Dell, were also formally challenged in court. For years they engaged in "bait-and-switch" financing offers. Even customers with excellent credit found their low or 0% interest rates changed to rates as high as 29% shortly after opening their account. My own wife even got hit in the DFS train wreck. With her pristine credit, she opened an account with DFS expecting to purchase a Dell. Several years later having never made a single purchase, her credit was marred. DFS marked her account as having been discharged due to bankruptcy (which of course never occurred). The amount discharged: $0.00. DFS claims they "accidentally" confused her SSN with someone else’s.
Apparently in an effort to turn things around, Dell has been snatching up small IT software and service companies for the past year. They have also expanded into the retail market through Wal-Mart, Best Buy and Staples. Whether Dell will be able to restore their former greatness, only time will tell. However, as I type this on my Inspiron laptop, I am placing an order for an HP server.