Who are Dell’s main competitors?

Question

What will be an ideal response?

Answer 1

The case provides details on Compaq and Gateway, and the following table can be developed.



Overall, one can simplify the above information in a 2 x 2 matrix as follows:



Compaq can be labeled as a broad product line/broad channel strategy, while Gateway’s strategy can be classified as narrow product line/narrow channel strategy.

The questions then are: Where is Dell now? and, Where should it be in the future? Using Table TN–B, from the operation side, Dell and Gateway are more similar. However, in terms of product mix, Dell and Compaq appear to be more similar. In fact, with the entry into laptops and servers, Dell is going head-on against Compaq. There is a lot of heat in class on whether this is a good decision or not. The discussion will be based on two themes:

• Dell’s past efforts

• The similarities/differences in the laptop/server markets as compared to desktops

It is important for the instructor to tease out the fact that all the points being made in class are looking at one basic question, “Can the Dell Direct Model be successfully extended to laptops and servers?” Some students will use Dell’s past failures and differences in the laptop/server markets to show that the Dell Direct Model cannot be extended. Other students look at the similarities of the laptop/server markets to justify extending the Dell Direct Model into new product markets.