Here’s another installment of the strategy series: Dell and Apple.
Disclaimer: This analysis is based solely on the strategy discussion in Jack Welch’s Winning.
Two companies that are pioneers in selling computers and other electronic items in the world have completely opposite strategies. Dell, with its online store and customization engine, makes buying a computer all about how much memory, hard disk and USB slots you need on your computer. Apple on the other hand sells you much more than a computer or personal music system iPod. It sells an experience primarily through those wonderfully designed Apple stores. Unlike Dell, Apple provides customer with more pre-customized boxed options as compared to customizing that box (Apple computers are customizable as well at Apple.com).
If we look at Dell’s model of selling computers, what Dell is doing is selling an assembled box of all the different parts that makes a computer. Customize-ability of the computer plays a big role and design takes a back seat. The distinguishing factor is pretty much the price and support. Dell’s strategy, in simple words, is to commoditize the computers. Make buying computers as simple as buying any other home or office supplies. The strategy works great with corporate customers who care more about price and support.
Apple does not sell computers, it sells an experience, a membership to an exclusive cult and an entry to the Apple product ecosystem. Design plays the central role in all Apple products. Apple’s strategy, opposite to Dell, can be stated in simple words as de-commoditization of all the products it sells. As in any typical case of de-commoditization, price takes a back seat and customers get attracted to the product itself. Apple’s strategy is crisp and clear, and Apple implements it with perfection in any industry it enters, be it the computer industry, music industry or mobile phone industry.
These are two companies selling the same things with completely different strategies and execution plans. The debate will go on for ever on which company has a better strategy, but the success of Dell and Apple asserts the point that there’s no one strategy that is good or bad for your company. Your success depends on how crisp the strategy is and how well you are implementing it.
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Apple and Dell do not sell the same thing! Dell sells cheap Windows boxes. They offer nothing new that any other PC manufacturer sells. Apple sells a completely different operating system, a system that is tightly integrated between software and hardware.
Also, have you truly compared prices between an equally configured Dell and Apple? You would find that Apple computers are cheaper or at the very least in the same price range.
And the last I heard was that Dell’s on-line store was not selling hat well.
Your analysis seems to be based on a complete lack of knowledge about what you speak.
Observe…
Apple Mac’s are as customizable as Dell’s.
Proof?
Almost all of Dell’s options are standard on the Mac.
Analysis…
That would tend to reduce the amount of boxed options one needs to customize a Mac as most options available come standard.
Argument solved.
Pay attention, there will be a test.
This is PC-bias analysis. You don’t know enough about Macs to comment about them. Dell sells parts options to order. Apple sells computers that are already loaded and don’t need parts options.
Apple does not sell experience; they sell computers that provide a superior experience. It’s all about the product. Every now and again I will read a PC user who will write, If only Mac people could actually use a computer, by which he means, use PCs which are more difficult to employ. My response is, while driving a car without door hinges may strengthen your left arm, wouldn’t it be better to have a vehicle that is properly designed and outfitted? That’s the Mac, better designed and equipped.
Hello Alan Smith,
I am trying to put forward two different strategies from two companies that sell computers and other electronic stuff. I am not arguing that a PC is better than a Mac or vice versa.
As far as price argument goes, I am normally able to find cheaper computers at Dell.com as compared to Apple.com.
Example:
Inspiron 13 at Dell.com is $699 (http://configure.us.dell.com/dellstore/config.aspx?oc=dncwwa1&c=us&l=en&s=dhs&cs=19&kc=productdetails~laptop-inspiron-13)
MacBook at Apple.com with comparable specs in terms of Processor, Memory, Hard drive is $1099 (http://store.apple.com/us/configure/MB402LL/A?mco=NzQ3Njk0)
Again, the argument here is not that Dell has a better strategy than Apple, it is only that they are different.
Hello Realitybites,
Thanks for your comments.
I agree that Macs are customizable (I added a note in the post to make it clear). What I am trying to say is that Apple’s strategy is to focus on selling a complete box, not the parts that make the box.
As far as this post is concerned, I can defend my perspective that Apple and Dell have two different strategies, without passing a judgement on which one is better.
For 5 to 8 hundred bucks you shloud be able to get a pretty sweet system. I would look for the maximum amount of Ram you can get as the first criteria. Check out the small businesses in your area for a deal. By avoiding the computer in a box systems available at large retailers, you can avoid getting a system that is precompromised with useless and performance degrading software.
Hello Richard,
My intent here was to keep the post neutral between the strategies of Apple and Dell. No where in the post I have mentioned that Dell/PC has superior strategy as compared to Apple/Mac or vice versa. I believe they have two different ways to conduct their business, and they focus on different things to attract their customers.
Great analysis in terms of strategies.
It makes sense to see why Dell “commoditizes” a computer. Dell doesn’t make the operating system or softwares to put on the computer, so it makes sense for them to think of it as just another part of the computer. On the other hand, Apple makes the whole box, and as you say, the experience. So it likes to differentiate in terms of what they provide in terms of design of the hardware itself and the oprating system and applications on it.
Thanks for the post!
Interesting analysis!
It does feel different when you shop at Apple as compared to Dell.com. The advertisements of Apple are also completely different from Dell’s advertisements. At the end, what you buy is a computer (Mac or PC)!
Two companies selling computers using two different strategies.
Thanks for the post!
Hello Steven and Alexis,
Thanks for your comments.
Nice to know that you liked the analysis.
You can clearly see which stratagy is working. Check there Income(A:4Billion, D:2.85 Billion), profit margin (A:15%,D:4%) same way EPS too.
Dell is just one of the manufacture, I can very well buy my PC from many others. But Apple is apple. Thats why Dell is gasping for air.