It’s so long ago now that Dell entered the LCD TV market, but the logic was always woolly, and news has arrived this week, through Reuters citing the Taiwanese newspaper Economic Daily, that it will soon cease to actually build its own devices.
A Dell spokesman has also been quoted confirming that in February changes were made to the line up of LCD devices above 40 inches, adding TVs from Sony, Panasonic, Pioneer, Samsung and ViewSonic to those below 40 inches that Dell makes and sells.
Back in September 2003 Faultline said, ‘Dells plans to enter the digital media business, with an online music store, an LCD TV, a digital music player and software to turn its PCs into media centers, take it miles away from its roots and has no guarantee of success.’
Just a small matter of Dell’s web sales having the wrong audience, the company having the wrong supply chain partners, a different pricing point and a need to stay focused long term on what it did well, and not go up against Philips, Sony and Panasonic.
The TV market is a great market, with huge volumes, but razor thin margins which change day to day, which relies on good retailing relationships and volume purchasing agreements. There are $billions invested in TV manufacture by companies that have huge intellectual property assets in visual display technologies, which Dell has to pay royalties on. In times of plenty perhaps it was an okay idea to enter this market, in the tough times that Dell is currently witnessing, it would have to be a very different company
Dell sales of PCs have fallen radically during the past year, and Hewlett Packard’s new management took it out of most digital media markets and focused it back on PCs, to great effect. Now that Michael Dell has taken over as chief executive and has begun cutting staff and product lines we can expect the same at Dell, even though spokespeople at Dell are still denying it.