The troubled computer maker sought input from users, but complying with the most popular online suggestions could worsen its woes
When computer maker Dell asked customers how to spice up its products and improve service, the flood of responses may have provided more feedback than the company bargained for.
Thousands of computer buyers have weighed in on a site Dell set up Feb. 16 to solicit opinions on everything from product design to marketing to technical support. The resounding response: Give us more software and other features based on open-source code, including the Linux operating system.
Heeding the requests won't be easy for the PC maker, which ousted Chief Executive Kevin Rollins on Jan. 31 and again named founder Michael Dell CEO in an attempt to regain market share, improve product quality, resolve customer support problems, and recover some of the financial mojo Dell exuded until recent years (see BusinessWeek.com, 2/1/07, "Is Dell Too Big for Michael Dell?").
Well, Since You Asked…
On one hand, the customers who've posted 1,600 suggestions to Dell's IdeaStorm site and the tens of thousands more who voted to second those ideas represent the savviest edge of the PC market. They're consumers who identify trends and influence other buyers. On the other hand, incorporating the vox populi into business decisions could add costs and hamper customer support, worsening ills already afflicting Dell.
"We certainly expected to see some interesting stuff, and it hasn't failed to deliver," a Dell spokesman says of the online forum, which harnesses tools common to the emerging user-generated Web, asking customers to blog about potential solutions to Dell's problems or vote for their favorite posts. So far, more than 120,000 people have visited the site, Dell says (see BusinessWeek.com, 2/23/07, "Hack This Product, Please!").
The most popular ideas? Nos. 1 and 2 on the list: Factory-install Linux on consumer desktops and notebooks, and preload OpenOffice and other open-source productivity programs. The fifth most popular is a recommendation that Dell replace Microsoft's Internet Explorer with the open-source Firefox Web browser. "They're very high-end users and very knowledgeable," says Dell's spokesman.
Making Linux Consumer-Friendly
What's less clear is whether the outcry for Linux reflects demand in the market that goes broader than a vocal group of open-source advocates. Even high-profile Linux proponents admit the operating system isn't ready for mass-market use. The system is gaining traction in corporate data centers where low costs and the ability to play suppliers against each another are paramount. But Linux has been too arcane to control, incompatible with popular hardware, and bereft of popular programs for most home PC users.
"Linux has a long way to go before it has the same market demand as Windows," says Jim Zemlin, executive director of the Linux Foundation, which promotes the software as an alternative to Microsoft's (MSFT) Windows, pays the salary of Linux creator Linus Torvalds, and counts Dell among its members. "Dell's a pretty smart company and they are responsive to their customers," Zemlin says. But to make Linux for consumers fly, the vendor would need to invest in engineering to ensure the software works with popular graphics chips and wireless modems, sign expanded support contracts with Linux suppliers like Red Hat (RHAT) and Novell (NOVL), or train its own customer service reps on open-source technologies. "That would help them build a better box," he says.
Dell says it's already listening. In a Feb. 23 posting on IdeaStorm, the company said it's working with Novell to certify its business desktops, notebooks, and workstations for compatibility with Linux, and is working with other Linux distributors about additional certifications. A company spokesman says Red Hat is among those distributors. Dell also said it will make it easier for PC buyers to forgo preloaded programs, and uninstall them once they get the machine.
Open-Source a Risky Innovation
Dell, once the top supplier of PCs, has seen its market share slip, profits fall, and reputation slide amid rising costs, quality mishaps, and missed market trends. Hewlett-Packard (HPQ) has become the top supplier of retail PCs, and Dell's lackluster products seem out of step in a market where Apple (APPL) has compelled vendors to pay attention to design. Customers have also complained about poor support and technical problems. That helped prompt Michael Dell to retake the chief executive reins, and he's hired new deputies to help turn out compelling products and clamp down on costs (see BusinessWeek.com, 2/16/07, "Dell's New Blood: Cannon, Now Garriques"). Dell reports quarterly earnings Mar. 1.
Bear Stearns (BSC) analyst Andrew Neff wrote in a Feb. 19 research report that a key to increased margins at Dell will be "focusing on innovative products that customers want." But putting customers' Linux ideas into action could also prove expensive. "PC makers tend to be very conservative about what they put on these machines," says Paul DeGroot, an analyst at consulting company Directions on Microsoft. Take tech support. If Dell offers Linux as a standard choice on consumer PCs, the number of calls to its support centers could rise. "After the second or third call, they've lost money on the machine," he says.
Then there's the effect such a move would have on Dell's relationship with Microsoft. IdeaStorm bloggers called for Dell to ship copies of OpenOffice, free software that includes word processing, spreadsheet, and other applications. "It can save you a pile of money" compared with Microsoft Office, which can cost $400 or $500 depending on the edition, DeGroot says. But Microsoft has been Dell's dominant operating system and applications provider since the company got its start in the 1980s. Microsoft has also taken steps to blunt the appeal of OpenOffice and other open-source suites. In January, Microsoft made the $150 Home and Student edition of its new Office 2007 suite available to all customers—not just education buyers.
Dell Needs More than Marketing
The groundswell on IdeaStorm isn't Dell's first brush with Linux. The company ships the system on its business servers and engineering workstations, and lets corporate IT departments install it on some PCs. But Dell stopped installing Linux on consumer PCs and notebooks five years ago, and it may not be in a rush to do so again. "It's something that you wouldn't tread lightly into," says its spokesman.
Yet it's also clear Dell needs to do something to repair frayed relationships with customers. The company on Feb. 16 launched a feature on its Web site where users can upload videos—YouTube style—of what they did on their Dell PCs. Last year, the company launched a site that includes videos of its chief executive at industry functions. On IdeaStorm, there's even been a suggestion for Michael Dell to start a blog, a la Sun Microsystems (SUNW) CEO Jonathan Schwartz. Better marketing is a start. But as Dell's response to the Linux clamor shows, it may need to adjust its products, too, to give the people what they want.