Laptop Shopping: Dell's Miscalculation

Saturday saw the East Coast of the US hit with the monsoon-like fallout from hurricane Ernesto. With outdoor activities out of the question, my daughters and I, as many other denizens of the area did, went shopping.

As it happens, I had promised them upgraded personal computer facilities this year. This decision necessitated a long-delayed commitment to a wireless network, so that gear was also on the shopping list. With fall "back to school" sales in full flower, we set off on a rainy, overcast afternoon to buy electronics gear.

At our first stop, Costco, my daughters found several laptops their liking. Upon discussing the array of models displayed with the helpful Costco assistant, I rapidly came to realize that there was a fairly uniform set of features and capabilities available within a $200 price range. Being the first store at which we looked, we held off a purchase decision for later.

The next stop was Staples. I went there for networking gear. As I made sure that the components I selected were appropriate for the intended network setup, my daughters busied themselves with trying out the various laptops on display among the shelves in the back of the store. There must have been at least 20 different models on offer. Soon, they called out to me that they found one which they would like me to buy.

Amazingly, they had chosen a very good machine at a great price. I say "amazingly," not because my daughters chose it, but because we were at Staples. This was about the last place I expected to purchase a computer.

However, they found an HP Pavilion notebook on sale, for about $900. It had the typical 1GB of RAM, 100GB HD, wireless capability, XP operating system, DVD burner/reader, that most machines in the price range possess. Plus an in-lid camera and various additional software titles.

As I wrote in my prior post, here, Dell has seriously miscalculated how consumers buy PCs nowadays. I am a good example. Never before have I purchased a PC in person, at a retail store. Four Gateways and one Dell were bought over the phone, after customization.

Now, however, the typical off-the-shelf notebooks contain nearly-identical features and components, at very similar prices. Thanks to the evolution of various manufacturers' distribution policies, many retailers carry a wide variety of brands: HP, Toshiba, Gateway, Lenovo, and Acer, to name just a few. With this sort of product choice at similar prices, it doesn't take a genius to realize that spending more for marginal customization, while waiting a week for the product, is hard to justify.

Really, about the only option left nowadays is your choice of how much RAM to buy. Otherwise, notebooks in the $1,000 price range are all very similar.

The conclusion which I draw from all of this is that Dell has seriously missed the boat in terms of its understanding of the consumer segment's buying behavior evolution. This notebook, on which I'm writing this post, is intended to provide my daughters with their own computing platform, as well as wireless internet access. As a second (or, in my case, more) computer purchase, sufficient information and product choices are available at retail to obviate the need to custom design a solution.

Dell did very well in the 1990s with their custom-design, fast delivery business model. Now, however, with Saturday's experience fresh in my mind, I see how and why they are outdated in their distribution methods.

One can't denigrate their prior success. But I don't really think they possess any unique competitive advantages anymore to drive further consistently superior total return performance in the years to come.