Why Can't Dell Innovate?

Well, do you think the Xerox feel the same way about Apple?

I guess there are two ways to make money: do it first and do it cheaper/better (now I won't say whether Dell is in the cheaper category or the better category, but I don't buy Dell).

I think that's silly.
It's been shown repeatedly that there's a fairly clear first-mover DISadvantage.

It just makes good business sense to see how a market pans out. If it's a wash, you lose nothing and your competitor loses all the R&D money and marketing money and time.

If it looks successful, you get to see where the customers want change and can introduce a "better" product from the eye of the consumer.

Why aren't people whining about Palm stealing Apple's ideas?

Sure, it would be "cool" to be the first to come up with a killer app, but it satisfies your investors and consumers more to be successful and "improve" on someone else's new idea.

For originality, look to universities like MIT.
For good business decisions, look to the business world.

Look its really simple, there are only 3 unique strategies in business, and perhaps life.

1) Innovation
2) Imitation
3) Frustration

Innovation gets all the ink, but rarely rewards its creators. In fact most innovators die broke and bitter.

The real money is always made via imitation, and thats really Dell's path. Give them credit because they've master the only skill and imitator needs, and that EXECUTION. Which is usually what happens to its competitors.

Frustration, the phone companies and microsoft are perfect examples here. Heck I'm been saying for nearly a decade that MSFT's best selling product is FRUSTRATION, because once a company bites from their software portfolio (ie. the forbidden fruit), you can't get rid of them. Its irreversible.

Keep in mind that these ideas didn't originate with Apple, Apple just did them better. If Dell does them better still... bully for all of us.

Dell sells (computer) commodities, sells them relatively cheaply, and is very very good at it. That is their business model. Innovation is not part of this - they would rather wait and see what "sells" before entering a market. This is pretty standard practice for most firms in capitalistic economies. Being "innovative" is inherently risky - and risks can be costly. Microsoft is also well-versed in this practice of using others' ideas that have proven successful. In fact, many large companies find it more cost-effective to let smallers firms "innovate" and then buy them out later. For smaller companies in a particular industry, such as Apple, the ideal is that by being innovative you can nimbly keep one step ahead of the competition (and mass market) by producing unique products that are in demand - and move on when lower-cost producers finally enter the market.

Jason

There is a prevalent mis-conception that Apple ripped off Xerox. In fact Apple had been working on GUIs for a while before they visited Xerox Parc, what they saw confirmed their feeling that GUIs were around to stay.There were also some ideas they saw but did nothing, OO programming and Ethernet.

Also I dont think you can blame Apple for Xerox's failure to commercialize the great technologies they were inventing, but rather blame Xerox. Xerox in fact chose not to commercialize the great technologies, which is not really surprising if you look hard at what Xerox was (and is) selling, copiers, toner and paper. I had the privilege to work as a consultant at Xerox in the mid to late 90's in Webster, NY (where in fact they have a bigger R&D department than Parc), and was stunned to discover that 50% of revenues were from toner and paper, 49% were from copiers and the rest were from IT products for print management. Given those figures it is easy to understand why technology was never near and dear to upper management's heart.

Dell's whole business is built around commoditizing PC and server class hardware. They are the Wal-Mart of the IT industry. They don't innovate in a technical sense, but a business sense. And I think that was Dell's philosophy from its humble beginnings.

Hey, I can't complain about their low prices... They lower the cost of bringing *my* innovative ideas online!

Apple may have some good ideas, but their failure to capitalize on those good ideas is their own sad failure. If Apple wasn't so restricted by the Steve Jobs dynasty and better served the interests of its investors, maybe you'd have nothing to complain about!

Besides why should I pay extra for an Apple solution from Steve Jobs? Because he's so 'cool'? Whatever, man, I'm glad there's a Dell to cut him down to size!

Casey

I really don't see an issue with this. So Dell offers some similar products as Apple. This will make Apple have to price their products competitively thus allow us as comsumers to get the best price. If this new competition will allow me to save a few bucks [without adding even more to Micheal Dell's or Steve Job's millions - or is that billions] then I am all for it.

Agreed with Casey. Dell does innovate, just in ways most technology purists wouldn't have it. Their just-in-time inventory and supply chain management processes blow away the industry's (former?) crappy reseller model. Innovating in this way keeps them (leading) in business, even if it's not as if some would have it.

Dell doesn't innovate because Microsoft doesn't innovate. It's that simple.

Dell does innovate, even on the technology side. Not necessarily at the PCB level, but their mechanical design rocks. And if they can innovate away the cost of manufacturing, selling, and delivering them, hey that's the free market.

Yahooligan calls Dell unoriginal and uninnovative. Pot calls kettle black.

Actually, Dell's a far far better company than Yahoo. This blog is just another example of the arrogance prevalent at Yahoo. Yahoo lost touch a long time ago and hasn't innovated anything that has mattered in just as long. Yahoo will have to either get off their ass or die out to way better companies like Dell, Google, ...

At least the Yahooligan was brave enough to attach his name to his opinion.

what's the point with Yahoo! here?
Apple does wonderful work on their products, i don't think they have to worry about being ripped off.
The big problem with ripping off is that you always are 6 months late. Moreover Apple's iPod, (cause obviously it's what they want to rip first) is a delightful combinaison of iTunes (a stunning soft) and iPod (nothing but a firewire hard drive with headphones), And I'm not so sure dell can do the trick on the software part.

People, please! Yes, Jeremy does for work Yahoo, but he isn't Yahoo. He's just an employee. A person with his own opinions. Personally, I get the idea that he works there because he gets to do some really cool stuff with a lot of expensive toys, but that's just my take.

What does Yahoo have to do with any of this? Jeremy works there, so what? He probably does very cool stuff there as well, probably stuff you have no idea about...try to stay focused!

Wow, Mike Hillyer, VB *AND* MySQL? Sounds like you can get a job at Yahoo too! Talk about sucky technologies...

I'll bet Jeremy is just still harboring a grudge for all the times the dumb jocks shoved him in lockers!

What innovations is Yahoo responsible for? The directory??

I really can't think of anything I use Yahoo for - I use google for searches; I get news from other sites; I get financial info from other sites; I use other sites for email; I get movie info from imdb; THERE'S NOTHING I RELY ON YAHOO FOR!

It's amazing Yahoo is still around frankly. They're just coasting from all the hype they received from the Internet boom.

Well Tom, why not cover the programming language with the largest user base combined with the open source RDBMS with the largest installed user base? VB and MySQL is not the perfect combination for every application out there, but they do have their uses.

Quote:
"Yup. It's really quite lame. These companies must be run by some of the dumb jocks from high school that never seemed to have an original idea."

I love your blog and I'm a loyal reader so don't take this the wrong way. You have no business understanding of Dell.

I agree with the above posts by Marc and Casey. The day Dell decides to become an innovator is the day most of its shareholders start seriously considering selling.

I'm not taking it the wrong way, I just think you're reading too much into what I've said.

Had I wanted to compare business models, I could have compared Dell and Apple. I'd have enumerated why Dell is beating the pants off Apple.

But I'm not terribly interested in that sorta stuff. That's not who I am. I'm more interested in companies that invent technology rather than business processes and ideas.

I guess I figured that'd be obvious by now.

Interestingly, it's become apparent that Dell didn't even innovate in this matter because the DJ (bleh!) is a rebranded Creative mp3 player and the music store is a rebrand of an upcoming MusicMatch online music store. They couldn't even copy Apple, they had to take someone else's competitive moves instead.

I understand that they try to limit their R&D as much as possible, but this is crazy.

You know, from a historian's POV, it's pretty funny. The Romans conquered a goodly portion of the world through 'imitation'. Go look it up. But the key is choosing which items to imitate. The Romans (and Japanese, to an extent) were excellent at figuring out which ideas/innovations were worth perfecting and using. American businesses did it with the assembly line.

So what if one company is imitating another?! Imitation is the sincerest form of flattery, after all.

You know, from a historian's POV, it's pretty funny. The Romans conquered a goodly portion of the world through 'imitation'. Go look it up. But the key is choosing which items to imitate. The Romans (and Japanese, to an extent) were excellent at figuring out which ideas/innovations were worth perfecting and using. American businesses did it with the assembly line.

So what if one company is imitating another?! Imitation is the sincerest form of flattery, after all.

I am currently reading amazon.com: Get Big Fast, it's actually an ok book and an interesting story, despite the author's consistent repetition of certain anecdotes. Part of the book I just finished reading was the story of their first trip into the land of VCs and trying to acquire capital to keep the ball rolling after Bezos' personal funds were poured into the company.

Evidently someone approached Michael Dell about the possibility of investing, or being on the board or something like that, and he was told "Jeff Bezos is the Michael Dell of the internet." to which Mike replied: "I thought I was the Michael Dell of the internet." And thus he failed to get in on the ground floor of the biggest, baddest .com [r]etailer.

This lack of insight goes right along with lack of innovation.

Man... what if Apple built PCs though?