Recently-Released Documents Reflect Dell’s Decline

Efficiency, outsourcing, and low inventory – all terms that epitomize the “Dell Model,” an approach to business commonly taught at some of the most prestigious business schools in the nation. Dell, Inc., one of the largest technological companies in the world, was once rated by Fortune magazine as one of the most admired companies in its industry, most likely due to its unique techniques that fought to lower the price of computers and keep them affordable yet secure. However, according to a recent New York Times article, the company has been experiencing a steady decline for the last seven years due to poor customer service, product quality and accounting, and that recently-released documents from a major lawsuit filed against Dell directly reflect the company’s ongoing problems.

From 2003 to 2005, Dell sold millions of computers with faulty electrical components that were leaking chemicals and causing malfunctions. Dell conducted an internal study that found that the affected computers were expected to cause problems up to 97% of the time over a three year period. According to the documents from the lawsuit filed by Advanced Internet Technologies (A.I.T.), an internet services provider, instead of recalling the machines they knew were faulty, Dell covered up the problems by instructing its employees to blame its customers and “emphasize uncertainty” when dealing with complaints.

After receiving complaints from A.I.T., Dell insisted that A.I.T. had driven their 2,000 failing computers too hard in hot, confined spaces, and tried to sell them more expensive computers as a resolution. A.I.T. claims that it lost millions of dollars in business as a result, and therefore filed the lawsuit. The math department of the University of Texas received a similar response from Dell that claimed the problems with their malfunctioning computers were caused by the school overtaxing the machines by making them perform difficult math calculations. Dell also refused to fix 1,000 failing computers of the law firm defending them in the lawsuit.

Dell disputes the merit of the lawsuit filed by A.I.T. as it is now three years old and does not involve any of Dell’s current products. Dell also claims that it actively-investigated the failures and worked directly with customers to fix the computers on a case-by-case basis. Additionally, Dell considers this an industry-wide problem as computers produced by Hewlett-Packard, Apple and other computer manufacturers had the same problems as their machines also contained the same faulty components. According to the lawsuit’s documents, however, Dell appears to have suffered far more than its competitors as the failures affected its mainstream products, their OptiPlex desktop computers, millions of which were sold to businesses and government agencies for almost two years.

The New York Times claims the documents revealing Dell’s effort to conceal the problems with their faulty computers highlight the company’s rapid decline in the technology world in general. The company has been dealing with quality control and customer service issues for years, and may soon face another suit filed by the Securities and Exchange Commission due to some serious accounting problems. Dell’s decline shows that a business model focused on efficiency, outsourcing and low inventory, although great in theory, apparently does not work in the absence of accountability.

If you would like more information on Dell or on how 3D can help you make informed purchasing decisions to fulfill your business’ computing needs, please call us at (360) 671-4906, email us at info@3dcorp.us, or visit our website at http://www.3dcorp.us/.

References: "Suit Over Faulty Computers Highlights Dell's Decline," New York Times, "The Fall of Dell: A Business Model Innovator Loses Its Way," PCWorld, "Dell on the Nichicon Capacitor Issue," Direct2Dell Blog