Buying a PC Online: a 2015 Saga of Customer-Service Inefficiency

In this open letter to Michael Dell, CEO at Dell.com, we relate the saga of a friend I’ll call Russ and his journey to buying a replacement PC online.

Plan A: Lenovo Chokes
Russ had an old, Lenovo one-core AMD workhorse desktop upgraded to Windows 7 awhile back. The box got slower than molasses. After all the usual speed-up remedies failed, Russ decided to buy a new desktop. We consulted as I do for (too) many friends and decided on a modest machine with a solid-state disk. Russ went online and configured-to-order in early November. Problem solved ….

But not quite. Lenovo quoted a delivery date, and when December rolled around, Russ queried when was his new PC going to be built and shipped. The answer was “We don’t know, but hold tight.” Russ replied, “Not good. Cancel the unfulfilled order.” Lenovo said, and I paraphrase, “You can’t cancel the order because we have released it to our manufacturing supply chain in China. It will arrive when it is built and shipped.” Russ called American Express and put the charge on indefinite hold in case it actually arrives some day.

Moral: 1. Don’t take an order you cannot fulfill. 2. Don’t leave a customer hanging.

Plan B: Dell Gets to Bat
With a little coaching, Russ found what he wanted at Dell.com: an Inspiron desktop without an SSD but with a decent Intel “Haswell” Core i3 processor, 4GB of memory, and a 1TB hard drive running Windows 10. Price was US$449 with free shipping. The clincher was same-day shipping.

The Unboxing: a Moment of Silence and Sadness
The new PC arrived in four days. I came over Sunday morning with assorted tech bits so we could hook up the new Inspiron and to run Microsoft’s sweet Windows Migration Tool to get it into production. Popped open the chassis, added 4GB of memory, closed the chassis, connected the cables and hit the power-on switch.

Nothing happened. Nada. The PC would not power on in spite of trying different electrical sockets and AC cables. It was a 2015 PC Dead on Arrival.

We were sad but not completely surprised as these things happen — presumably very rarely because of the Dell costs to swap a DOA machine. So, we called Dell Tech Support to get started.

Tech Support: Call Triage
It took eleven minutes to wait on hold, enter the PC service tag, explain to the tech we had a DOA machine that we wanted to swap. The information requested included the service tag, serial number, name and address, and other bits of information — all of which is already stored in Dell’s order entry system but was nevertheless verified and keystroked again into the service system.

We made it through triage and onto tech support’s call resolution team.

Tech Support: Call Resolution Team
This call took eighteen minutes, with most of the time spent on hold at the end waiting to be transferred to Sales. The business-process problem with the call resolution phase is simple: the department is a separate information silo from call triage, and no call or problem data is shared.

Russ had to literally spell out the same answers to information questions including the service tag, serial number, order name and address, and other bits of information that had already been amassed at order-taking and call-triage. Besides boring the customer to tears, the process is a poor use of tech support labor.

Reassuring us that the four-day-old PC was still under warranty, call resolution rang off to run down the DOA return process. After seven minutes, we were told that Sales handled returns and “please hold while I transfer you to that department.”

Sales Support: Waiting for Godot
And we waited some more with occasional call-tree clicks that eventually ended with a recorded message saying “Sales is closed on Sundays, so call us during business hours tomorrow.”

Customer time to non-resolution of a DOA problem: more than 30 minutes. Russ was pissed. I went home to lunch.

Luncheon Epiphany
I often skim the Sunday newspaper advertising inserts to keep track of technology mainstream deals and product positioning. For example, Intel’s Broadwell and Skylake 14nm processors only recently started being featured in PCs at BestBuy, and are still not being advertised at Wal-Mart, Target, Staples, or OfficeMax.

That’s how I found the Staples ad for a Dell Inspiron 1300 desktop with a Intel “Haswell” Core i3 processor, 8GB of memory, and a 1TB hard drive running Windows 7 Pro. Price $300, marked down from $580, and $150 less than Dell.com’s almost identical DOA PC.

I telephoned Russ, he picked the PC up that afternoon, and the migration was well underway on Monday morning. The DOA machine goes back to the Dell factory tomorrow.

Dear Michael,
I silently applauded your taking Dell private because the mature PC industry in a slowing global economy does not need a quarterly spotlight on top of all its other challenges. I expected lots of value could be wrung out of the business with greater efficiencies and focus on key business processes. Dell has been a build-to-order online specialist for, like, thirty years.

So, I was disappointed that Dell’s DOA process involved so many steps across organizational and information silos that cry out for a rethink. I hope you’ll take this missive to heart. You know what to do about this.

No, It’s Not Just Dell and Lenovo …
HP has no laurels to sit on. Even Apple has disappointed me on more than one occasion. As this saga illustrates, the PC industry can do better on customer satisfaction.

The future of personal information technology is not one-size-fits all. It’s “buy what you need and want”. That’s going to take a holistic approach to online sales and service. You would have thought that would be old-hat going into 2016, but apparently not.

Follow @peterskastner on Twitter

Dell Inspiron 3000 Desktop

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Microsoft: Wrong Strategy, Right Implementation

Last fall, then Microsoft CEO Steve Ballmer announced the company’s new strategy as the “devices and services” company. I choked on this and remained silent because after all, Ballmer was on the way to retirement and the company was clearly on a road to change. I’m not a heckler.

However, let’s look at the strategy on the surface. First, Microsoft is not “the devices company”. They get credit for the xBox game consoles, mass-market mice and keyboards, and …. nothing more. The Microsoft-developed tablets and phones over the years have made hardly a dent in their respective markets. The assets and knowledge base of the Nokia acquisition aren’t likely to move the dial much either. My fellow analysts all agree on this state of reality.

Likewise, Microsoft’s overall impact on IT services is minuscule in the case of enterprise IT, and approximately non-existent in the case of consumers. You don’t need a focus group to determine that Microsoft is not top-of-mind for computer services. Therefore, I conclude the Microsoft as the “devices and services company” is a failure waiting to happen. The reality does not match the words.

Nevertheless, I applaud what Microsoft has been doing of late in making its familiar technology available on the real devices people own and use. A couple of weeks ago, the Office Suite became free apps for the Apple iPad. This morning, I loaded Word into Google Chrome on my Mac — and later I’ll put it on a Chromebook. In the devices space, Google (Android) and Apple (iPad and iPhone) are Microsoft’s arch enemies.

Enemies or not, I am paying nothing for the Microsoft apps on Chrome. I’m also paying nothing to store my documents on Microsoft’s OneDrive cloud storage. Free lunch on the Internet is good. Of course there’s a caveat, which is that my docs can only be stored in Microsoft’s OneDrive cloud. But that’s a free-market tradeoff that I and many consumers will be willing to make.

If Microsoft keeps implementing an “any device” strategy like the iPad/Chrome offer described above, they’ll do well and buff some tarnish off the brand. And if the company gets around to describing its strategy as “we are the best applications for everyday use by business and consumers on any device”, they might get more applause — and attention. Follow me on Twitter @PeterSKastner

Word for Chrome

Google As “The Cross-Platform Apps Company”

A beta version of Google’s Chrome Browser now supports Chrome App Launcher. This opens up the Chrome Store apps to Windows, Linux, and Mac OS desktops plus Google Android and Apple iOS mobile phones and tablets. Not to mention Google’s Chrome OS. Cross-platform is good, users say, because they increasingly recognize the utility of apps and their data across the devices in their lives.

Google's Chrome App Launcher

Google’s Chrome App Launcher

Common apps running on a familiar user interface and operating system across a wide variety of hardware platforms is an idea that crops up frequently in the history of the computer industry. Unix and Windows NT come immediately to mind. Google is apparently bringing the cross-platform idea back into play.

The Chrome browser runs on Android, Windows, Linux, and Mac OS and has more recently appeared on iOS. Bookmarks, tabs, settings are synchronized in Google’s cloud including Drive storage, and available to any device at any time. Chrome apps add much more than typical browser extensions. They are real apps, albeit with cloud and local data. Docs, Sheets, and Slides are the functional equivalent of Word, Excel, and Powerpoint in the Microsoft universe, and Pages, Numbers, and Keynote in the Apple Universe.

Chrome apps plus the already cross-platform Chrome browser give Google a wider breadth of platforms than the competition. As more data and usage is moved to the cloud (e.g., Office365), the benefits will become more apparent to cloud-migration users.

Perhaps my personal journey is illustrative. Like many professional users, I’ve followed Microsoft’s Office apps for generations. But over the past decade — Vista comes to mind — I started using a Mac. And I still have PCs. However, I never invested heavily in the Apple iWork office suite, using it for mostly Microsoft-compatible import and export or, lately, to make cross-platform .pdfs of finished documents or presentations. I have expertise and a software investment in Microsoft PC office apps and have no foreseeable intention to move to Microsoft Office 365.

Since more of my consumption and production is happening on tablets and even smartphones, I’m a good candidate to drop Apple iWork and move to Google apps. These appear on the Mac desktop and launch just like Mac apps. Or Windows apps.

Moreover, the mobile apps I use from the Chrome Store are all there too: WorkFlowy, TweetDeck, QuickBooks, and Evernote. It’s not just cloud office.

Let’s leave aside the issue of whether your data is secure in the cloud. That applies to all apps everywhere, and is worth pondering another day.

Being able to run a familiar, common set of apps across all the major hardware and OS platforms and time is a valuable competitive advantage.

I don’t see the technology industry yet recognizing that Google is quietly setting up to be the only supplier that can run the same apps on any broadly used platform.

Follow me on Twitter @peterskastner. Your comments are invited.

Apple’s Q2-2013: Q4 Anticipation

I’m on the road but wanted to update you on Apple’s second quarter.  Revenue was flat and profits were down compared to last year, while iPhone sales were up, and iPad and Mac sales were down. I expect the current third quarter to be constrained by anticipation of expected product announcements in September. Then, product supply issues will be unable to fully meet Q4 holiday demand for iPhone and iPad.

It sure looks like Apple has managed to compress a year’s worth of  opportunities into three or four months. Think how much smoother things might be if product came forth across the entire twelve months of the year.

The text below was supplied by Apple PR. While I cannot vouch for its accuracy, I have no reason at all to dispute it. It’s a useful condensation of the numbers.

This afternoon Apple announced third quarter results, including record June quarter iPhone sales and our highest ever Education revenue. You can find our earnings press release here and a replay of the call with Tim Cook and Peter Oppenheimer is available here
Overall:
– Apple reported quarterly revenue of $35.3 billion and net profit of $6.9 billion, compared to $35 billion and $8.8 billion, respectively, a year ago
– Gross margin was 36.9%, compared with 42.8% in the year-ago quarter
– International sales accounted for 57% of total quarterly revenue
– Apple generated $7.8 billion in cash and has returned $18.8 billion in cash to shareholders through dividends and share repurchases
iPhone:
– Apple sold 31.2 million iPhones, up from 26 million in the year-ago quarter
– iPhone leads in customer satisfaction and loyalty, according to numerous third-party research firms, including J.D. Power & Associates, ChangeWave and Kantar
– Apple reduced iPhone inventory by 600,000 units in the quarter
– iPhone remains strong in the enterprise, and has captured 62.5% of the US commercial market, according to IDC
iPad:
– Apple sold 14.6 million iPads in the quarter, compared with 17 million in the year-ago quarter
– iPad faced a tough June comparison, as the first iPad with a Retina display was launched in the year-ago quarter and we ramped up inventory
– iPad channel inventory was reduced by 700,000 units, making sell-through down just 3% year-over-year
– iPad usage share remains incredibly high, and grew to 84.3% last month, according to Chitika
Mac:
– Apple sold 3.8 million Macs, down from 4 million in the year-ago quarter
– The updated MacBook Air line was launched at WWDC in June, making it available for just three weeks of the quarter.
– The Mac was though down 7% but again outperformed the market, which contracted 11%, according to IDC
– We look forward to the launch OS X Mavericks this fall and of the all new Mac Pro later this year
Music/Services:
– iTunes, software and services together generated $4 billion in quarterly revenue
– We now have more than 320 million iCloud accounts and 240 million Game Center accounts
– There are more than 900,000 apps in the App Store, with more than 375,000 designed specifically for iPad
– Customers have downloaded more than 50 billion apps
– Apple has paid more than $11 billion to developers, half of which was earned in the last four quarters
Education:
– Our education division experienced its highest ever quarterly revenue
– 1.1 million iPads were sold in education, and the Mac experienced strong sales as well
– Maine’s statewide education technology program saw 94% of the state’s elementary and high schools choosing Apple products
– The first phase of Los Angeles Unified School District’s plan to provide 660,000 students with a tablet was approved, resulting in an initial $30 million iPad sale
Retail:
– Apple retail stores generated $4.1 billion in revenue, about equal to a year ago
– iPhone saw strong growth in sales of our own retail stores
– MacBook Air had its most successful Retail launch to date
– We opened six new stores across five countries and now have 408 stores, 156 outside the US
Apple iPads

Apple iPads

On the Impact of Paul Otellini’s CEO Years at Intel

Intel’s CEO Paul Otellini is retiring this week. His 40-year career at Intel now ending, it’s a timely opportunity to look at his impact on Intel.

Source: New York Times

Source: New York Times

Intel As Otellini Took Over

In September 2004 when it was announced that Paul Otellini would take over as CEO, Intel was #46 on the Fortune 100 list, and had ramped production to 1 million Pentium 4′s a week (today over a million processors a day). The year ended with revenues of $34.2 billion. Otellini, who joined Intel with a new MBA in 1974, had 30 years of experience at Intel.

The immediate challenges the company faced fell into four areas: technology, growth, competition, and finance:

Technology: Intel processor architecture had pushed more transistors clocking faster, generating more heat. The solution was to use the benefits of Moore’s Law to put more cores on each chip and run them at controllable — and eventually much reduced — voltages.

Growth: The PC market was 80% desktops and 20% notebooks in 2004 with the North America and Europe markets already mature. Intel had chip-making plants (aka fabs) coming online that were scaled to a continuing 20%-plus volume growth rate. Intel needed new markets.

Competition: AMD was ascendant, and a growing menace.  As Otellini was taking over, a market research firm reported AMD had over 52% market share at U.S. retail, and Intel had fallen to #2. Clearly, Intel needed to win with better products.

Finance: Revenue in 2004 recovered to beat 2000, the Internet bubble peak. Margins were in the low 50% range — good but inadequate to fund both robust growth and high returns to shareholders.

Where Intel Evolved Under Paul Otellini

Addressing these challenges, Otellini changed the Intel culture, setting higher expectations, and moving in many new directions to take the company and the industry forward. Let’s look at major changes at Intel in the past eight years in the four areas: technology, growth, competition, and finance:

Technology

Design for Manufacturing: Intel’s process technology in 2004 was at 90nm. To reliably achieve a new process node and architecture every two years, Intel introduced the Tick-Tock model, where odd years deliver a new architecture and even years deliver a new, smaller process node. The engineering and manufacturing fab teams work together to design microprocessors that can be manufactured in high volume with few defects. Other key accomplishments include High-K Metal Gate transistors at 45nm, 32nm products, 3D tri-gate transistors at 22nm, and a 50% reduction in wafer production time.

Multi-core technology: The multi-core Intel PC was born in 2006 in the Core 2 Duo. Now, Intel uses Intel Architecture (IA) as a technology lever for computing across small and tiny (Atom), average (Core and Xeon), and massive (Phi) workloads. There is a deliberate continuum across computing needs, all supported by a common IA and an industry of IA-compatible software tools and applications.

Performance per Watt: Otellini led Intel’s transformational technology initiative to deliver 10X more power-efficient processors. Lower processor power requirements allow innovative form factors in tablets and notebooks and are a home run in the data center. The power-efficiency initiative comes to maturity with the launch of the fourth generation of Core processors, codename Haswell, later this quarter. Power efficiency is critical to growth in mobile, discussed below.

Growth

When Otellini took over, the company focused on the chips it made, leaving the rest of the PC business to its ecosystem partners. Recent unit growth in these mature markets comes from greater focus on a broader range of customer’s computing needs, and in bringing leading technology to market rapidly and consistently. In so doing, the company gained market share in all the PC and data center product categories.

The company shifted marketing emphasis from the mature North America and Europe to emerging geographies, notably the BRIC countries — Brazil, Russia, India, and China. That formula accounted for a significant fraction of revenue growth over the past five years.

Intel’s future growth requires developing new opportunities for microprocessors:

Mobile: The early Atom processors introduced in late 2008 were designed for low-cost netbooks and nettops, not phones and tablets. Mobile was a market where the company had to reorganize, dig in, and catch up. The energy-efficiency that benefits Haswell, the communications silicon from the 2010 Infineon acquisition, and the forthcoming 14nm process in 2014 will finally allow the company to stand toe-to-toe with competitors Qualcomm, nVidia, and Samsung using the Atom brand. Mobile is a huge growth opportunity.

Software: The company acquired Wind River Systems, a specialist in real-time software in 2009, and McAfee in 2010. These added to Intel’s own developer tools business. Software services business accelerates customer time to market with new, Intel-based products. The company stepped up efforts in consumer device software, optimizing the operating systems for Google (Android), Microsoft (Windows), and Samsung (Tizen). Why? Consumer devices sell best when an integrated hardware/software/ecosystem like Apple’s iPhone exists.

Intelligent Systems: Specialized Atom systems on a chip (SoCs) with Wind River software and Infineon mobile communications radios are increasingly being designed into medical devices, factory machines, automobiles, and new product categories such as digital signage. While the global “embedded systems” market lacks the pizzazz of mobile, it is well north of $20 billion in size.

Competition

AMD today is a considerably reduced competitive threat, and Intel has gained back #1 market share in PCs, notebooks, and data center.

Growth into the mobile markets is opening a new set of competitors which all use the ARM chip architecture. Intel’s first hero products for mobile arrive later this year, and the battle will be on.

Financial

Intel has delivered solid, improved financial results to stakeholders under Otellini. With ever more efficient fabs, the company has improved gross margins. Free cash flow supports a dividend above 4%, a $5B stock buyback program, and a multi-year capital expense program targeted at building industry-leading fabs.

The changes in financial results are summarized in the table below, showing the year before Otellini took over as CEO through the end of 2012.

GAAP 2004 2012 Change
Revenue 34.2B 53.3B 55.8%
Operating Income 10.1B 14.6B 44.6%
Net Income 7.5B 11B 46.7%
EPS $1.16 $2.13 83.6%

The Paul Otellini Legacy

There will be books written about Paul Otellini and his eight years at the helm of Intel. A leader should be measured by the institution he or she leaves behind. I conclude those books will describe Intel in 2013 as excelling in managed innovation, systematic growth, and shrewd risk-taking:

Managed Innovation: Intel and other tech companies always are innovative. But Intel manages innovation among the best, on a repeatable schedule and with very high quality. That’s uncommon and exceedingly difficult to do with consistency. For example, the Tick-Tock model is a business school case study: churning out ground-breaking transistor technology, processors, and high-quality leading-edge manufacturing at a predictable, steady pace of engineering to volume manufacturing. This repeatable process is Intel’s crown jewel, and is a national asset.

Systematic Growth: Under Otellini, Intel made multi-billion dollar investments in each of the mobile, software, and intelligent systems markets. Most of the payback growth will come in the future, and will be worth tens of billions in ROI.

The company looks at the Total Addressable Market (TAM) for digital processors, decides what segments are most profitable now and in the near future, and develops capacity and go-to-market plans to capture top-three market share. TAM models are very common in the tech industry. But Intel is the only company constantly looking at the entire global TAM for processors and related silicon. With an IA computing continuum of products in place, plans to achieve more growth in all segments are realistic.

Shrewd Risk-Taking: The company is investing $35 billion in capital expenses for new chip-making plants and equipment, creating manufacturing flexibility, foundry opportunities, and demonstrating a commitment to keep at the forefront of chip-making technology. By winning the battle for cheaper and faster transistors, Intel ensures itself a large share of a growing pie while keeping competitors playing catch-up.

History and not analysts will grade the legacy of Paul Otellini as CEO at Intel. I am comfortable in predicting he will be well regarded.

Follow me on Twitter @PeterSKastner

Amazon Beats Apple to Cloud Music Storage

Amazon announced its cloud music service today, offering 5 GB of music storage of AAC and MP3 music files to everybody, but 20 GB of storage to those who purchase MP3 albums at Amazon.

The files must be unencrypted AACs or MP3s, and they can be uploaded at their original bit rate. Those who purchase an album from Amazon’s MP3 service get the sweetest deal, though—20GB of space—and all new MP3 purchases will be automatically copied to your Cloud Drive without counting against your storage quota (you can still download the MP3s, too).

Apple is rumored to be working on its own cloud-based music service for MobileMe with largely the same features: music downloads plus online music storage for streaming to an iOS device or computer. That’s not expected to come until this summer or later, though.

As I wrote last month, Apple’s Lala technology is suspect until proven, based on my testing. So, Amazon’s lead could be bigger than it appears.

Based on the phone calls for help I’ve gotten over the years from friends and relatives who have lost photos and music, cloud storage will become ubiquitous. With music purchases protected, don’t be surprised if Amazon’s next move is into photo processing and storage.

Amazon’s digital home presence until this year spiked at Christmas shopping season. But the company is rapidly fleshing out a cloud-based series of products that are growing the company’s footprint well beyond e-commerce and distribution. Amazon is a company that I’ll be watching more closely.

Source: Wall Street Journal

Via: ARS

 

 

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