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I knew it wasn’t all puppies and rainbows!

Joel on Software, “Local Optimization, or, The Trouble with Dell

Unfortunately, the dirty little secret about Dell is that all they have really done is push the pain of inventory up to their suppliers and down to their customers. Their suppliers end up building big warehouses right next to the Dell plants where they keep the inventory, which gets reflected in the cost of the goods that Dell consumes. And every time there’s a little hiccup in supplies, Dell customers just don’t get their products.

This isn’t the only problem with Dell. Their other big problem is that they’re constantly starting price wars, which keep driving down their margins further and further, which makes not only their products but all of their competitors’ products crappier and crappier. It also fuels the delusion that price is the only factor that customers use when selecting a supplier. It’s a race to the bottom that nobody wins.

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