by chiefstaff

August 25, 2011

US PC makers’ market is showing classic symptoms of short term strategic thinking taught by Harvards and other such august institutions, and which has become endemic of the American industry on the whole.

Other commentators have written sufficiently on the hollowing out of the US economy and the conversion of the economy into a FIRE (Finance, Insurance, Real Estate) economy. I have nothing more to add to that discussion.

However when Hewlett – Packard recently announced its decision to sell off the PC division to potential buyers to the middle east I was again reminded of how some of the most brilliant minds can be so wrong.

Looked at in isolation, the decision makes perfect sense for the board of HP. They purchased Compaq, they made a fair go of trying to clean up the supply chain and compete with Dell, they tried every trick in the book, and finally they threw their hands up in the air.

At least, as we say in Australia, they gave the sauce bottle a fair shake before discarding it.

IBM did not even do that when it decided to sell out to Lenovo.

IBM’s missteps in the PC industry are well chronicled – right from the decision to outsource the operating software to Microsoft, to supply chain problems in manufacturing to the final decision to sell the PC division to Lenovo.

HP, on the other hand, has had relatively benign coverage, though in my view their saga was even worse.

Right from acquisition of Compaq, to the price wars against Dell, to the supply chain machinations have neither been discovered, not analysed by strategic analysts working on the assumption that HP knew what they were doing, and it was only a matter of time before they will have it all under control.

A bit like Ben Bernanke and the Fed saga at the moment!

Meanwhile, all these strategic moves have ruined the PC business for the lone US survivor – Dell.

This little pig is still standing, though barely able to keep up with the pricing onslaught of HP as well as the copycats – the Acers, the ASUS, Benqs and other brands – many of whom are related to its erstwhile suppliers.

Once a darling of the Supply Chain world, Dell has also now morphed into a case study in how NOT to manage your supply chain. Almost all the competitive advantage has been lost to the former suppliers (or their associated entities) and there seems to no other tricks up its sleeve.

How long will Dell brave the onslaught of the low cost copy-cats without any competitive advantage what-so-ever?

A refreshing contrast to this whole saga is provided by Apple (whose CEO Steve Job finally pronounced today the long awaited words – iQuit).

Despite all the criticisms evoked by one of its suppliers (Foxxcon), Apple has managed to run a tight supply chain ship. It has kept the key components of the supply chain inhouse, and outsources only what is not a critical source of competitive advantage.

If it maintains its current strategy under the new CEO, there is no reason it can continue to launch one successful product after another – every few months.

So the key questions for the readers are:

  1. What do you think is the future of Apple? Will it continue to launch successful products and maintain a competitive advantage well into the future?
  2. What is a way out for Dell? Will it also sell out to a far eastern group in near future?
  3. Just as Dell’s greatest strength – its supply chain management – eventually became its greatest weakness, will Apple suffer from a similar fate at some stage in future? How can it guard against that?

Please comment and share your thoughts freely…


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chiefstaff

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  • Very descriptive article to make understand all companies decisions making capability towards Supply chain.
    My focus on “What is the future of Apple?”
    As per the reference blog (https://bit.ly/2xRllDA)
    “Apple shows no signs of slowing down anytime soon. The Cupertino company saw its stock reach an all-time high, at $400 per share, and Apple reported a staggering $28.57 billion in revenue (to the tune of $7.31 billion in profit).
    Apple Q3 of 2011 has proved to be Apple’s most successful financial quarter to date, and the iPhone and iPad have played a huge role in that success. iPhone sales saw a 142% increase, while iPad sales saw an even more impressive 183% increase. The iPod saw a 20% decline in sales, and that number echoes a previous analyst report that the iPod is not surviving as part of Apple’s product line.”

    So, according to me In terms of products, Apple will continue to stay busy with refreshes and new announcements. Most notably, the next iPhone is expected to drop in the coming months. Rumors have it pretty much pegged as a CDMA/GSM device with an 8-megapixel camera and dual-core A5 processor. There have been hints of another iPad model getting introduced this Fall with a Retina Display, but that rumor still seems far-fetched.

    Reply

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