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Friday, April 20, 2007

Internet and new technology failures: Dell’s Web PC

Not quite a net gain

In late 1999, computer manufacturer Dell launched the Web PC. The computer was small (a mere ten inches in height) and came in five different colours. The aim of the computer was to simplify the experience of surfing the Internet, while at the same time being attractive. ‘The quality of the customer’s experience will be the defining source of loyalty in the Internet era,’ Michael Dell told the press at the time. ‘The Web PC is breaking new ground for our industry as we take our one-on-one relationships with customers to a new level of helpfulness.’

One of the key features of the product was an ‘e-support button’, that instantly launched a self-diagnostic programme. The button could also connect users directly to Dell’s award-winning online technical support team.

The PC also included a ‘sleep mode’ designed to eliminate the time spent booting up the computer for Internet access. Users could simply push a button to instantly ‘wake up’ the computer.

‘Many of these benefits are made possible by the ‘legacy-free’ design of the Web PC,’ explained John Medica, the vice president and general manager of Dell’s Web Products Group. ‘We hand picked every piece of technology that went into the Web PC without carrying over any technology from previous PC designs that doesn’t contribute to a pure Internet experience.’

The product was heavily marketed through a multi-media advertising campaign, centred around the slogan ‘Born to Web’, which drove customers to a Web PC Web site and free phone number, both of which acted as direct sales channels. In addition, Dell offered different peripheral products for the Web PC, including such devices as a digital scanner, a joy stick and a digital camera.

The press heaped praise on the product, although most journalists saw it as an attempt to echo Apple’s iMac strategy, with its emphasis on an eyecatching design, and user-friendly hardware. In his review for the Washington Post¸ Alan Kay said that although it ‘focuses more on style than computing,’ the Web PC is ‘a decent PC that’ll do most things you want.’

However, despite the number of benefits it offered, the Web PC was a flop. Dell pulled the machine from the market in June 2002, just six months after its release. Why? A number of reasons. Firstly, the emphasis on design was misguided. Sure, the iMac had been a success. But Apple had always been about design, and Dell hadn’t. Dell’s core customers wanted good value and functionality, not groundbreaking design.

Dell’s Web PC was good-looking, but its looks were ultimately irrelevant. Whereas Dell usually uses its own in-house design team, for this project the company gave the job to a radical San Francisco-based design firm called Pentagram. ‘I’ve designed great things that have been failures,’ the chief designer told Business 2.0 magazine. ‘The product didn’t fit what Dell is about.’

Computer User magazine noted another problem. ‘Oddly, Dell is targeting its Web PC toward home or home-office markets where users would generally be better off with an expandable upgradeable system,’ commented the reviewer. Dell’s core market was traditionally business-orientated.

Then there was the price tag. Although it was billed as ‘low cost’, the price of US $999 was more expensive than many competing models. ‘Consumers are looking at price first, then styling,’ said Stephen Baker, a PC analyst at research firm PC Data. ‘No-one aside from Apple has been able to crack that styling thing.’
Furthermore, Dell was selling in a completely new way. By offering a complete package, the world’s number two computer maker was breaking with its typical practice of offering à la carte pricing that allows customers to mix-and-match computer chips and other components to create a customized PC. If the Dell brand signified anything it signified customization and functionality over design. The Web PC failed to offer either one of these values.

Lessons from Dell’s Web PC
  • It’s not about the product, it’s about the brand. The Web PC was not a bad product, as the plethora of positive reviews testifies. However, it did not fit well with the Dell brand.
  • A low-cost product needs to be perceived as such. Although the Web PC was good value, because the price covered a complete package, it appeared too expensive.
  • Imitating the competition was a mistake. When computer manufacturers saw the success of the iMac, they inevitably wanted a bite of the apple. This proved to be a misguided strategy for Dell, a company normally associated with ‘beige and boxy’ computers.

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