Friday, September 21, 2007

Dell in Germany

There's an economic point that all too few people seem to understand. Invention, innovation, don't just mean designing new things. They can also mean, and this is much more important than new products, changes in the way we do things we do already. Changes in methods of organisation, for example.
This is what has driven Dell's success over the years. Michael Dell spotted that the major problem with Desktops and other computers was the depreciation of their value, as components sat on shelves, or personal computers were transported to stores and then sold. 1% a week was his finding. So if you can find a way to do away with all of that stocking you should be able to reduce your prices (or upgrade the equipment itself) by 6-8%.
Which is exactly what Dell then went on to build and it's still the powerhouse of the company. No stock and thus no depreciation, meaning either better prices or more computer for the same one.

Dsiclosure Policy.

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