Apple vs. Dell: the victory of marketing leadership over operational excellence?
Is the bell tolling for process-intensive (Dell, Home Depot, Amazon, Wal Mart, HP, Ikea, etc.), top of the class in operations, companies? Why have marketing-dept. driven companies (Apple, Nescafé, American Express, l´Oréal) so strongly gained momentum in the recent months?
Take the Dell-Apple bullfight. Check this MacDailyNews article. Ceteris paribus, Apple computers (laptops & desktops) now appear to be less expensive than Dells (see an example here, in Spanish but easy to pick up).
As a reminder, Apple´s market cap has been topping the one of Dell since the early days of May 2006.
Furthermore, Apple blows Dell away at the Google fight (see picture).
Adendum: I guess economics may help here. In growth periods, marketing-driven companies outperform operations-driven ones, and conversely. Provided that it already has a sort of cost-killing culture, I bet that Dell & HP will take the lead again at the next economic downturn.
Adendum 17th August 2006: Interesting article in InfoWorld about Mac Pro being overpriced.
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In Dells case I think that it is losing out because it poor reputation for quality is catching up with it. Dell has been around a few less decades than Apple and probably sells alot of computers. Apples sucess has been been because of the iPod.
Also you probably cant really analyse to much into this unless you look at companies which are competing in the same sector.
I do agree with your growth period adendum, although I have not facts or figures to back it up.
I believe Dell’s quality is really good. I’ve worked under harsh conditions (moving city every 3 days as an auditor in the US) with a pretty old Dell laptop for 6 months, and it was a really strong piece of laptop – I can testify for it.
Furthermore, Apple’s success is certainly not due to iPod. iPod accounts for the recent and most probably future successes of Apple. Not its reputation, not its positioning.
With regards to Dells Products I had a Dell laptop which its motherboard failed. I took it to two different independent laptop repair places. They told me the same thing that Dell used substandard parts and it would be almost the same cost to by a new one as opposed to getting it fixed.
With regards to the original discussion well are some of the process-intensive companies very marketing driven aswell. I heard somewhere (although this may be internet folk-lore) that Amazon planned to spend double its previous years earnings on marketing for the first (x) years it was in business.
Another thing to consider is that are some of the companies you mentioned in the ‘top of the class in operations’ or do they simply market themselves as such?
Dear Craig,
You’re raising 2 extremely interesting issues:
1) can a corporation be at the same time both marketing-driven and process-optimization oriented?
2) can a company claim to be an expert without being such?
Don’t take the following leads for granted, these are just humble and short thoughts on the matter. I guess each question leave enough room for a Ph.D. thesis…
1) I don’t think a company can at the same time heavily invest in marketing and focus on optimizing its business processes. The reason is fairly evident and simple: a company starts working on optimizing its business processes when its market is mature and its margins lower. In a booming or luxury market, companies spend loads of money in marketing to acquire customers. In the luxury industry, optimizing business processes actually kills the company: if you start mass-marketing a luxury product, it’s not luxury anymore. That was just an example…
2) The answer is No. If a company says something untrue about its deeply rooted culture, I’m betting the company in question will no exist in 3 years from now. GE is a process company, claim to be so, and educate the best BPM leaders worldwide. l’Oréal and Procter & Gamble claim to be great marketing machines, which is true. Dell has reinvented processes in the PC industry; Apple is almost synonym to innovation.
Companies, like human beings, have genes. Our job is to look at these DNA structures and try to understand them. Companies cannot lie on their very raison d’être.