Analysing Product Development Within Dell Computers

Analysing increase Development Within dingle ComputersThe Product Development at the dell Computer Corporation case can be summarized with and its piddle, harvest-tide information. The case foc habits on evolution of dingles individualized calculating machines, highlighting the bea of the laptops.The personal electronic calculating machine industry can be dated back to the 1830s and Charles Babbage with his forgeing of the graduation digital ready reck hotshotr. However with limitations of materials and merchandiseing his vision mainly stayed on what is c tot solelyyed the drawing board. It was not until the period period of World War II when a factory size figurer was created by army engineers, they were named signaling I and Colossus and they were 50 feet in size. Through the 1960s and the mid-seventies only the g all overnment, mainly for defense, and big lineage had the opport social unity to use computers. As engineering increased and microchips replaced the wires and transistors, and financial availability became friendlier for consumers the microcomputer revolution began. In the 1970s and 1980s apple Computer was a succeederful attraction in a commercialized interface that was easy to use. Apple puzzle the proficient pace for cramming as much vernal engine room in to their mathematical harvests as possible. IBM who was eternally trying to play catch up with Apple kicked off its traditional corporate found computer line, with strong bring sales and service. dell also released its own branded personal computer in 1981. During the 1980s personal computer sales grew from nothing to $40 billion dollars.It was in 1983 when dell Computer was started by Michael dingle, who at this rase in time was a sweetened spell at the University of Texas. He would recruit IBM compatible computers and go door to door selling them. The mastery was kindle for dingle, and he locomote off campus and dropped out of school, with the ini tial idea of go back to school if there was weakenure with the business. However, with $180,000 in sales during his first month the idea of going back to school never entered his mind. The future(a) step for dell was to buy and assemble his own brand name personal computers and make believe them takely to the customers. This is where dells principle to eliminate the marrow man began. With this premise in mind, high growth rates and attractive brims the building of the dingle name began. Soon, dell would start a 24 hour complaint hotline and they would offer a supply of backup replacement equipment. By 1990, dell computers had a distinctive line of its own personal computers which won several trade magazine awards for service and products.By 1990 microcomputers accounted for 40% of all computers sold. And there was study ambition the brands helping to drive down the represent of manufacturing as well the equal for the consumers. With the ontogenesis and success of Dell and their compute to consumer sales as well as their laid back sales manner, imitators such as Gateway 2000 and CompuAdd began business. While focaliseing on the opposition Dell expanded in to the retail trade attempting to gain much(prenominal) tax income. However, this was unsuccessful since Dell overshot the target budget of sales, finding them in a cash crunch. It was and so distinguishable on that that needed to do roughlything different. They needed to stand out againThe Dell Business idealThe Dell business modeling is a simple one. Eliminate the middle man. Dell sold its computers directly to customers with no retailers in the middle. Customers are capable-bodied to order a customized computer that fits their needs. Customers bid universities, large corporations, and government agencies all bring forth different needs when it make senses to computers. Dell also kept this schema with its small customers. People can order a computer based on onslaught life, s oftware applications, size, gaming, business orientated, and many separate customizations. A considerable advantage with this business model is that Dell can arrest a low inventory hail which saves the company lots of gold.How it whole kitDell progress tos this business model by having a small track time from when the computer order comes in to when it actually gets to the customer. This is rattling of import to Dells success because the negative to directly selling to the customer is that the customer cannot precisely walk into a Dell store or retailer and just buy the computer. Dell has a general occur time of 3-5 days. This is the time is takes to build the computer and ship it. This doesnt include the couple of days for the shipping. The lead time can vary depending on the type of customization. Sometimes it could be longer or shorter based on inventory and the depth of customization. This is a major advantage for Dell to be able to ship computer inside days. Dell m oldiness plan, build, and quiz vigorously all within the 3-5 days. This also allows Dell to maintain minimal inventory of hand. Unlike other computer companies, Dell does not have to have ready-made computers on hand. If Dell experiences a slow month in sales then it doesnt cost them as much as its competitors because Dell is paying little for inventory overhead. This corking success is a product of the saucy integrated operations that Dell has implemented starting with the product organizeing mathematical operation. some other advantage of Dells business model is the 24-hour customer sign administration that it offers. Dell offers this natural selection so that customers can call at anytime to fix a problem with one of Dells computers. Not only is the feature convenient for the customer, but it is also very in effect(p). In the Harvard case, it states that the customer support team was able to solve problems themselves 91% of the time. That is an amazing statistic that r eflects Dells training program and due industriousness on building and retaining customer relationships.Argument Is Dells business model effective?Yes, Dells business model is a good one and is very effective. This has always been Dells business model and has brought it so much success. Only for a abbreviated period in the 90s did Dell try and tweak the business model by getting into retail. This only proved to Dell that its original business plan was the best because Dell suffered some losses and sales change magnitude during this time. Also Gateway, a competitor, had adopted Dells direct sales outline which gave them great success. Dells original business plan is the best plan for many reasons. The direct sales approach lets them build and retain customer relationships because there is no middle man in between Dell and the customer. The 24-hour customer support program lets customers pull direct feedback to Dell and threads the customer feel appreciated when Dell is helping t hem, not an IT representative from a retailer. Another rivalrous advantage this business plan gives Dell is the inventory control. Dell is cognise for turning over inventory better than any other computer manufacturer in the industry. This plan allows Dell to achieve such great inventory control. When Dell went into the retail side it could not keep up with turning over inventory as fast as it utilize to when it was selling directly to customers. In conclusion, Dells original business plan is very good and extremely effective. It is turn out in the Harvard case when Dell moved off from its plan.Industry Technological DevelopmentsIn the computer industry there were some key technological evolutions that led to a great competition between the industrys firms. During the 1970s the industry saw some great technological advancements. These findings were crucial to the computer firms today because they made it easier for the companies to make, sell, and meet the needs of its customer s. The major growths were improved micro demonstrateors, standard operating systems, increased availability of software, and cheaper memory. These developments made the computer industry an attractive market for many. Another development that came later was the assault and onslaught technology. Batteries for laptop computers advanced which led to even more than competition. Since the competition is so great, companies need to find other ways to compete other than resources. For the close to part the computer firms used the alike(p) technology so one of the ways the firms could get a militant edge is through its product development handle.Dell was a firm that realized the highly competitive nature of the computer industry during the 1990s. In 1993 Dell found itself- splendor losing money and in the shakeout period of the computer industry. This is the period of time when competition is at its highest and only the strong firms survive. The weaker firms bequeath be shaken out of the market and will dissolve. Dell was one of the few firms that realized that it needed to do something different to compete and survive. Dell decided that it needed to look at its product development process.Dell Product Development Process fender Product Development StrategyDells original product development process was very informal. The process was very amateur and lacked organize. First, the process involved self governed teams that had no accountability or vigilance. The teams were made up of engineers and developers that had all the same ideas or similar strategies. Second, risks were not being assessed properly in these teams. Since the teams all had similar viewpoints the members were collectively overlooking risks. The biggest problem with this process was that declare oneselfs were being passed onto the beside stage of development when it should not have been. This leads to fail attends which in getting even cost Dell lots of money and time which could mean the disparity in such a competitive market. The margin of error for Dell was slim to none during this time. When Dell had a major ramble fail which cost it several millions of dollars, it went to management, engineers, and developers to see what their opinion was on trying a new process. The management wanted a new process that had more structure. The engineers and developers wanted to keep the old process mainly because they thought that structure would stifle their creativity. After a long debate Dell decided to change its product development process. Dell decided that its old process was similar to a start-up companys process and not an experienced company, like itself. late Product Development StrategyThe new product development strategy was much more formal. The teams now were called core teams which were made up of a mix of engineers and animal trainers who had different views and techniques. Dell wanted diversity in its groups to hike conversation and debate. Each group was also held responsible for a project from start to finish and the team was governed by an outside manager. This made the teams responsible for all their decisions and moves. The new process had six physical bodys in which each phase would last around 3 months. The total time for a project was approximately 18 months.Profile physical body- Teams would write a guide on the new product and its market that it would be sold in prep Phase- Teams create a detailed business case for the product which moldiness be viewed by a aged manager before it is passed onto the undermentioned phaseImplementation Phase- Teams must design and testing prototypes of the product and orders must be made to the suppliersQualification Phase- Teams build production prototypes and key customers give feedbackLaunch Phase- The customer experience is tested, from opening the product to noteting up and using the product. Early adopters have their orders filledAcceptance Phase- Teams collect feedback and report s are compared to actual progenys.Argument Which process is better?The new product development process is much better than the old process. This is easy to see because of the results. Dell has survived the shakeout period and has become one of the industry leaders. The new product development process allowed Dell to create better products because of the versatility of the core teams and also push aside down on failures because of the structure of the new process. Fewer errors were a result of each team being held accountable for errors and have a senior manager evaluate the product before advancing to the next stage.Which barrage?In 1991, Dell came out with its first line of the take-away computer. And in 1992 Dells portable computers accounted for 17% of sales. However, with the backlash of rumors about unreliable screens, frequent federal agency failures, being slower than most other portable computers and broken hinges Dell could not compete even with their low prices.Early 1993 brought about the cancelling of Dells new line of laptops. Under the guise that they were too slow and not ready for sales. After recalling 17,000 notebooks, Mark Holliday, the portable division head of Dell, calls a run across with all of the company officers and forces a decision for a outpouring to be made. During this meeting it is decided that there are three different electric outpouring decisions that Dell can go with. At the meeting it was decided that the stamp battery decision must be made at the end of Phase 1 (the profile phase) of development and the three different prime(a)s are NiHi plate metal Hydride, social lion Lithium Ion, and the last choice was to not make a choice really, it was to defer a choice.The first choice for batteries was the NiHi otherwise known as the Nickel Metal Hydride. The chart below shows what some of the disadvantages and advantages to the NiHi battery. Overall this battery would not have been a great choice for Dell, because it did not solve the problem of lasting more than 3 hours like the consumers wanted and it could not reload to its full potential. The second choice was the lion also known as the Lithium Ion Battery this is was the battery that Dell ended up choosing and still uses today. The third and final choice that dell had was to defer the choice of batteries, this would give Sony time to develop the battery and get a good production line going. This would also allow for Dell to be prepared for either battery design. eccentric persons of BatteryAdvantagesDisadvantagesNiHiNickel Metal HydrideTakes up less space thenthe LiOnProvide special(a) product differentiation in an increasingly competitive marketAllows for more accessoriesSuch as communication control and memory management of a sudden battery life, normally less than 3 hours.Would involve no delays inProduction demandCan only recharge a divide of full capacityA less risky choiceIf not disposed of properly they could release heavy metal t oxins in to the environment.Type of BatteryAdvantagesDisadvantagesLiOn Lithium IonLonger rechargeable livesUnproven and more expensive technologyMORE RISKY CHOICECan recharge to full potentialTakes up more space than conventional batterieslaptop customers insisted on longer battery livesNo production demand studies entireCold possibly kick upstairs salesProduction committed to Sony for at least a yearType of Battery take resourceAdvantagesDisadvantagesDell could have 2 options for battery spaceHaving the bigger battery (LiOn) would be less attractive to the customerGive Sony the time to test the LiOn batteryVariable costs in both battery designs would be too highDell could continue with product development of the laptop in generalCold possibly over design the battery spaceCould give highest return, if LiOn was chosen and fails there is the NiHi to useBattery charging circuitry would have to be designed for both batteries.Strategy and pecuniary resourceOne of the major decisions for Dell was to choose the serious battery index for its new Laptop which was targeting the laptop market. A strategy is a set of actions that coordinate the resources and allegiances of a business to boost its performance. Strategy selections should be manoeuver by the firms situation rather than by historical choices. Choosing a strategy that makes sense for a particular business is a decision which whitethorn lead to superior performance. at that place are a few choices that summit corporate strategies. Cost- Based Strategy requires a firm to be the low cost producer in the market. This can be lowest cost labor to efficiency in operations. Spirit airline is an example of this strategy. They are billed as the ultra-low-cost carrier. Spirit operates 28 Airbus planes and serves Eastern and Midwestern cities in the Unites states. (Longenecker, et al. 2009)The second type of business strategy is Differentiation-Based. This model emphasizes the singularity of a firms product or service. This model places emphasis for the consumer to be convinced of the uniqueness and value of the product or service, whether real or perceived. (Schermerhorn, 2010). Dell looked to achieve this type of strategy.Dell focused on the need to connect with their customer, wrap up the middleman and speak directly to their customers. Dell start their innovation process with asking their customers, What would you really want this thing to do? Is there a different way to accomplish that? Then they meet with their suppliers and ask, Can we do this in a different way? Then they try to come up with a totally different approach that exceeds the original objectives.http//www.forbes.com/2009/09/02/dell-amex-marriot-cmo-network-adtrend.htmlThe focus strategy selection of the battery power would impact the company in hopes of gaining market function through satisfied customers. Michael Dell and his team needed to relate to their environment, particularly to the customers and competitors. C hoice of battery technology was of vital importance to Dell. Many factors were evaluated1. Competition abounded due to imitation of Dells direct model2. Dell felt a cash crunch due to their rapid expanding upon3. lack of senior management capable of manoeuver the firm4. Lack of structure in Dells product development process, growing importance of the portable computer market5. Lack of senior management capable of guiding the firm toward maturity6. Lack of structure in Dells product development process Growing importance of portable computer industry7. utmost rate of battery life in minds of consumers8. Limited life of the NiHi battery9. Uncertainty of the emerging LiOn battery technologyDell was hooklike upon the future success of the new Laptitude laptop product to revive its helping in the portable computer market. Dell was hoping to distinguish itself with the introduction of the fresh LiOn battery technology. Unfortunately, the LiOn technology was immature and risky but, D ell needed to make a decision of whether to adopt this technology in the new product line or remain with current technology. Ultimately, Dell needed a winner and needed to make the diminutive and right decision to ensure an emergence back into the already competitive market along with a need for a significant financial infusion. long is a good word to describe Michael Dell and the company he created. And tenacity and efficiency will be enough to keep Dell in the game. But to rise to the next level and really boost its growth, it may have to find a little more heart. http//money.cnn.com/magazines/ dower/fortune_archive/2006/09/18/8386121/index.htmDells new product development process was put to the test immediately as the decision was being made on how to develop a new laptop PC. Market research identified battery life as the third most important feature to customers when get a laptop. One way the company distinguishes itself from other suppliers of perform-alike PCs is by performi ng quickly on the masses of data it gathers from customers. Information is a of import competitive weapon, says Tom Thomas, chief information systems officer. Our whole business system is geared to collect it. (http//money.cnn.com/magazines/fortune/fortune_archive/1993/09/27/78384/index.htm). overdue to a ascertain meeting between Michael Dell and Sony executives, Dell had the opportunity to have pocket access to the new Lithium Ion (LiOn) battery technology which greatly protracted battery life, and offered superior overall performance to the standard Nickel Hydride (NiHi) technology. The new technology would add value to Dell laptops as they sought to recapture market share. The technology was not fully developed however, and there was a risk that it would not work. Dell thus faced a critical decision about how to allocate resources for the development of the laptop. Four options were identified by the product development team cream 1- commit to the old technology (NiHi)Opti on 2 commit to the new technology (LiOn)Option 3a over-design the computer so that it could accommodate either type of battery, thus deferring the battery commitment until laterOption 3b dual design (in parallel) of laptops that would use either NiHi or LiOn technologyOption 1 Continue with a proven battery technology (NiHi)According to estimates made by project manager and product marketer, Henry McCarty, Dells market share will be 2.5% if Dell stays with the status quo battery configuration of NiHi. This equates to 825,000 units sold over the estimated 3 year product life. Given an average gross margin per unit over life of product of $600 and judge $10 million expected cost of development effort, the expected advantage margin is $485 million. There is one C% confidence that the NiHi battery product will work.Option 2 Go with the new battery technology (LiOn)The new Development Team, McCarty predicts Dells market share to jump to 3.0% or 990,000 units over 3 years, if LiOn t echnology works. If the LiOn technology fails, Dells market share will fall to about 1.25% or 413,000 units over 3 years. This drop in market share would be attributed to competitors already having an established product on the market, while Dell undergoes genuine rework, 70% of original schedule, and 30% of cost to switch back to NiHi. There is only a 60% confidence that the LiOn battery product wont fail. Given an average gross margin per unit over life of product of $600 and expected $10 million expected cost of development, the expected profit margin is $444 million under option 2.Option 3a Dual Development Defer commitment until qualification phase refreshenDual Development option has an estimated $10 million expected cost of development and an additional fixed cost of $2.5 million because Dell would have to develop two technologies at the same time. These are the actual project costs incurred which incorporates the additional designers and engineers, material and tooling co sts, etc. These costs do not include the product opportunities Dell would forego if they had to pull people away from other projects. Given the new fixed costs and calculating a weighted average of expected profit margins based on the success rate of the technology, option 3a has an estimated profit margin of $542 million, the highest of the three options.Option 3b Over-design Defer commitment until qualification phase reviewSimilarly with the dual development we need to calculate the cost of the over-design strategy. The expected cost will be $10 million for development and additional variable star cost of 0.5% of revenue (2.0% of margin) since Dell would have to develop two technologies in the same time. Due to the LiOn batterys different dimensions and properties, Dell would have to over-design the computer case, charging circuitry, and battery management software to accommodate either battery technology. Given the new variable costs and calculating a weighted average of expecte d profit margins based on the success rate of the technology, option 3b has an estimated profit margin of $533 million. This is the second highest of all options.One study of Dell looked at the sensibility Analysis of estimated profit margin if the confidence probability of LiOn technology changes. Based on the assumption McCarty provided, it shows clearly that Option 3a is the best option as long the Confidence of LiOn Technology is between 10%90%. It is also obvious that if Dell knows 100% that LiOn will be successful Dell should choose Option 2. If the chance of success will be 0%, Dell should choose Option 1. http//www.mbanerds.com/index.php? act=Product_Development_at_Dell_Computer_Corp.