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What's Gone Wrong at Dell?
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Dell, a major world computer company, has been exposed to a number of significant setbacks across the world recently. Immediately before publishing its report on the second quarter of the 2007 fiscal year, Dell changed its tough stance on negative events and has taken the positive, proactive measure of recalling all notebook batteries that could pose a danger to customers, and they're fully refunding all Chinese customers affected by processor mislabeling.

However, even before these recent dramas surfaced Dell was experiencing problems. Due to a quotation system error their 8,999 yuan (US$1,128) computer was mistakenly advertised at 975.78 yuan (US$122), resulting in a frenzy of online orders.

When the problem was discovered Dell refused to sell the computers at the advertised price, which caused a credibility crisis. Consumer confidence has fallen even further as securities analysts and investors remain pessimistic about Dell's future on the market. Rumor has it that Dell's President and CEO Kevin B. Rollins will soon leave his post.

So what's wrong with Dell? In the Chinese market should Dell pay more attention to their ordinary customers or remain focused on their relationship with the government and its corporate clients?

In the past few months a number of fire incidents have been reported to Dell -- none have been reported in China -- in relation to their notebooks. Dell says the cause of the fires was the lithium batteries that power the notebooks. However, this hasn't been proved conclusively. 

It seems Dell failed to take measures to prevent further problems following the initial fire reports. In August they recalled approximately 4.1 million lithium batteries from all over the world, which had been manufactured by Sony Corporation. They've explained that the batteries could overheat resulting in a potential fire hazard.

Nevertheless, Dell was slow to respond. According to reports from foreign media they recalled some 22,000 notebook batteries in October 2005. The company has had some experience in dealing with problems with notebook batteries but in the future they'll need to be better equipped to handle problems in a more prompt fashion if they wish to hold onto their already tarnished image.  

So far there is nothing to suggest the Dell laptops in China are affected by this latest problem. However, in an era of global information technology negative incidents of this kind have the potential to cause something of a chain reaction. 

The processor mislabeling incident woke Chinese consumers up to Dell's offhand attitude to service. It even ignited an ethnic complex in Chinese consumers who felt that Dell showed particular disdain to their rights as consumers.

If Dell had offered to fully reimburse customers as soon as the problem emerged it would not be facing potential lawsuits. Some customers have hired lawyers to sue Dell for commercial fraud and are demanding they be refunded and compensated for their trouble. It's too late now for Dell to offer full reimbursement to these customers.

They also face the problem of the quotation system error in China. However, they maintain the stance they took at the time. Even if the customers had deliberately created a shopping frenzy, a case like this would be a test of the company's credibility. Currently Dell is still unwilling to fulfill its commitment to its online quotation.

It did, however, give customers who had submitted an order a discount of 25 percent although it limited the number of machines available. However, customers involved in the incident are still insisting they receive the goods at the original purchasing price. Lawyers for the customers argue that if they made the online payment and received a confirmation e-mail from Dell, a sale contract exists between the two parties. If either party changes their mind the contract is broken. Will the customers involved in this incident sue Dell? No matter how things develop Dell has found itself mired in a real crisis.

One of Dell's biggest problems is that all these incidents occurred within a very short space of time. Due to its marketing system Dell has focused on large clients in China such as the government and businesses rather than individual consumers, which could very well endanger its viability in the country.

(People's Daily Online August 18, 2006)

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