The beauty of disruption.. Dell keeps rolling
Back in 2002, Dell stated that they wanted to reach $60 Billion in sales within a few years... given the down economy and their revenue of $30B at the time, this was a bold statement and goal. Well, now Dell has $60 billion in it's sight.

As everyone who reads this blog knows, Dell doesn't really innovate at the product level, they innovate in distribution. As technology products commoditize, Dell enters the market and is able to cut costs through their distribution system and gain market share by selling at a lower price point. Generally speaking, this model hasn't shown any signs of being challenged. So other than stealing market share in their current product segments, where can Dell expect growth?... Consumer Electronics!

As HDTV starts to penetrate the home, the entire home electronics "stack" is going to be replaced. When you get your new HDTV, consumers will get a new DVD player, new DVR, new home theater system, etc. The question for Dell is how long should they wait (read: how commoditized do the products need to be) before really pushing into this market? The success of Gateway's 42" plasma TV has shown the willingness of consumers to buy CE products through the web. I think Dell is being far too conservative in its consumer approach, and they need to take advantage of this HDTV stack replacement, and build a better consumer brand.

So why should Dell risk entering this market more aggressively? First, the margins on CE products are much higher than the margins that Dell gets on PCs and servers today. Second, I think another big opportunity in this space is SERVICES... yes, I am telling Dell to get into the consumer services business... and here is why. I am a huge believer in the idea of the "Digital Home"... and having spent some time this summer looking working for Samsung and looking at this market there will clearly be a market opportunity for a firm to provide "digital home support."

Imagine the following scenario: I own a Sony HDTV and have it hooked up to my High Definition TiVo. I also own a few laptops, and a central PC where I store all my home videos and MP3s. I have a few extra bucks and I have subscribed to MSN's MLB package so I can watch my beloved Cubs while living in Boston. For some reason, I can't get my Cub's games to show up on my TV where I want to watch the game. I call up MSN and they say "It works on your PC and that is all you can expect". I call up TiVo since I have the Media Option package and they tell me that it is a probelm with the TV, not their product. I call up Sony, and after running through a bunch of steps they determine that the TV is fine and it is something else. I call my cable company, and they tell me to get lost. What is the average consumer supposed to do? Would the average consumer pay $9.95 a month for a service that will provide onsite help for these types of problems... I think the answer is yes! And if you look at recent commericals from CompUSA and other retailers, they see this opportunity as well.