Dell's Pain Is Often System Builders' Gain

Dell's services shortcomings

Norman Flamm, the owner of Micro Air Computers, a Reading, Pa., system builder, said a lot of customers fed up with the computer giant's services have come knocking on his door.

"From a year ago to now just based on Dell's reputation, it's easier to sell against them," said Flamm. "There are just many more people that have had Dell systems and had problems. A lot of customers are saying they'll never buy another Dell again, and I'm sure they are telling their neighbors. That definitely has got to be killing Dell sales. There are many customers that have jumped ship and we are capturing them."

Dell CEO Kevin Rollins has acknowledged the customer service issues and pledged more than $100 million to beef up customer service and support capabilities as well as develop new products.

"We expect to deliver a greatly expanded product line in the second half of the year," Rollins told shareholders at the company's annual meeting last month.

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Flamm and others said even customers that have bought Dells are turning to them for service because they don't like Dell's outsourcing of support.

"Technical support is key," Flamm said. "The hand-holding we give is critical. We ask customers what would they rather do—bring the computer to us or call Bombay? The service and warranty we give is definitely superior than what Dell has."

Tom Derosier, co-owner of CPU Guys, a Hanson, Mass., system builder, said he is fixing 150 to 200 Dell systems a month vs. 75 systems a month a year ago. "Customers don't want to wait on the phone for Dell service," he said. "They want to get it fixed right away. People complaining about Dell service is a given these days."

Home theater specialists are also preying on Dell's outsourcing of customer service. Lee Rambler, director of custom home for WeeBee Audio Video, Lancaster, Pa., said he warns customers that are considering buying a Dell flat LCD display or TV that they will be forced to deal with technical support from overseas.

"I tell customers not only are they buying an inferior product, but they will be dealing with Bangalore for technical support," he said, noting he refuses to install Dell products.

Solution providers are also benefitting from the backlash. Jay Tipton, vice president of Technology Specialists, a Fort Wayne, Ind., solution provider, said he won a deal two months ago to supply a client with two IBM servers and Wyse thin clients after the company's CEO waited 72 hours to get a motherboard replaced for a system that was on a 24-hour repair warranty.

"Three or four years ago, Dell was beating us 65 percent of the time," said Tipton. "That was before they had the bad service rep and a bigger pricing advantage. I haven't lost a deal to Dell for over a year. All I have to do is bring up their service."

Glen Coffield, president of Cheap Guys Computers, an Orlando, Fla., system builder with retail stores, said Dell needs to stop worrying about selling $399 and $299 notebooks and focus on building quality products with good service.

"They used to make a good-quality product," he said, adding that Dell Chairman Michael Dell "is a victim of his own ego."