Ever heard the story about the guy who decides to look for his lost car keys where the lighting's better, rather than where he lost them? It looks to me as if Michael Dell is taking a page out of that guy's playbook.
With another uninspiring earnings report under its belt and its PC market share continuing its gradual decline, Dell (Nasdaq: DELL ) recently decided to invigorate its notebook lineup by announcing the Inspiron 17 Touch, which (as you might've guessed) features a 17-inch touchscreen display. With archrival Hewlett-Packard (NYSE: HPQ ) having seen some success with its TouchSmart line of all-in-one desktops, and Microsoft (Nasdaq: MSFT ) having made improved touchscreen capabilities one of the key selling points to Windows 7, I guess Dell figured it was time to jump on the bandwagon.
Unfortunately for Dell, it looks like the 17 Touch will end up being yet another niche product that won't do much to change its PC division's sagging fortunes. For non-tablet applications, touchscreen displays work best on PCs when they're at eye level with a user, and close to his hands. If a user has to look down and move his hands past a row of keys and a touchpad, as would be the case in a conventional laptop setting, then using a touchscreen just feels awkward and unintuitive for most tasks, as I can say from personal experience.
HP, which has shown a much better knack than Dell in recent years for understanding consumer preferences, seems to understand this. That's why they've limited their use of touchscreens in their notebook lineup to systems with 12.1-inch displays, built with tablet use in mind. And Apple (Nasdaq: AAPL ) , of course, has its eyes set on developing an ultra-portable tablet, but for now at least, doesn't seem to have much interest in adding touchscreens to its conventional MacBooks.
Good luck trying to use Dell's 17-inch behemoth as a tablet -- unless you've got bionic arms, it won't be long before a system that big starts feeling pretty uncomfortable in your hands. Meanwhile, if you only have a little interest in the system's touchscreen, the 17 Touch's $899 price tag will look a little steep, considering the underwhelming Intel (Nasdaq: INTC ) processor and graphics chipset under the hood.
Combine the 17 Touch with Dell's release of its stylish-but-overpriced Adamo XPS and Latitude Z notebooks, and you see a clear trend of the company trying to "innovate" its way out of a steady market share decline by developing products that are likely to turn heads and create buzz ... but in the end, will produce only limited sales volumes. And all the while, Dell seems incapable of restoring its historical, bread-and-butter competitive advantages in manufacturing efficiency, reliability, and customer satisfaction.
In fact, with Dell's recent decision to sell and outsource a major Polish manufacturing plant to contract manufacturer Foxconn, and its previous plant closures in Ireland and North Carolina, I get the impression that the company is throwing in the towel on its attempts to restore its once-unchallenged manufacturing prowess. The fact that the plant sales are part of an ongoing program to slash operating costs illustrates what Dell has little faith in its ability to gain a competitive advantage from its manufacturing prowess anymore.
Sorry, Dell, but you're no Apple. Your product line isn't differentiated enough to save your lunch in the absence of a manufacturing edge or a "gold standard" reputation for product reliability. If your PC division is pinning its hopes on 17-inch touchscreen notebooks and custom colors, then its market share losses are far from over.
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