Dell hopes customer service can boost flagging sales

Dell hopes customer service can boost flagging sales

Dell announced Friday that its customer service agents would offer Web-based tech support, in an effort to gain market share from Hewlett-Packard.

As its commanding lead over Hewlett-Packard (HP) dissolves, Dell has turned to customer service to rescue its flagging PC sales.

Dell service agents can now troubleshoot customers' PCs and solve common problems using a broadband Internet link instead of a personal visit, company leaders announced Friday.

This "DellConnect" service could save the company time and money, compared to the cost of dispatching technicians in vans to solve customer complaints. Dell is also spending US$100 million to hire more workers in its sales and call-center facilities.

The moves mark a new way for Dell to distinguish itself in the market, since it can no longer point to a distinct price advantage over its rivals.

Dell accounts for 18.1 percent of worldwide PC shipments, compared to 16.4 percent for HP and 6.4 percent for Lenovo, according to a first quarter analysis by IDC.

That balance could soon begin to shift. Lenovo announced Wednesday that it planned to cut retail prices in order to gain market share. And HP reported May 16 that it had a successful first quarter, posting net income of US$1.5 billion compared to US$1 billion in the same period last year.

Two days later, Dell leaders admitted they had been slashing their own prices in an effort to stay ahead of HP. That led to weak earnings, as Dell reported first-quarter profit of US$762 million, far short of the US$934 million it had earned in the same period last year.

In response, Dell Chief Executive Officer Kevin Rollins made two big changes. He announced that Dell would start selling servers with chips from Advanced Micro Devices, breaking its long-time devotion to Intel.

Rollins also promised investors he would spend US$100 million on customer service. The announcement of this Web-based tech support is part of that effort. The service is not completely new; Dell will expand its existing "TechConnect" service from covering only U.S. consumers to including consumers and small-businesses worldwide.

In other spending, Dell has increased employment from 1,000 to 4,500 at its Nashville, Tennessee, production, sales and call-center facilities. The company has also invested in 10 new or expanded global call centers, located in Oklahoma City; Edmonton, Alberta; Manila; and Halle, Germany.

Together, those efforts have already reduced customer hold times by 50 percent, Dell claims.

These efforts may not be enough, analysts say.

"Dell is almost operating in a commodity environment; I don't see how they differentiate their product from anyone else's. And I'm not sure that improving their service offering is going to help, because it's something that customers already expect," said Michael Church, a portfolio manager with Church Capital Management in Yardley, Pennsylvania.

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