Why Dell, Intel, and Microsoft lose ground and speed?

There’s an interesting article at the yesterday’s Financial Times.

The headline is Computer pack top dogs lose their bite, and the major paragraph is this one:

“The reality is more subtle. The PC is far from dead – annual sales have jumped from under 50m to more than 200m a year in the past decade and are still rising steadily. The PC ecosystem, however, is starting to shift and in ways that Microsoft, Intel and Dell itself can no longer control.”

That brings me to the thought why big companies change slowly, or sometimes never change, until it’s too late?

It’s really a pity to see big companies stuck into old models, which used to be good some time ago – 10, 20, 100 years ago. Companies that struggle with the new century, the new generation, and the new realities.

Several examplse, my favourite is the RIAA and the MPAA. They want to stop “ilegal” distribution of music and movies on the Internet. Instead of thinking how to provide content to the millions of users, they think how to prevent this content from reaching their potential customers.

Recently there are a number of articles about new solutions, provided by US-companies. They offer download of video, even the option of burning it on a DVD.

The big companies should create as soon as possible a working business model (and yes, I do have one, but I will not publish it for free here – if they want to make it happen, they should hire me:-) , or else in a few years both the RIAA and the MPAA will be shut down – the same way they try to shut down web sites.

What about the big software/hardware companies and their natural rivals like Google? Same thing.

Read FT, “Consider what has been going wrong with the old system. To establish their dominance of the PC world, the Big Three relied on mutually supportive business models. Microsoft added more and more features to its software to encourage users to keep upgrading to new versions of Windows and Office, Intel made faster and faster chips to handle the new software, and Dell used its direct sales approach to sell cheaper and cheaper boxes. More, Faster, Cheaper became the mantra behind successive waves of new PCs. ”
and
“Just look at the troubles the Big Three have run into. Microsoft is years behind schedule with its next version of Windows: the program got too big to be managed. By delivering its software as a service over the internet, Google has been able to release new products more quickly.
Intel has reached the physical limits of speed: smaller, faster chips leak too much power. AMD, by putting a number of slower processing “cores” on a single chip, has come up with a better design, forcing Intel to change course.
Dell’s approach to low-cost production still works fine. The trouble is, other companies such as Hewlett-Packard and Lenovo have learnt how to copy the advantages of its methods, while the disadvantages – a lack of sales and service support – have become more apparent.

So, what can they do?

My first advise is, change their business model! Try to keep the status quo, and soon there will be no one to use your products.

My second adivse: look for new areas, for example services, but also for new customers. Invest in education. More smart and educated people means more customers in just a few years.

For Dell and Microsoft, it’s easier to find a solution to the problem, described at the Financial Times. For Intel, it may be more difficult, but not impossible.

I think I already have a solution for the first two big companies. Quite a successful one, if implemented properly. Will have to blog about it some day, too.