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Dell To Sell Its Computer Factories

Soulskill posted more than 5 years ago | from the dude-you're-getting-a-new-business-model dept.

Businesses 249

Anti-Globalism sends us to a Wall Street Journal for a report that Dell plans to sell its factories in an effort to revamp its production model. Quoting: "Dell's plants are still regarded as efficient at churning out desktop PCs. But within the industry, company-owned factories aren't considered the least expensive way to produce laptops, which have been the main driver of growth lately and are complex and labor-intensive to assemble. Rivals such as Hewlett-Packard Co. years ago shifted to contract manufacturers -- companies that provide production services to others -- to build their portable computers. H-P builds "less than half" of its PCs in facilities it owns, wrote Tony Prophet, H-P's senior vice president for PC supply chain, in an e-mail. Contract manufacturers can generally produce computers more cheaply because their entire operations are narrowly focused on finding efficiencies in manufacturing, as opposed to large firms like Dell, which must also balance marketing and other considerations."

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Made in China (5, Insightful)

edfardos (863920) | more than 5 years ago | (#24900861)

...as opposed to large firms like Dell, which must also balance marketing and other considerations [like environmental health, worker safety, taxes, social security, living wages]. Just send it to China! --edfardos

Re:Made in China (5, Insightful)

Anonymous Coward | more than 5 years ago | (#24900999)

What happens when the exploding cost of oil makes it too expensive to ship computers back and fourth from china? Could we see a grand resurgence of electronic manufacturing jobs in North America? Perhaps Mexico will become the manufacturing powerhouse for us that china is now.

Re:Made in China (3, Insightful)

Chaos Incarnate (772793) | more than 5 years ago | (#24901035)

THe problem with that is the infrastructure. Building an assembly plant, or even a plant for some of the mechanical parts like the cases, wouldn't be too hard. But creating the infrastructure here to build all the electronic parts can't happen overnight.

Re:Made in China (0)

Anonymous Coward | more than 5 years ago | (#24901049)

Can you say NAFTA? Good. Now can you say "Security and Prosperity Partnership of North America"?

Re:Made in China (-1, Flamebait)

Anonymous Coward | more than 5 years ago | (#24901137)

Just read the news. The barrel of crude is now at $105, down $40 from its peak price months ago. This oil crisis is ending. They project the barrel will be around $80 by December, very close to the $55 we had before the Iraq war.
Communists and their alternative fuels just lost again...

Re:Made in China (1, Informative)

Anonymous Coward | more than 5 years ago | (#24901223)

What happens when the exploding cost of oil makes it too expensive to ship computers back and fourth from china? Could we see a grand resurgence of electronic manufacturing jobs in North America? Perhaps Mexico will become the manufacturing powerhouse for us that china is now.

China is also undergoing some good inflation numbers. It can only remain competitive for a short future. A lot of manufacturing companies are already moving to some other, cheaper, locations.

Re:Made in China (5, Informative)

maxume (22995) | more than 5 years ago | (#24901383)

It takes more fuel to truck something from LA to Chicago than it does to ship it from China to LA. No doubt trains improve on trucks quite a bit, but fuel costs aren't particularly onerous for objects that regularly retail for $100/pound (maybe worry about it when you see bananas go for $5 a pound instead of $0.70).

Re:Made in China (3, Informative)

Kjella (173770) | more than 5 years ago | (#24901477)

What happens when the exploding cost of oil makes it too expensive to ship computers back and fourth from china? Could we see a grand resurgence of electronic manufacturing jobs in North America? Perhaps Mexico will become the manufacturing powerhouse for us that china is now.

Well, except most of the components already come from Asia somewhere, and most computers aren't put in 10lbs steel cases anymore. The future is likely to be laptops (already past 50% I think?), netbooks (Atom has been selling wildly past expectations) and nettops which are "fast enough" desktops for most people. All of these are compact and light, if we couldn't afford to ship those you wouldn't be able to ship most household gadgets. And even if all of that wasn't true you're looking at cheap cases and assembly building, not high-tech industry. And even if that wasn't true, I think the increased wages means you'd see more standardization and robot assembly, so job for some automation engineers but not many jobs. The days when you had half a dozen expansion cards to get RAID/sound/network/USB/firewire/SATA/eSATA are long over. The new Atom boards even have the processor soldered on. Most parts of the computer are so cheap, you just want it assembled with a minimum of overhead - a higher tier standard computer will often give you the upgrade you wanted *and* overall be a better computer for the same price as making a custom build.

Re:Made in China (3, Insightful)

u38cg (607297) | more than 5 years ago | (#24901515)

Actually, it's already happening to a certain extent. Industries with spare capacity in America have suddenly found that China's shipping costs have dulled her competitive edge somewhat.

Re:Made in China (1)

morcego (260031) | more than 5 years ago | (#24901643)

HP seems to agree with you.

I live in Brazil, and the last HP notebook I've bought was built here in Brazil by Foxconn (if I recall, I don't have it here with me).

Making stuff in China is much cheaper than here in Brazil, but with you factor in transportation, import taxes etc, sometimes it is cheaper to build it somewhere else, even if you are still using contractors.

Re:Made in China (4, Informative)

Anonymous Coward | more than 5 years ago | (#24901697)

container ships run on "bunker" fuel which is basically the nastiest cheapest stuff that will burn. They're dirty cheap to operate and they're typically subsidized by host country to boot. So the Chinese government, Korean government, etc make it cheaper in the interest of trade.

Frankly, I'm surprised Dell has been assembling computers in the US for this long. Don't tell me they "build" them here that's a load of nonsense. The parts have been made in China and Taiwan for ages it's just the final assembly that was happening in the US. In fact, the shipping cost difference is likely ZERO because all the parts were coming from Asia anyway.

Anyway, Dell has been doing a lot of cost cutting recently. They've outsourced their IT to India and now they're moving all of their assembly to China.

The worst part is that Dell doesn't even offer good prices anymore. I'm seeing better prices from small US companies with more flexibility then anything out of dell.

So to hell with them. They'll ride on their names for a few years and then they'll be another dried out company like the rest of them.

Re:Made in China (1, Insightful)

Anonymous Coward | more than 5 years ago | (#24901719)

Nuclear powered merchant ships.

One existed in the 1970s. [wikipedia.org]

Re:Made in China (0)

Anonymous Coward | more than 5 years ago | (#24901533)

Just send it to China!

Let the race to the bottom begin!

Managers... like lemmings. (0)

Anonymous Coward | more than 5 years ago | (#24900863)

All managers move into the same direction, it's like some psychic force.

On behalf of the People's Republic of China... (-1, Troll)

Anonymous Coward | more than 5 years ago | (#24900873)

...we appreciate the business! Now we can buy more tanks!

Re:On behalf of the People's Republic of China... (4, Insightful)

Anonymous Coward | more than 5 years ago | (#24900957)

No, they can buy more U.S. debt. Our fearless leaders will make sure that there are plenty of opportunities for foreigners to continue buying our asses into financial servitude. How the hell else do you expect to get socialized medicine, tax cuts for 95% of U.S. citizens, socialized pre-kindergarten, a G.I. bill for "community organizers," heavily subsidized alternative energy programs, continued funding for the Ponzi scheme that is Social Security, etc.? Most of us seem to have forgotten the lesson that our parents taught us: money doesn't grow on trees. If you put a dollar in one pocket, it first has to come out of another pocket. It's all just one big shell game, folks.

Money does grow on trees (1)

stabiesoft (733417) | more than 5 years ago | (#24901503)

In a way, now in america it does grow on trees. We chop down trees, make pulp, and print it. (oh, does that mean it devalues the dollar. Hmm, don't tell the fed!)

Re:On behalf of the People's Republic of China... (0)

Original Replica (908688) | more than 5 years ago | (#24901641)

they can buy more U.S. debt. Our fearless leaders will make sure that there are plenty of opportunities for foreigners to continue buying our asses into financial servitude.

Except that in the last few years, they have made the buying of our debt unprofitable. The Euro is the new international currency and the US is waivering as a powerhouse. That's why Russia is getting suddenly imperialistic again, because we aren't a strong enough to be a global deterrent anymore. So militarily and economically we no longer have dominance which means that buying US debt is now a losing investment. I'm kinda looking forward to what happens when our foreign debt holders decide to call in thier markers and the economic size of our government is forced to cut in half. Especially because it's going to hit as the same time as the Social Security shortfalls are really setting in. US manufacturing will return in a major way in the next 20-30 years but we will manufacturing parts and toys for wealthy Europeans and Arabs.

Quality control (4, Interesting)

bhtooefr (649901) | more than 5 years ago | (#24900875)

While it may be cheaper to outsource production of your primary product, quality control might not be as good.

Besides, it seems kinda wrong that a company that manufactures computers is outsourcing manufacturing of computers.

Re:Quality control / Buy now ?? (1)

teaDrunk (849107) | more than 5 years ago | (#24900951)

So, wondering if this would be a good time to buy a Dell, before the quality drops ?
If I were to buy, I would rather get a Dell Lattitude (D series) that most other laptops/brands.

Re:Quality control (3, Informative)

Anonymous Coward | more than 5 years ago | (#24900973)

You make a point, but you've missed the larger picture. I am a Dell employee and I can tell you the future of the company is not manufacturing PCs or notebooks, but rather offering services-after-the sale for the machines built by contract manufacturers.

Re:Quality control (1)

LordNimon (85072) | more than 5 years ago | (#24901081)

In other words, just like every other PC manufacturer.

I used to work for Dell. Frankly, I can't understand why anyone likes it there.

Re:Quality control (0)

Anonymous Coward | more than 5 years ago | (#24901439)

Perhaps they like it better than welfare?
I doubt anyone enjoys scrubbing toilets for a living either.

Dell also outsourced it's support (3, Interesting)

Colin Smith (2679) | more than 5 years ago | (#24901359)

They don't provide the services directly, they don't manufacture the hardware directly. They are now simply a middle man hoping to cream off some cash.

Can't think of a good reason to buy directly from them now.

 

Re:Dell also outsourced it's support (0)

Anonymous Coward | more than 5 years ago | (#24901611)

only on the very narrow consumer level products.

their business support is still US based, their XPS / Alienware support is still US based, And iirc they still make much more money from the business side than they do from the consumer side.

They aren't going anywhere....

Re:Dell also outsourced it's support (0)

Anonymous Coward | more than 5 years ago | (#24901677)

They get good prices from the 3rd party's by buying in bulk. Some times the middle man can save you money.

Re:Quality control (4, Insightful)

falcon5768 (629591) | more than 5 years ago | (#24901123)

Dells quality control was never its strong suit to begin with. I cant even begin to tell you how many computers we got from them with miss-seated boards, loose connections, or faulty drives or boards. Granted they where warrantee repaired, but the only reason we kept buying was both cost (they where the cheapest bid) and because my boss has a blind hated of Apple products and refused to continue on with our contract with Apple when he was hired despite complaints from our staff.

If that was supposed to be GOOD quality control that we experienced... I would hate to see what poor is.

Re:Quality control (1, Offtopic)

Warbothong (905464) | more than 5 years ago | (#24901149)

Sounds like Dell really are embracing Linux. They're moving their manufacturing into a specialised daemon, doing one thing and doing it well.

It was inevitable, since they've been treating their components as files for years (they are kept in a "notebook" afterall) :P

Re:Quality control (1)

UnknowingFool (672806) | more than 5 years ago | (#24901167)

Businessweek had an interesting article about outsourcing that I can't find right now. One of the advantages of outsourcing was the lower cost. However loss of control was one of the disadvantages. This could lead to quality control problems as well as intellectual property problems. When the a company outsources production to another, it can't guarantee that its trade secrets are protected during the contract and especially after the contract ends.

Loss of control (5, Insightful)

swb (14022) | more than 5 years ago | (#24901243)

Doesn't this eventually lead to the contract manufacturer refusing to build Dell's designs [and does Dell even design their own laptops?] because the designs don't fit into the manufacturer's efficiency models?

Somehow this seems like it will eventually turn Dell into a company just reselling whatever laptop designs/models the manufacturer can make the most efficiently.

As for Dell's intellectual property? I'm sure it can be protected by their manufacturer, provided they sign a long-term deal and help the local party boss with whatever his needs are.

Re:Quality control (1)

andy1307 (656570) | more than 5 years ago | (#24901175)

This is inevitable. Americans want juiced up laptops for under 1000$. TANSTAAFL..

Price, the only consideration? (1)

ikejam (821818) | more than 5 years ago | (#24900883)

"Contract manufacturers can generally produce computers more cheaply because their entire operations are narrowly focused on finding efficiencies in manufacturing, as opposed to large firms like Dell, which must also balance marketing and other considerations." - So Are Marketing and Other (Design, Reliability, QC? ) considerations no longer important?

Re:Price, the only consideration? (3, Insightful)

jrumney (197329) | more than 5 years ago | (#24900975)

"Contract manufacturers can generally produce computers more cheaply because their entire operations are narrowly focused on finding efficiencies in manufacturing..."

Efficiencies like employing 12 year olds to work 16 hour days in the factory, and other practices that are difficult for a US brand-name company to get away with without distancing themselves through outsourcing.

Re:Price, the only consideration? (0)

Anonymous Coward | more than 5 years ago | (#24901205)

I'm glad you put that out there. This is a way for Dell to have all their computers built in cheaper markets by a third party, so people can't directly accuse them of sending their manufacturing to a third world country.

Re:Price, the only consideration? (1, Informative)

egommer (303441) | more than 5 years ago | (#24901377)

As opposed to 12-16 old workers being exploited by prostitution rings out or street beggars. I see you managed to slip in your quotes from the Communist Manifesto. Factories and businesses give people a choice at obtaining levels of income that you seem to want to deny them because of your selfish views on some imaginary evil.

Re:Price, the only consideration? (5, Funny)

IgnoramusMaximus (692000) | more than 5 years ago | (#24901495)

As opposed to 12-16 old workers being exploited by prostitution rings out or street beggars.

This of course applies to 3-12 year olds also!

Why, I see you are quoting from the Divine Book of Anarcho-Capitalist Boundless Universe-Devouring Avarice. And it says within: "You shallt not stop until 16 hour work day at a mining facility is granted for every of ye 3 year olds, as is their right, for it is ordained by our Lord Mammon that the only conceivable in a pious land alternative be ... brothels and street panhandling! So sayeth we! Verily!"

Why, if it weren't for the enterprising Priests of Limitless Greed, we would all be ruined by our childhoods of prostitution, having never tasted the glorious privilege of back-destroying labor at a ripe age of 6. What would we ever do without our Magnanimous Capitalist Benefactors of Trickle Down Economy?!

Re:Price, the only consideration? (4, Insightful)

janrinok (846318) | more than 5 years ago | (#24901599)

Not all Asian manufacturers use child labour. They can also make big savings by not having to pay the same wage as would be required in the USA, but an acceptable one for local labour nonetheless. They also can make efficiencies elsewhere, perhaps in fuel costs or in the price of raw materials, or simply by economies of scale. Have you also noticed how many immigrants arrive in western countries almost penniless and yet, within a year or two, are running a thriving business? Yes they work long hours but that is by choice, because they want to benefit from the fruits of their labour. Nobody is forcing them to work longer hours than perhaps you or I might be prepared to do, but that doesn't mean that they are wrong to do so. Yes, western countries will lose jobs but it is not always child labour or sweatshops that are to blame. Sometimes we just want too much money for too little work and, when the market can no longer bear that demand, then the jobs will move somewhere where the workforce is more accommodating.

Re:Price, the only consideration? (1)

ksd1337 (1029386) | more than 5 years ago | (#24901631)

Just goes to show that there is no company that will give up money to protect it's employees or quality of it's products.

Re:Price, the only consideration? (5, Insightful)

Crazy Taco (1083423) | more than 5 years ago | (#24901101)

"Contract manufacturers can generally produce computers more cheaply because their entire operations are narrowly focused on finding efficiencies in manufacturing, as opposed to large firms like Dell, which must also balance marketing and other considerations." - So Are Marketing and Other (Design, Reliability, QC? ) considerations no longer important?

This is simply incompetence, or idiocy, I'm not sure which...

I work for a very large food company that has about 40-50 manufacturing facilities worldwide. These facilities make almost all of our products. We make millions upon millions of items every day... in the facility I work in, we make something like 1.5 million items a day, just by ourselves. In an average grocery store, we manufacture around 500 distinct products, to say nothing of the variety of goods we provide to food service establishments such as hospitals, restaurants, hotels, military bases, etc.

In the current bad economic climate, our stock price is rising rapidly. Why? Analysts attribute it to our ability to find efficiencies in manufacturing and operations. We don't look at finding efficiencies as an impossible burden to be outsourced to others; we instead look at it as an opportunity to increase profits without having to raise costs on consumers (which is especially important in this economic climate). And we've gotten quite good at it over the years, despite the fact that, perhaps even more than Dell, we do spend a lot of time and energy on marketing, sales, finance, coupons, and everything else. I can guarantee you that you see a lot more of our commercials each year than Dell's.

So I think Dell is really being incompetent here. Instead of looking for savings and learning to make its operations efficient, it is going for the quick fix of contracting out. But my guess is that it will contract out to a number of different facilities throughout the nation or world, and while each of those facilities will be good at focusing on itself, they will not have the advantage of seeing learnings from ALL the facilities across the organization, and they will miss things. I know our plants keep tabs on each other and call each other all the time to see how some project or other went. Typically one plant will take the plunge on some experimental idea, and the rest will be watching to see if it works out, which is a lot better than siloed contract plants potentially trying the same failed idea at each facility due to lack of communication. Had Dell kept manufacturing, it would have had the advantage of seeing the whole organization, and they could potentially have saved more in the long run by manufacturing everything themselves, but instead they are taking the incompetent way out. Frankly, I'm glad I work for a company with better leadership than them.

Re:Price, the only consideration? (3, Insightful)

xenocide2 (231786) | more than 5 years ago | (#24901481)

Last I checked, Two Scoops was still in production after ten years, and the margins terrible. In contrast, computer equipment moves rapidly. This is most apparent in chip fabrication, but also in final computer assembly. The fact is, you can't spend the time wringing out production efficiencies in a product with a 3 year life span. Especially when assembly is such a small part of the cost anyways, it just doesn't make sense to focus on that rather than reducing part costs.

Coase's theorem is the relevant economic concept, about when firms choose to hire employees (do it themselves) versus go to the market. And there are ton of contract manufacturers driving prices down. By letting these guys focus on the cost of operating their plants (which plenty run several of), Dell can focus on financing and marketing and pricing features you and I want, rather than pursue slim improvements in margins that are the staple of commodity manufacturing.

The truth is, Dell pursued production too much, at the expense of margins. [marketwatch.com] By selling off the factories, they can move the balance between share of sales and prices much faster. Just order less and let the contract manufacturer deal with what to do with the downtime.

Re:Price, the only consideration? (0)

Anonymous Coward | more than 5 years ago | (#24901501)

1.5 million tacos a day surely will clog the toilets.
Think of the goatse you're causing!

Agree (2, Interesting)

WillRobinson (159226) | more than 5 years ago | (#24901507)

I have seen the same in the semiconductor industry. I was automating Asia during the 80's and 90's. They were quietly spending billions.

I always wondered why the American companies in the US for the most part, couldn't get their act together on production efficiencies. They opted to send manufacturing overseas.

While I understand the overhead costs here were higher, I feel it was so they could "scale down" easier.

For me, it was ok while we were building the supporting manufacturing equipment here, but how long till Asia had the know how, combined with the cheaper overhead's before we would be out of the loop entirely?

Same for dell, while having contract manufacturing, and tech support overseas, whats left? Just a name and a sales system. How long till that can be done overseas? Well it can be done now. There are companies with the pockets than can setup a company here, manufacture there, support from there, and guess what, more of the profit from selling another computer will go there.

Really, its sad to say, but I believe in 5 years, dell will not exist. There will be a tipping point, where the profits will dictate that, and some overseas company will be able to sell for 5% lower than dell can operate at, then game over.

Re:Price, the only consideration? (2, Interesting)

hey! (33014) | more than 5 years ago | (#24901525)

Different markets, different companies, different efficiencies.

As competent laptops near the two figure mark in dollars, manufacturing is increasingly turning out commodity items. That means margins get small. That's what killed the PDA industry: it wasn't convergence per se. Convergence makes sense for some users and not others, but it makes sense for all producers. Rather than adapting to selling $49 PDAs, they escaped into the highly controlled and artificial world of mobile phone sales.

The problem, I think, is that the field of computing is as or more volatile than ever, but on razor thin margins. It's not something you can master by the TQM process of repeatable processes and analyzable results. So being able to say sayonara to a couple of thousand workers without any fuss is desirable. Companies, I'm guessing, see their future security in being highly flexible marketing entities.

Frankly, I find this distressing, but I'm not sure it's the wrong approach.

Apple, if I understand this correctly, contracts nearly all its manufacturing out. It has just one facility in Ireland. Perhaps this is enough to keep their ideas grounded in the realities of manufacturing.

Re:Price, the only consideration? (1)

LurkerXXX (667952) | more than 5 years ago | (#24901331)

That entire piece was nothing but PR spin so they can excuse the outsourcing to 3rd world countries to make their computers. Other places under other people's control, where they don't have to pay a decent wage, have a decent work environment, or be environmentally friendly.

Right now Dell has to do marketing to sell it's computers (duh).
It will still have to do the vary same marketing of it's computers after it outsources its manufacturing (duh).
Meanwhile, dell currently owns the factory. The factory doesn't have to advertise to Dell (itself) to use the factory.
When they outsource, all those 'factory companies' DO need to do marketing to try to get Dell, or HP, etc, etc, to use their factory.

So there is extra marketing overhead in using a 3rd party factory. What you save is on labor and environment costs. Dell is simply spreading BS.

Apple (1, Insightful)

Kohath (38547) | more than 5 years ago | (#24900887)

While Dell and HP try to make cheap computers that aren't broken, Aplle will continue to make good computers that aren't cheap. Apple has been gaining marketshare from these guys steadily for a long time now.

Re:Apple (5, Informative)

Jorophose (1062218) | more than 5 years ago | (#24900991)

All of Apple's parts are Foxconn, except the intel processors, and $somebody's hard drives.

Congratulations, you have parts made from the bottom-of-the-barrel of the shittiest components maker, Foxconn. Nobody would touch that with a 10-foot poll when they have Gigabyte.

Apple cuts its costs to make a profit, too. Or you thought an iMac really costs 1000$ to make?

Absolutely right (5, Insightful)

Crazy Taco (1083423) | more than 5 years ago | (#24901193)

Congratulations, you have parts made from the bottom-of-the-barrel of the shittiest components maker, Foxconn. Nobody would touch that with a 10-foot poll when they have Gigabyte.

Absolutely right. No one who has built computers for any length of time feels comfortable putting a Foxconn board in over the alternatives. Not saying a Gigabyte board or an Asus board will never go bad (I've had them go out on me before), but just hop over to newegg, search for motherboards, filter to those manufactured by foxconn, and just take a look at the number of stars (or eggs) they get. Then go in and look at the comments, and take a look at how many have died within a few months, or were just DOA.

I bet Apple daily ships boards back to Foxconn by the truckload as they show up dead on arrival and fail QA, but you've got to know that a lot of those 1-3 months of life boards are getting through. Have fun with Apple products!

And as a side note, if Apple products are so awesome, explain the whole iPod battery fiasco a few years back where iPod batteries were all dying shortly after the warranty, and Apple was just telling everyone to go buy a new iPod. Or go look at all the forums full of people complaining about how their iPod shuffle just randomly bricked itself one day (orange and green flashing light issue), sometimes due to the new version of iTunes, and sometimes just because. And how Apple's solution again was to tell everyone to go buy a new Shuffle. I had one of those, and I basically said, "Screw the crappy, short lived Apple products with no support, I'm buying a Zune." As All State might say, "I was NOT in good hands", and I was not about to be taken by Apple again.

pot kettle black (3, Interesting)

je ne sais quoi (987177) | more than 5 years ago | (#24901369)

You honestly thought that by buying a Zune you would avoid cheap products and poor QA/QC? Just seven stories below this one on the main page is one about how the MS decided to ship a bunch of defective Xboxes just so they could get their console out before Sony's. Your post was informative and interesting, and then you go and spoil it all at the end by claiming that you've avoided this whole mess by buying a Zune.

parent is misleading (0, Troll)

je ne sais quoi (987177) | more than 5 years ago | (#24901435)

I was just over looking at the Wikipedia entry for Foxconn [wikipedia.org] :

Among other things, Foxconn produces the Mac mini, the iPod and the iPhone for Apple Computer; Intel-branded motherboards for Intel Corp.; various orders for American computer retailers Dell, Inc. and Hewlett Packard; the PlayStation 2 and PlayStation 3 for Sony; the Wii for Nintendo;the Xbox 360 for Microsoft, cell phones for Motorola, and Amazon Kindle.[1][2] [3]...

later down it says:

Foxconn is one of the OEMs for iPod nanos, MacBook Pros, MacBook Airs and the iPhone. Foxconn is the OEM for the Xbox 360, PlayStation 2, PlayStation 3 and Wii. Apple iPhones, Foxconn OEMs Motorola, Nokia, Sony Ericsson cell phones.

So sure, they might make shitty products, but they make everyone's shitty products. Stop it with the irrational apple hate already...

Re:parent is misleading (1)

Jorophose (1062218) | more than 5 years ago | (#24901639)

It's not irrational apple hate.

It's pointing out apple is not magically godly quality.

By the way, I'm pretty sure they don't do the Wii, if only because it's ATI graphics and an IBM CPU; highly unlikely Foxconn is the one making the boards.

Re:Apple (1)

MacDork (560499) | more than 5 years ago | (#24900995)

What would I do? I'd shut it down and give the money back to the shareholders

Oh delicious irony!

Re:Apple (1)

sleeponthemic (1253494) | more than 5 years ago | (#24901037)

While Dell and HP try to make cheap computers that aren't broken, Aplle will continue to make good computers that aren't cheap. Apple has been gaining marketshare from these guys steadily for a long time now.

Is this a joke or do you actually believe that paragraph had any point whatsoever?*

* disregarding the obvious "I LOVE APPLE" sentiment

Re:Apple (2, Insightful)

cowscows (103644) | more than 5 years ago | (#24901039)

While some of this is undoubtedly the "cool" factor that Apple has grown with the iPod/iPhone, I think another piece of the puzzle is that except for gaming, the pace of hardware cycles is pretty much irrelevant these days. In the late 90's/early 2000's, you could buy a new computer every two years and really feel the speed difference, even if you only used it for basic stuff like email/web browsing/word processing. Close to a decade later, email/web browsing/word processing/etc. are still what 99% of computer use is, and the demand that those activities put on the hardware hasn't increased anywhere near as much as the power of the hardware has.

A computer that you bought in 2004 to surf the web can likely still surf the web very adequately in 2008. The experience wouldn't be much different on a brand new machine. The impetus to be constantly upgrading is gone. With that out of the equation, the priorities when choosing a new machine change. It probably didn't make as much sense to spend an extra $500 on a computer that should keep working for five or six years when you were already expecting to upgrade to a new one within two years. But If you're shopping for a machine that you fully expect to use as your primary computer for five years, then paying extra for something nicer makes more sense.

Re:Apple (0)

Anonymous Coward | more than 5 years ago | (#24901043)

[citation needed]

Re:Apple (0)

Anonymous Coward | more than 5 years ago | (#24901061)

Not sure about the Mac Pros, but I'm pretty sure all the Apple laptops are contract manufactured. Mac Pros might still be assembled in CA though?

Re:Apple (2)

milatchi (694575) | more than 5 years ago | (#24901099)

Apple's stuff is made in Taiwan like everyone else's, and from what I've had to work on in the past 2-months (4 black matte iMacs: 3 with bad screens, one a bad motherboard, and each less than a month old) the quality is the same or less than other hardware vendors.

Re:Apple (2, Insightful)

daninbusiness (815223) | more than 5 years ago | (#24901653)

While Apple has been notably very successful over the past 10 years, all (nearly all?) of their manufacturing is done through contract manufacturers. It is entirely possible that the same factories in Taiwan and mainland China build dell laptops and apple laptops on the same day. Given that Apple consistently charges more for its product than Dell (or others in the consumer PC space), it's likely that they spec out some higher-grade parts in their systems & may be more involved in QC. My point is, although Dell & Apple are performing quite differently, their overseas manufacturing strategy has to be nearly the same. Design & marketing are making the difference for the time being. Dell probably needs to do this to remain competitive & adjust to the declining desktop PC market; in my opinion they should keep some manufacturing capability as further down the road it could become an advantage rather than a liability. Keeping factories running is expensive, especially if they aren't busy enough.

That explains it (0)

dZap (698758) | more than 5 years ago | (#24900889)

So that is why Dell makes better computers than HP, imho.

DELL's Indecision (3, Interesting)

bogaboga (793279) | more than 5 years ago | (#24900893)

...Rivals such as Hewlett-Packard Co. years ago shifted to contract manufacturers -- companies that provide production services to others -- to build their portable computers. H-P builds "less than half" of its PCs in facilities it owns, wrote Tony Prophet, H-P's senior vice president for PC supply chain, in an e-mail...

To me, this is the crux of the matter. Dells indecision tells it all. I have had close interaction with folks at DELL and what strikes me, is their apparent indecision when it comes to matters that require immediate attention.

I cannot be convinced that with all the "spying" that goes on withing the PC and Notebook markets, DELL did not know that HP was outsourcing and saving a bunch. They knew but did nothing!

To make matters worse, HP produces better hardware as compared to DELL, in my opinion. So they must be doing something better than DELL.

The one surprise in the article... (3, Informative)

damn_registrars (1103043) | more than 5 years ago | (#24900897)

For those who haven't yet chosen to RTFA:

The company owns factories in Texas, Tennessee, North Carolina, Florida, Ireland, India, China, Brazil, Malaysia and Lodz, Poland

I was surprised that they still did manufacturing in the states. I didn't really expect that any PC makers still did.

Re:The one surprise in the article... (1)

77Punker (673758) | more than 5 years ago | (#24901625)

The North Carolina factory just went online a year or two ago after my (former) home state gave them millions of dollars in incentives (corporate welfare) to move in.

Glad to get away from that goddamn buncha crooks. Now I live in Arizona where I'm so far unaware of systematic political crime like that, aside from Sheriff Joe Arpaio.

I guess life's a bitch somehow no matter where you live, except maybe Iceland.

quality of these factories? (1)

amclay (1356377) | more than 5 years ago | (#24900899)

So...their quality will go down, like it hasn't done in the last 8 years...cough http://www.undeadcomputing.com/ablog.html [undeadcomputing.com]

H-dash-P? (1)

ScottCooperDotNet (929575) | more than 5 years ago | (#24900911)

When did HP start getting written as H-P?

I'm trying to figure out why Dell seems to be the most popular office brand. Could it be they simply suck less than the others? Inertia?

Dell's driver downloads are pretty good, although it would be better to get the exact drivers for the service tag, rather than guess if it has a given video chip or option NIC upgrade.

Re:H-dash-P? (0)

Anonymous Coward | more than 5 years ago | (#24900983)

Oh it meant HP? I thought it was a "you're getting a dell" emoticon.

Lessons not learned (3, Informative)

OpenYourEyes (563714) | more than 5 years ago | (#24900927)

That's brilliant! Just the way to sell fewer desktops!

Dell has had huuuuuge problems [direct2dell.com] fulfilling laptop orders because of supply chain problems. So making their desktops the same (bad) way they make their laptops only makes cents. I mean... sense...

Bye Bye DELL nice to have known you (0)

Anonymous Coward | more than 5 years ago | (#24900929)

First they take the stupid move to eliminate the North American Tech Support Centers. Now I have no reason to buy DELL over HP, or Gateway. Save money in support and loose Sales.

Now to continue more selling of DELL. By
the middle of the next decade there will be no DELL.

Another Asian outsourcer? (2, Interesting)

Anonymous Coward | more than 5 years ago | (#24900937)

Very soon this country will lose all its production capability, if the trend of outsourcing everything to MF Asia continues.
Such process, it's becoming a pain to watch.

Re:Another Asian outsourcer? (1)

flyingfsck (986395) | more than 5 years ago | (#24901109)

Factories will come back as soon as the Dollar devalued another 75% or so.

Other considerations like... Quality? (0)

Anonymous Coward | more than 5 years ago | (#24900943)

I have this strange feeling that the quality of Dell laptops will go down fast once the factories are sold.

Translation: offshoring their manufacturing (4, Interesting)

mysidia (191772) | more than 5 years ago | (#24900945)

Dells' factories were in the US, where they had to obey all sorts of US regulations that are expensive to obey; like OSHA rules, making it cost-ineffective to have US factories.

By having a contractor do it instead; Dell can avoid the negative political implications of having to say "they're sending their manufacturing overseas". Instead it will be a matter of a private contractor further outsourcing their work later, and Dell will be insulated from the necessary ramifications of their decision to minimize short-term immediate cost at the expense of control & being a good corporate citizen.

Which will give them some protection against legislation, human rights groups, etc, and various issues that normally occur when a company simply builds factories offshore and shuts down US factories.

Their contractors can have the laptops assembled cheaply offshore then shipped to the US.

Although the quality of the workmanship may diminish dramatically (and Dell laptops will be more prone to certain defects such as say perhaps HP laptops), the cost will be much less for them, when they can pay the labor-intensive laptop assemblers the equivalent of US $0.05 an hour instead of having to meet US federal minimum wage.

Cost savings are unlikely to be passed directly to consumers, so pure profit.

At least in the short term, rather clear why they would see it as a clear win.

Re:Translation: offshoring their manufacturing (1)

ducomputergeek (595742) | more than 5 years ago | (#24901189)

Explains the number of HP laptops I've seen with failed wireless cards. I live in a small college town. The coffee shop I work out of sees a lot of laptops and the number of times I've seen students with HP laptops about 6 - 9 months old digging out a USB wireless card is amazing. Repeatedly, people will come in, suddenly can't get on, and I'll see it's an HP laptop. Sure enough, the wifi card is bad and apparently they're part of the motherboard and can't be replaced, like a mini-pci.

I don't know about percentages, but it is an extremely high number for such a small area.

Re:Translation: offshoring their manufacturing (1)

mysidia (191772) | more than 5 years ago | (#24901363)

It may be worse than that.

It's not necessarily all manufacturing bugs. There can be defective designs too.

Does the manufacturing experience not help the design at all?

When they hire contractors... the contractors' factories will get all the manufacturing experience.

There is even a risk that the contractors or some factory they hired will eventually cheat the manufacturer (I.E. by producing Surplus laptops and sell them off on black markets with no profits for Dell)

Re:Translation: offshoring their manufacturing (1)

zippthorne (748122) | more than 5 years ago | (#24901373)

Perhaps you should stop boosting your wi-fi hotspot through your oven's magnetron.

Re:Translation: offshoring their manufacturing (0)

Anonymous Coward | more than 5 years ago | (#24901711)

Although the quality of the workmanship may diminish dramatically

And it may not diminish, and it may increase.

China is over the hump as far as establishing export manufacturing through cheapness, and knows it must establish a reputation for quality. It already has some very good firms. These are hard to notice because they're competing at home with cut-rate no-rule start-ups in the next province or city, and because the retail world at large continues to seek & buy the very cheapest product from China.

And there's no reason to presume the quality of workmanship in Dell's US assembly plants was all that good. Consider UPS football or US automobiles or whatever other special "customer service" experience you've had lately from US workers. US manufacturing is a very mixed bag.

Dell may very well connect with high quality contractors in China by spending pennies more than the lowest bids. Dell computers may become the vanguard of the inevitable visible good Chinese products.

This is happening in other industries too... (3, Interesting)

Iftekhar25 (802052) | more than 5 years ago | (#24900947)

I work for a print publishing firm, and we've been experiencing a recent surge in customers, because publishers are starting to focus on their core competency, which is content generation. The "other" business of printing, quality control, packaging, and distribution is now being out-sourced to other companies who specialize in squeezing the last dollar of efficiency out of this (manufacturing it cheaply, transporting it somewhere cheap to be processed, then ship it out everywhere else), and whose entire purpose in life is to efficiently produce, and distribute printed matter.

I'm sure Dell has complete control of the design of their hardware, where every nut and bolt goes. And the specifications will no doubt be very detailed, if my experience in the print industry's any indication.

It's just a matter of letting the organization that does something very well do it, rather than trying to do everything in-house.

Re:This is happening in other industries too... (1)

mysidia (191772) | more than 5 years ago | (#24901005)

This is great until something bad happens and the organization that "can do it very well" goes under or... can no longer do it very well or the best...

Which happens after everyone's relying on the same contractor, and no other contractors are available (monopoly), decades later after say Dell has long lost their ability to manufacture themselves.

Suddenly they have very little bargaining power to get a good price at contract renewal time.

Because they've closed all their factories, their factory staff and management are gone -- Dell loses all the collective experience they had invested in getting into their organization.

Re:This is happening in other industries too... (2, Insightful)

zippthorne (748122) | more than 5 years ago | (#24901067)

No, that's the good kind of outsourcing: in any business, it's often advantageous to pay someone else to do the things you just need done, so you can focus all your effort on the business you're actually in. You end up paying less, because even with the premium of hiring out, the outside company is probably more efficient than you would've been, what with it being their primary focus, and all.

But if your publishing firm outsourced it's publishing, then there remains the question, "what do you do again?" Your customers will eventually just eliminate the middle man and go straight to the source.

Re:This is happening in other industries too... (1)

whoever57 (658626) | more than 5 years ago | (#24901485)

I'm sure Dell has complete control of the design of their hardware, where every nut and bolt goes. And the specifications will no doubt be very detailed, if my experience in the print industry's any indication.

Design separated from manufacturing is not a good recipe for improving quality or driving down cost. My guess is that over time the design expertise will migrate to the outsourced factories.

Re:This is happening in other industries too... (1)

AncientPC (951874) | more than 5 years ago | (#24901681)

Disclaimer: I work for an Asian supplier (not Foxconn) that provides parts for Dell/HP/Apple computers.

What Dell is doing here is simply reducing in-house manufacturing and focusing on computer design. This is essentially what Apple does and what AMD is doing by selling its fabs.

There is (relatively) little profit margin in manufacturing. This is why IBM sold its Lenovo division and got out of the desktop/laptop market. Factories have high fixed costs (manufacturing equipment, etc) and depends on volume and process efficiency to survive.

Obviously Dell's manufacturing plants are only allowed to make Dell computers. If the company is having a bad year it has to absorb a lot of fixed costs from idle factories. It the company is having a particularly good year it is difficult to react and ramp up production in such a short time. However as a 3rd party supplier, my company can solicit contracts from other companies to balance out the ebb and flow from one. Think of it as riding one stock vs a mutual fund.

As a side note, it's gotten to the point where the more developed Asian countries that used to do manufacturing now outsource to China, Malaysia, or the Phillipines. As China's quality of life and wages have been growing, Chinese firms have begun outsourcing to Africa now (not for tech manufacturing AFAIK).

...and give the money back to the shareholders? (0)

Anonymous Coward | more than 5 years ago | (#24900971)

...'cause that would be great!

Looking back on Dell (4, Informative)

jamie (78724) | more than 5 years ago | (#24900981)

CEO Michael Dell, October 2007, on being asked what he'd do if he were CEO of Apple:

Since then DELL stock has gone up by 72%... while AAPL has gone up 3080%.

Dell's basic problem [daringfireball.net] has been known for a while. They don't do anything unique. They were one of the first to "get" just-in-time custom manufacturing and they rode that horse for a long time, but everything they do, others can do better -- and apparently do.

Innovation, if it can be sustained, always wins over efficiency, because innovative hardware and software design can empower users by orders of magnitude, while efficiency gains approach an ideal asymptotically.

Re:Looking back on Dell (4, Insightful)

TheRaven64 (641858) | more than 5 years ago | (#24901063)

I know not being able to RTFA is a requirement for Slashdot editors, but the first paragraph of that article says the quote was from 1997, not 2007. They didn't shut Apple down after that, instead they paid NeXT $300m to take over the brand. NeXT has done a lot of really great stuff since taking over Apple, but don't kid yourself that the Apple of today has anything to do with the Apple of 1997.

Re:Looking back on Dell (1)

MacDork (560499) | more than 5 years ago | (#24901423)

I know not being able to RTFA is a requirement for Slashdot editors, but the first paragraph of that article says the quote was from 1997, not 2007. They didn't shut Apple down after that, instead they paid NeXT $300m to take over the brand.

Apple bought NeXT for $400 million. [wired.com] You're off by about $100,000,000.00 bucks. Perhaps you too should read a few articles.

don't kid yourself that the Apple of today has anything to do with the Apple of 1997.

Thank goodness. Gil Amelio nearly destroyed the company single handedly.... it's almost like you're complaining that 'Coke classic' has nothing to do with 'new Coke.'

Re:Looking back on Dell (2, Informative)

jamie (78724) | more than 5 years ago | (#24901441)

Oops sorry, I typoed 2007 when I meant 1997.

Re:Looking back on Dell (2, Insightful)

UnknowingFool (672806) | more than 5 years ago | (#24901449)

Apple bought NeXT in 1996 which was part of their larger strategy for the OS. The classic MacOS could not be upgraded; it had to be replaced with a new OS. Apple had spent years developing Copland but it was unworkable as a solution. NeXT was their answer for this. This is when Steve came back to Apple.

But when he came back, the people realized why they needed Steve. He had a larger strategic vision for Apple more than their current CEO. The comeback of Apple has been tied to Steve Jobs good or bad. Not that he is the only one responsible but under his leadership Apple has become a powerhouse. He didn't do all work, but he is credited with focusing Apple on what it needed to do. When Steve took over, Apple had too many computer lines and spent a long time developing Copland which it had to eventually shelve as unworkable.

The first year, it was about the painful task of stopping the losses. He cut projects and product lines. He trimmed the workforce. He made peace with Microsoft. But most of all he focused his engineering on the the handful of products that would be profitable. One of them was the iMac which helped Apple turn its first profit in years. After 1997, it was about moving forward to OS X.

Free bonus: spare fingers (1)

Ancient_Hacker (751168) | more than 5 years ago | (#24901007)

Yep, if the laptops are made in China you can use workers that make $80 to $150 a month.

And as a free bonus, you might get one of the 1,000+ fingers a day that are chopped off in industrial accidents every day.

Way to save a buck, Dell!

Re:Free bonus: spare fingers (2, Insightful)

andy1307 (656570) | more than 5 years ago | (#24901213)

Way to save a buck, Dell!

The American consumer has no qualms about buying from companies that manufacture overseas as long as they get their electronics cheaper.

Having Worked for both Companies.... (1)

fireheadca (853580) | more than 5 years ago | (#24901011)

Having Worked for both Companies I can safely say, that both companies have the same quality of product.

Oem is Oem and quality is usually sacrificed for price and people usually buy the cheaper with the same specs.

Granted, sometimes you can't go out and build your own system for the cost of some of these Oems.

You get what you pay for.

----
Get your own sig.

Recipe for success (5, Insightful)

Anonymous Coward | more than 5 years ago | (#24901041)

1. Take everything that made you successful.
2. Throw it away.

Well, I mean, Dell became number 1 in PCs due thanks to a model where you could configure your PC in the web, get it built in good time with a guaranteed level of quality and receive it at your home/office.

First they started adding physical stores to the mix. That's perhaps not too bad, but certainly adds problems of inventory that previously were unknown.

Now they are trying to make themselves virtually indistinguishable from other providers by selling the one piece of their company that made them different, their make-to-order factories.

I suppose that's just one more example of clueless executives applying the reduce-costs recipe because that's the thing they learned in their MBA's. Because that's the easy thing to do, because the costs are written and can be studied. I suppose you need some kind of inventive mind to think ways about adding to the income column, instead of subtracting from the costs one. But what do I know? After all, they make fatter salaries than I do.

The stupidity of the argument... (3, Insightful)

tjstork (137384) | more than 5 years ago | (#24901053)

Is that contract manufacturers supposedly offer efficiencies because they don't have to listen to Dell's marketing considerations. It would seem to me, then, that Dell's marketing considerations would need to change and all this really is is a low wage subsidy of a fundamentally flawed business.

I'm really sick of MBA's getting American companies out of manufacturing because they lack the engineering knowledge and are too lazy to make it work. If there a company really well led by an MBA? I mean, President Bush has an MBA... look how well he's done.

Re:The stupidity of the argument... (1, Insightful)

Anonymous Coward | more than 5 years ago | (#24901151)

I don't think the MBA is really even the issue. There are B&E PHD's out there who consider the same strategy to be worthwhile depending on the frame of reference. What you're really taking issue with is short run shareholder based focus and long term company focus that vicariously benefits the shareholders.

Sadly in a world where performance metrics are calculated based on short runs, this is what happens. It doesn't help that many shareholders demand growth and change NOW when waiting for further research might be the long run solution.

Re:The stupidity of the argument... (0)

Anonymous Coward | more than 5 years ago | (#24901263)

You can get a PhD in breaking and entering?

Re:The stupidity of the argument... (0)

Anonymous Coward | more than 5 years ago | (#24901181)

I mean, President Bush has an MBA... look how well he's done.

I agreed with you up until this. Saying Bush had an MBA and sucks as a leader means that other people with MBA suck as leaders makes about as much sense as saying that since Bush is from Texas and sucks as a leader, everyone from Texas sucks as a leader.

Re:The stupidity of the argument... (1)

egommer (303441) | more than 5 years ago | (#24901315)

If there a company really well led by an MBA? I mean, President Bush has an MBA... look how well he's done.

So, Dell selling off it's MFG division is George Bush's fault? I see. You must really know what you are talking about then.

Re:The stupidity of the argument... (1)

James Cape (894496) | more than 5 years ago | (#24901401)

Their marketing concern is not to have Michael Moore show up at some toxic waste dump in Bangladesh where 11yo girls are slaving away for a brutal local warlord in 120deg heat mounting components. I don't know that the marketing department's consideration of basic human decency is really all that changeable, honestly.

On the other hand, if you farm it out, you can always claim you had no idea The General (we didn't even suspect he wasn't a real general) was cutting the children's arms off to help them find the lost capacitors...

Dude, you're getting a Dud! (1)

kpainter (901021) | more than 5 years ago | (#24901157)

Here is an example of how you take something that is already not very good and make it worse.

Dude! (1)

Mathness (145187) | more than 5 years ago | (#24901341)

Dude, you're getting a Dell factory.

Question... (1)

Erpava (915121) | more than 5 years ago | (#24901523)

How do you say "Dude, you're getting a Dell!" in Chinese?

What about Apple? (2, Insightful)

bxwatso (1059160) | more than 5 years ago | (#24901545)

IIRC, Apple builds its hardware using contract manufacturers in China and other countries outside the US.

Since Apple is pure, clean, and everything /. loves and admires, how can Dell be wrong for following their lead?

Coming soon DeRR computers. (1, Informative)

Anonymous Coward | more than 5 years ago | (#24901633)

Pity, in order of preference... when recommending companies

Desktops:
Apple, Dell, Sony, HP, then the crap like LG, and gateway emachines.

Laptops:
Toshiba, IBM, Apple, Dell, Sony, HP, then the crap like LG (*shudder*) and emachines/gateway.

Generally chinese and korean brands get a thumbs down for build quality, usually on the level of major thumbs down.

Asus and Gigabyte are the best motherboard brands if you are building something yourself, avoid MSI, biostar, or any company that doesn't update their BIOS once a year. New CPU's come out dammit.

MSI boards are found in eMachines, go figure.

The thing is, Dell slit it's own throat with outsourcing outside north america the tech support.

What kind of company do you have when both your product and your support are not in the country. What incentive is there for the outsourced company to just steal the designs (like China does with the iPod/iPhone ) and make counterfeit copies, or even make their own brand? Sure, they might not be re-importable back to the US if they still say Dell on it.

If you're going to outsource, first outsource to countries that aren't expensive to ship from and have equal intellectual property protection. Not India and China where the counterfeits flow freely in the streets. The main reason the counterfeits are not as prevalent in the US is that it's illegal to import, and it's hard to do a border run when there's 8000 miles of ocean or in the way. The bigger the counterfeit item, the less likely it gets here. Though go ask the US NSA how many counterfeit cisco routers they are running.

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