The fierce market competition has forced Intel, Dell, and Gateway – three giants currently struggling – to rush into restructuring.
Although their plans differ, they share a common goal: to return their companies to an optimal framework in time for the two major business seasons of the year: back-to-school and Christmas 2006.
Intel
First up is Intel. Last week, the world’s leading chip giant announced the layoff of 1,000 of its mid-level managers. The layoffs are occurring evenly across the globe and represent about 1% of the company’s current workforce.
According to expert Rob Enderle, this move is part of the strategic restructuring plan that CEO Paul Otellini announced in April. This is viewed as a necessary response to ongoing criticism from investors regarding Intel’s financial losses and its dwindling market share to rival AMD.
The stock market believes that Intel will continue to lay off employees until the total cuts reach 10,000 people.
Dell
Meanwhile, in light of the exploding laptop scandal, the world’s number one personal computer manufacturer, Dell, has decided to limit discounts on online orders. Instead, they will lower the ceiling price of all products.
This can be seen as a significant change for Dell. Historically, Dell has relied on a discount model to advertise extremely low prices for retailers and customers. However, the general consumer sentiment is that they dislike complexity.
By lowering the baseline prices, Dell aims to bring buyers closer, especially as the company’s market share is declining. In recent months, Dell has also been implementing a comprehensive restructuring effort, focusing on customer service. The company plans to invest up to $100 million to hire additional call center staff, technical support, and enhance after-sales service quality.
Moreover, the discount mechanism for online orders has its flaws. Typically, the money only flows into the pockets of retail agents, while users either remain unaware of these benefits or are simply… too lazy.
Despite this, Dell’s customer service has recently faced a new scandal. The service blog inadvertently shares a domain name with a heavy adult website. As a result, rather than interacting with Dell’s support department, users end up encountering… adult content.
And Gateway
Gateway, the third-largest personal computer company in the U.S., is also undergoing significant changes. The company has announced it will hire an additional 130 technical support staff, primarily to address customer inquiries.
Since the dot-com bubble burst in 2001, Gateway has outsourced most of its hotline operations to India to save costs. However, at the beginning of the year, Gateway relocated all of this work back to North America. Now, they are determined to establish their own support center.
This is one of the final steps in the important restructuring campaign that Gateway has been undertaking over the past several years. Gateway merged with competitor eMachines in 2004, laid off thousands of employees, and restructured its entire management team. Now, the company just needs to find a permanent CEO (Rick Snyder is currently the interim CEO) and fulfill its promises.
According to IDC analyst Richard Shim, the plans of Intel, Dell, and Gateway are all on the right track, but there are no guarantees of success in such a challenging market. Global PC revenue is expected to grow by 11% in 2006, down from over 15% two years ago.
Thien Yi
