Are Dell services doomed?

Forbes magazine describes how Dell is going to reinvent itself. Central to the idea of the resurgence is services. Now I have a problem with this on two fronts.

The first is channel conflict. Dell's move into services directly cuts into the business of resellers and integrators. Given the channel is key to growing their sales into the SMB sector, they will have a serious problem getting the local IT guys on board.

More importantly though, is this idea they know how to provide services. My overwhelming experience with big businesses in the IT and Comms sectors is they are genuinely clueless when trying to run a service business.

Dell's recent track record in customer service shows this. In fact, I would go as far as to say the decline in service levels is the number one reason for Dell's fall in market share over the last five years.

This isn't to say Dell can't succeed in this area, it just means that Dell have to invest in the infrastructure, staff and training so they can offer a compelling and useful product.

To do this, they have to have decent margins on the product. If they sell cheap, the product will fail. This is why most service offerings from big corporations are rarely successful.

Margins are at the core of Dell's problems. They made the decision to chase the bottom of the market and now they are paying for it in declining margins, declining customer satisfaction and declining long term prospects.

All of this said, I love the idea of a suicide chip. Blowing laptops up remotely sounds like fun. Although given Dell's experience with exploding batteries, one would think they've had enough of self destructing laptops.