Dell livid at analyst for critical report

Computer maker disputes Giga report that accuses Dell of covering up series of miscues -- an 'arrogant disregard for the customer', analyst says.

Dell Computer is livid with an influential computer analyst for issuing a critical report that faults the fast-growing computer maker for allegedly attempting to cover up a series of miscues.

In the report, Giga Information Group analyst Rob Enderle said the manufacturer was plagued by growing pains and losing new accounts because of service and support problems as well as product delivery delays.

Taking aim at the way management conducts business, Enderle said Dell had "a tendency to make commitments in order to get a signed contract that are not met once the contract is signed". Accusing Dell of "an arrogant disregard for the customer" as well as "questionable business practices", he said the problem was exacerbated by "what appears to be a growing tendency at Dell to cover up problems and not correct them".

Other high-tech companies on a fast growth trajectory such as Microsoft have similarly been sidetracked, Enderle noted. Still, he said, "this behavior represents an unacceptable risk for companies, particularly large companies looking for Dell as a replacement for an existing vendor."

In an interview, Enderle said Dell was jeopardising the very recipe that's been key to its success -- the company's direct connection to customers. "Its biggest promise is that they create a much closer relationship (than Compaq)," Enderle said. "There have now been a number of accounts that have expected this hands-on, personal kind of treatment but have not gotten it."

As word of the report circulated, alarm bells went off at Dell's Round Rock, Texas, headquarters, where officials furiously rejected Enderle's conclusions. A spokesman for the company strongly disputed Enderle's conclusions and said the "handful of examples" offered up in his report have been resolved.

"In one case it was as simple as a couple of misconfigured systems," said the spokesman, David Frink. "The examples that Mr Enderle provided Dell don't reflect accurately the customer relationships we have -- either with those customers or our customer base as a whole."

Enderle, however, stuck to his guns. "We think it has largely to do with (Dell's) very rapid growth," he said. "They just haven't had time to develop some of the guidelines that larger firms have."

Larger PC makers, such as IBM, have specific service-related guidelines, which regulate the behaviour of corporate account teams, Enderle said. In once case, he said, Dell threatened to pull its contracts from a client company after it complained about service. "Eventually it got resolved, but it should have been resolved in hours and it took weeks," Enderle said. "We've been reporting these problems to Dell for three months. We had to issue a report to get them to fix it."

"We're working with Giga on these issues," Frink said, but declined to be more specific.

Enderle suggested Dell make sampling new accounts using a third party and also that it should put in place stronger account-management policies, along with stiffer penalties for those who violate them. The reported problems appear to be limited to new corporate accounts in North America and Europe. Existing accounts and consumers have no real complaints, Enderle said.

While quality concerns and customer service complaints are frequent in the computer industry, PC makers are put on this kind of watch very rarely. "I've only done it twice," Enderle said.

The last company Giga placed under watch was Compaq Computer after complaints surfaced about its notebook PC in late 1996 and early 1997. The watch was lifted about eight months ago.