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Fri 29 Sep 2006 08:00 PM

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Dell 2.0 set to re-examine PC giant’s business model

Firm vows to invest US$150m in customer relations

Dell’s announcement this month that it is re-evaluating its business model has been seen as a clear sign that it needs to work more on its customer relations.

Chairman Michael Dell said at an event in New York, US, this month that the firm was establishing a new business plan, dubbed Dell 2.0, in a bid to turn its fortunes around.

Dell 2.0 would, he said, signify “a very exciting time in our company where we are re-examining everything we do.”

Dell has suffered an array of problems in recent weeks ranging from a US Securities and Exchange Commission (SEC) investigation to poor profit results to a battery recall.

Part of the new business plan will involve boosting the firm’s customer service ratings, which have slipped in the past year.

“We know we’ve not done this perfectly in the past,” Dell CEO Kevin Rollins admitted to reporters this month.

The company has said it will invest US$150million in improving customer relationships this year.

“That was the clearest acknowledgement that I’ve heard them make that there have been issues in that space and is a significant step toward recovery,” Gartner analyst Ron Silliman told informationweek.com.

Rollins said the change will involve “deepening customer relationships, and customising the entire customer experience, placing a greater emphasison services tailored to individual customers.”

He admitted that the company needed to “broaden customer relationships by listening and evaluating more. This is a shift from a transactional model to value created over the lifetime of a customer relationship.”

Dell’s decision to delay filing its second quarter financial report because of questions raised in connection with itsinvestigation by the SEC has led to the Nasdaq exchange saying it will delist the firm.

The investigation is being conducted to determine whether previous financial reports from the company included misstatements of results.

Dell has also been battling with negative publicity from the recall of more than four million Sony-made batteries which risked exploding into flames when used in notebook PCs.

For the second quarter of 2006, Dell reported a net income of US$502million, a 51% decline on its net income in the second quarter of 2005.

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