Already a Bloomberg.com user?
Sign in with the same account.
Michael Dell explains Dell's new approach to an MP3 player that can rival the iPod, using platform-agnostic software from recent acquisition Zing Systems
A long list of powerful companies have tried and failed to make much of a mark in the world of digital entertainment, where Apple (AAPL) reigns supreme. Think Microsoft (MSFT), Sony (SNE), and Wal-Mart Stores (WMT). Dell (DELL) probably ranks at the top of the list. The computer maker made a splashy entry into the MP3 music player market in 2004 with its line of Digital Jukebox players, only to abandon the effort two years later. Now it's back, with a very un-Dell-like approach. Rather than just selling hardware based on existing standards, it wants to use software acquired from Zing Systems to create a platform so devices and services offered by a range of other companies can work together. BusinessWeek Senior Writer Peter Burrows interviewed Chief Executive Michael Dell by e-mail about Dell's new plan.
To what degree is this initiative about taking on Apple? Can you make a dent in Apple's share in iPods and iTunes?
This isn't about Apple. This is about Dell innovating for our customers.
I understand you personally championed the purchase of Zing. Is this true? Why?
Ron Garriques [president for Dell's Global Consumer Group and former head of the mobile-phone division at Motorola (MOT)] and team deserve the credit for championing Zing—they are doing a great job evolving our consumer strategy and driving personalized technology and entertainment experiences to consumers. I'm an enthusiastic beta tester and believe Zing could be very exciting for our customers.
It sounds like Dell wants to use the technology designed by Zing to differentiate Dell PCs by making it much easier for customers to move and sync digital media on multiple devices. How much can this drive Dell's growth, if at all? Is it enough to move the needle for Dell as a company? For the consumer business?
If you'll recall from our Q1 earnings results, our consumer business is doing pretty well. For example, consumer revenue grew 20%, to $2.9 billion; units increased 47%—more than two times the market—and increased global share by 1.2 points, to 8.8%. [These and other positive results are] a direct result of delivering what consumers want—our new products and our focus on design and style are obviously resonating. The PC continues to be the hub of users' digital entertainment worlds and we will continue to investigate ways to enable people to easily access their entertainment across various platforms. So Zing has the potential to be another element of our broader consumer strategy.
I'm told the company plans to bring out hardware devices designed to make use of the Zing technology to buy/play/share this content. How important will such hardware be for the company?
We're watching the device space closely. Right now our focus is on testing services that allow consumers to link and share content across many types of devices and through multiple services. Consumers are seeking a service that lets them access whatever source of music or movie content they want on any device. We believe that an alternative to the single device and service model offering available to consumers today would be compelling.
It seems to me that if the strategy works, Dell could be the primary counterweight to Apple's closed digital media model. Am I making too much of this?
I don't think you are.… What we've heard is that customers want access to the content they want from a broad variety of sources, how, when, and where they choose. We think we have a vision that will provide an attractive alternative to the single device and single service strategy that exists today.