After spending a decade at Nike designing tech-based products from shoes and watches to sunglasses, Ed Boyd joined Dell Inc. in 2007 to lead consumer product design shortly after founder Michael Dell returned as CEO to turn around the ailing personal computer maker.
Boyd found a small "hardware-centric" design team that was delivering stodgy, utilitarian PCs and shipping them in corrugated boxes. He set to work creating a design group that could rethink Dell's whole PC business — from industrial design, to packaging design, to user experience. His first effort was the Adamo, a slim aluminum-clad notebook that was hot — but not in a good way.
While the aluminum chassis gave it a durable design, the Adamo's sharp edges and the heat that built up after resting it on your lap "was kind of irritating," Boyd admits. "I said, boy, if I could do that again I'd like to use materials that dissipate heat, materials that are softer in nature."
Boyd got his do-over and and this year Dell unveiled the XPS ultrabook. Intended for mobile users on the go, it's thin, it's sleek, it's light, it boots fast and it's priced — starting at $999 — at a compelling enough price to prompt reviewers to compare it favorably to Apple's rival MacBook Air. It's certainly, many say, the best PC design they've ever seen from Dell.
But is the XPS 13, which went on sale in February, enough of a game changer to help breathe life into the PC business that still accounts for the majority of sales at Round Rock, Texas-based Dell?
"The Dell designs have gotten better, but the problem is that when you're selling into the high-end and consumer market, you need to have that lust factor," says Shaw Wu, an analyst at Sterne Agee in San Francisco. "It doesn't have the sex appeal to drive a ton of sales. Look at the numbers."
The numbers don't seem to be tilted in Dell's favor — and least not yet. In the first quarter, Dell, which ranked No. 3 in worldwide PC shipments, saw its shipments drop 2.1 percent from a year earlier, according to market researcher IDC. In comparison, top-ranked Hewlett-Packard Co. saw a 3.2 percent gain. The winner, though, was No. 2 Lenovo, which posted a whopping 43.7 percent increase. Wu credits Lenovo's revival of the popular ThinkPad brand (which it acquired from IBM) with luring back business users who had switched to Dell and H-P.
Dell gets to say how it's doing when it announces fiscal first-quarter results today after the market closes. Analysts on average expect sales of $14.9 billion, slightly down from $15.02 billion in the same quarter a year ago, and profit of 46 cents a share, down from 55 cents.
Sandwiched
Under Michael Dell, the company has turned away from the low-margin PCs that were once its mainstay and is now focused on more-profitable machines like the XPS. That's in addition to expanding into high-margin services, software and networking gear and offering equipment such as servers and storage devices to business customers.
The problem is that PCs still account for more than half of revenue.
And while Dell's shift away from low-margin PCs to those with a higher average selling price makes sense, "the higher-ASP segment of the PC market Dell is focusing on, especially with its XPS products, will become more competitive," says Katy Huberty, an analyst with Morgan Stanley. "Both HP and Acer outlined plans to shift strategic focus from market share to profitability in the PC market."
Wu puts it this way. "Dell is in a tough fundamental position sandwiched between low-cost players — Lenovo and Acer — and Apple encroaching more in its core PC business as Macs and mobile devices gain share," he told investors in a May 17 note, in which he rates the shares neutral. "Despite efforts to grow beyond a PC company with multiple acquisitions over the past few years, we estimate 70 to 75 percent of its business is still tied to PCs...Dell needs to take bolder, more aggressive steps to reinvent itself."
Three Years in the Making
Five years after he joined, Boyd, who also did a five-year stint designing consumer products at Sony, now serves as vice president of experience design for all of Dell. He's doubled his staff to more than 100, with industrial designers, packaging designers, user interface designers, material scientists, market and trend researchers, ethnographers and consumer behavior specialists working in studios and labs in Round Rock, Austin, Amsterdam, Singapore and Taiwan.
And Boyd is getting ready to unveil a new generation of products that take their design cue from the XPS 13, which took three years to bring to market. It has a carbon fiber, aluminum and magnesium chassis and a soft-touch finish. It's sturdy but lightweight and also dissipates heat so users aren't left holding an uncomfortably hot machine. Dell invested a lot time on the screen design so it could fit a 13.3-inch display in a 12-inch form factor. "The miniaturization was an example of some of our finest work," he says.
Under Boyd, Dell is also paying attention to the kind of details that helped Apple earn kudos — and win over users (Boyd praises Apple designer Jony Ive for good, consistent design). Instead of the corrugated boxes of the past, the XPS emerges from sleek black packaging with a minimalistic feel. The Intel and Microsoft logos are now on the bottom of the machine, out of sight as you type. "A lot of work went into cleaning up the experience," says Boyd. "All the things that you don't see — there were lots of effort to get rid of things that are a distraction...Doing simple is really hard."
Dell also created a new font — Boyd laughs when asked it's called and he says it doesn't have a name — that "when you look at it, it left you feeling that the technology was contemporary, forward leaning, a fresh clean modern font."
As for how Dell is doing, Boyd says there more work to do. "I'm happy with the progress we're making. I'm encouraged with the products we're making today. I'm happy but I'm not satisfied."
