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"The executive briefing center on Dell&amp;#8217;s campus. Image: Dell\n\n\nDell is held up as one of the business world\u2019s train wrecks of the moment, sort of a tech version of Britney Spears. The stock is down near the levels where it traded when founder Michael Dell re-took the reins as CEO in February, and the pundits have plenty of questions about the company\u2019s prospects. How could things have gone so wrong? Can Dell ever top the charts again?\n\nTruth be told, things aren\u2019t hopeless at Dell. Despite all the hand wringing over its deflated stock price, Dell\u2019s (DELL) revenues and profits haven&amp;#8217;t evaporated &amp;#8212; they&amp;#8217;re just not nearly where they should be considering the global boom in PC sales and overall high-tech spending. And Dell continues to be a cash machine, generating about $1 billion per quarter. A tech company could do worse  &amp;#8212; and many do. (See Advanced Micro Devices (AMD), Yahoo (YHOO), or Hewlett-Packard (HPQ) circa 2004.)\nThe problem for Dell is growth. Well over half of the company\u2019s revenues come from PCs, yet its sales are sputtering while others surge; this year for the first time Hewlett-Packard shipped more desktop PCs than Dell, while HP\u2019s laptop sales are outpacing Dell\u2019s by more than 50 percent, according to researcher IDC.\nIf Dell\u2019s going to grow again, it needs to start by doing two previously un-Dell things: One, consistently design and deliver beautiful laptops. Two, make peace with the middleman.\n\n  \n    A financial edge from edgy PC design (Photos 1-7)\n  \n\nThe Money in Mobility\nLaptops will have to be the first order of business. Michael Dell himself mentioned this month that mobility is king: Industry trends show the laptop market growing six times faster than desktops. In Dell\u2019s most recent quarter, 30 percent of revenue came from mobile products, up 19 percent from a year before; desktop sales were stagnant. Do the math, and it\u2019s clear that for Dell can\u2019t move the needle on market share and profits without a lineup of must-have mobile PCs.\nDell doesn\u2019t have that kind of laptop lineup now. The real standout is its XPS M1330, a surprise hit that is drawing raves because it\u2019s so atypical for Dell. What\u2019s different about it? It\u2019s thin, sculpted, and comes in multiple colors, giving it a look that laptop connoisseurs associate with design-conscious competitors like Sony (SNE), Apple (AAPL) and Toshiba. Even HP has lately won more kudos for its designs, and that\u2019s no accident &amp;#8212; HP\u2019s computer marketing is now led by Satjiv Chahil, a veteran of Apple and Sony who is has an eye for beautiful objects. In the past, Dell was criticized for churning out cookie-cutter gray boxes, and not paying enough attention to pizzazz.\nDesigning better-looking laptops is only half the battle &amp;#8212; Dell will also have to get them in front of consumers, and improve customer service. That has proven to be a bit of a challenge lately. This summer, the company couldn\u2019t keep up with demand for its colorful M1330 or Inspiron laptops, leaving customers irate that their purchases were weeks late. (Dell blamed problem paint jobs for the delays.) And the company still lacks the retail reach of rivals like HP and Apple, which helps explain why quarterly U.S. consumer sales were down 6 percent from a year ago. It also explains why the company was eager this week to announce that its XPS and Inspiron PCs will soon be available in more that 900 U.S. Best Buy (BBY) stores.\n\n  \n    New design in HP\u2019s business displays (Photos 1-5)\n  \n\nMaking Peace with the Middleman\nSecond, but also important to any turnaround: To boost its fortunes with business customers, Dell needs to make peace with the middleman. And since the company until recently spent a lot of time trying to eliminate the middleman, that will involve eating a little crow.\nIn the business technology, the middleman is often called a \u201Cvalue-added reseller.\u201D These are typically smaller shops that sell gear to small and medium-size businesses, and even handle customer service.\nMany resellers have suffered mightily from Dell pushing its business model, which was built on the idea that companies could save money by dealing directly with Dell. It\u2019s not that Dell has never dealt with resellers at all &amp;#8212; the company says its partners generated about $9 billion in Dell-related revenue in the past year. Still, Dell tended not to give them much special attention, and its culture was focused on its own deals whenever possible.\nThat old Dell strategy doesn\u2019t work as well anymore. Now that technology costs have come down, purchasing tech gear is sometimes less of a hardship than making sure it runs smoothly &amp;#8212; and many resellers have made themselves indispensable by keeping servers and other equipment running. For Dell to grow, it will have to get some of those trusted resellers to stock more Dell products and offer them to customers.\nNow there\u2019s more special attention for resellers. Wednesday Dell launched a program called PartnerDirect, designed to help resellers feel more comfortable dealing with Dell, and to help them finance and service Dell equipment.\nIf Dell makes all this work, will the shares perk up? Sure. But along the way the company also will have to keep costs in check, and prove to Wall Street that it can still reliably deliver strong operating margins and healthy stock buybacks.\nSound hard? Just remember, today Dell is much better off than HP was a few years ago."^^<http://www.w3.org/2001/XMLSchema#string>
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