Threat of Substitutes as Applied to Dell Computers - Essay Example

One of the first issues Dell should address in order to keep customers loyal, and not looking for substitute products is its customer service and product reliability records. According to ConsumerAffairs.com, Dell is the highest among domestic computer makers in customer complaints. (2005) The company has experienced double-digit growth in the past few years, and with the growth comes increasing pressures on their manufacturing as well as customer service departments.

If Dell is to remain at the forefront, they must address this issue, and bring the amount of their customer service and technical service complaints back down to reflect industry averages. Another significant threat to Dell is the rising innovation within the computer industry. The evolution of the laptop and home PC into a complete multi-media entertainment center is moving to the forefront of home electronics. HP has introduced its "Media Center PC" which comes out of the box ready to facilitate television viewing, music storage and playing, and a host of other home and family media needs.

Dell has also introduced similar products, but HP has gained the first foothold, advertising these computers to the masses via a massive television campaign. If customers gain a perception that HP or other computer manufacturers have the next generation PC's while Dell remains behind the curve, struggling with customer service and reliability issues, the company could see its position in the marketplace erode quickly. Another product that is allowing computer manufacturers to expand their position in the marketplace is the evolution of high-definition televisions.

The LCD and Plasma screens which have powered laptops for a generation have leaped the great size divide. Technology now allows this high-definition (HD) products to appear in 42" and 52" sizes, allowing for computer manufacturers to launch a foray against a marketplace that has been the sole residence of television manufacturers. Samsung, Panasonic, and Sony are leading the field in the plasma and LCD HD television market. Yet Dell has their line of HD televisions available. This evolution in media and entertainment delivery poses the most significant threat to Dell.

This product evolution has introduced a genuinely new product into the marketplace.