Alan Wolf

Michael Dell’s Shack Attack
May 4, 2007

A BusinessWeek commentary by senior writer Peter Burrows proposes an elegant solution to the dilemmas besetting Dell and RadioShack: a merger.

Dell, which is losing share to a revitalized HP, has made no bones about its need for a fresh market strategy. And with the computer company’s market cap at $57 billion, give or take a few mill, its pockets are certainly deep enough to accommodate the iconic but withering CE chain.

Industry observers believe that RadioShack CEO Julian Day is merely tidying up the balance sheet in advance of a for-sale sign. With its core wireless business being siphoned off by the carriers, and no clear role for a parts-and-battery chain in the e-tail enabled 21st Century, perhaps that wouldn’t be such a bad thing.

But would a Dell-RadioShack duo be a match made in heaven?

Perhaps. If Dell could swing the logistical and operational challenges of running a 4,000-plus-store chain, a physical presence in virtually every neighborhood would give it a leg up over its PC competition, and allow it to continue side stepping the traditional two-step distribution route. RadioShack’s real estate, meanwhile, would house a focused assortment, provide a showcase for Dell’s flat panel TVs, and, most important, would become relevant again for a new generation of consumers.

The success or failure of the endeavor would likely hinge on service, which is sorely lacking in the IT universe. If Dell could dispense from the corner store dependable and affordable advice on retrieving lost files, downloading photos and hooking up a home network that every student, soccer mom, grandparent or small businessperson can understand, then it could be the beginning of a beautiful friendship.

Posted by Alan Wolf on May 4, 2007 | Comments (0)