Disclosure: The writer owns stock in DELL.
Dell just introduced a sleek new PC for the affluent market – the Adamo. The website is gorgeous; it looks more like a website for jewelry or cologne or headshot photography. But can Dell, the miserly manufacturer of barely-usable PC’s, really succeed with a prestige brand?
If Apple is the cool young hipster and Microsoft is the stuffy old suit, then Dell is surely the haggard and inept maintenance man. Can Gomer sell style?
It depends. Many companies have tried, and failed, to introduce a prestige brand. The problem is the prestige brand gets weighed down by the parent brand, like a hot air balloon attached to a rusty old dump truck. The balloon cannot soar. Examples abound:
- Hyundai and Kia are trying to go up-market and sell low-end luxury cars. But they cannot shake the “cheap car” perception
- Wrangler, with the $15 WalMart jeans, tried to sell $190 jeans at Barney’s. No success.
- Holiday Inn tried to go up-market with Holiday Inn Crowne Plaza. But business travelers thought it was too expensive for a Holiday Inn.
In order for the Adamo brand to succeed, Dell needs to strip out all the Dell branding and let Adamo become its own brand. That’s how these prestige brands became successful
- Lexus is a successful premium brand because it is NOT associated with Toyota, the practical and reliable Corolla salary-man car. Lexus even has its own dealerships, separated from the Toyota dealerships.
- Audi also enjoys an upscale image, because any association with Volkswagen is carefully removed
Although we’re in the grip of a recession, people with money are still buying luxury goods. The hardest hit is the economy segment of the market. Adamo gives Dell an anchor in the market segment that isn’t floundering. And they will be successful, if and only if they carefully distance the Dell brand name and let the Adamo brand lead.
For now, the Dell brand is still a little too prominent on the Adamo. I hope they get smart fast on that.
But the most important thing is Dell knows how to win. Just like the Steelers in the 2009 Super Bowl. You don’t bet against a team that knows how to win. And you don’t go from a college kid building computers in your dorm room to CEO of a global computer business without knowing how to win. Take a look at how Dell is moving quickly to capitalize on the popularity of netbooks. Rather than cannibalize full-size laptop sales, netbooks are likely to open new markets for additional PC’s in the household, and accelerate adoption in emerging markets.
And that, dear friends, is why I’m bullish on Dell.
