June 22, 2010
What is the Value of a “Beige Box”?
In the 90s, Dell was the model of operational innovation. With a phone/internet ordering system and a regionally-based manufacturing approach, they single-handedly eliminated the need for any distributors or retail stores. This allowed them to sell computers at a price that dramatically undercut their competition. The problem with Dell’s solution was that the other industry players quickly adapted and began to offer prices that were just as competitive. As each “beige box” flooded the market, Dell lost a piece of its brand.
Computer companies that had prided themselves on product innovation suddenly were caught following the same trend. With everyone’s product looking and costing the same no computer manufacturer was able to stand out. Then something happened: the iMac.
You might remember these candy-colored computers showing up in schools, homes and offices. Blueberry, strawberry, tangerine, grape, or lime casings allowed each user to find the color that fit their personality. Just like that, Apple started a revolution to counter the beige boxes produced by Dell.
Apple’s computers became more than just functional objects. Their form was beautifully unique and stood out from everything else on the market. Apple continued to evolve by introducing a new operating system which laid the foundation for the iPod, iPhone and the iPad. For the foreseeable future, Apple has positioned itself as the leader of innovation because their products were developed as a part of an inspiring brand.
As of June 22st, 2010:
Apple’s Market Cap = $250 billion
Dell’s Market Cap = $27 billion
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