Dell just wrapped what has to be one of the worst years in its history -- maybe one of the worst years for any company, ever.
The latest sales figures confirm that it has not regained its longtime title of top PC maker, which it lost to rival HP in 2006's third quarter.
Its list of woes is long and includes a highly embarrassing recall of laptops after several of its machines burst into flames; a tarnished customer service reputation; an SEC inquiry into accounting practices; and stockholders angry enough to sue the company.
Some observers fault the management decisions of recently departed CEO Kevin Rollins, such as his move to go after the high-end enterprise and gaming PC markets. Even once vaunted business practices such as Dell's direct sales model are coming under negative scrutiny.
It's possible that Michael Dell can correct some of these problems as he takes over the company he founded. But even he may not be able to correct what could be a far more fundamental issue: a corporate culture that prizes operational efficiency at the expense of innovation.
According to Cutter Consortium, innovation will become a primary competitive differentiator in today's economy. Operational efficiency has become expected, just like product quality, and thus can no longer give companies enough of an edge against rivals, the firm says.
ZDNet blogger David Berlind agrees. Dell has simply relied on the innovations of suppliers like AMD and ATI, he points out, rather than investing in its own R&D. This lack of internal R&D is an especially big problem in the server and networking infrastructure market that Dell is trying to crack.