The economy is not yet based on conversations or experiences. So what are we to make of it when Dell lowers earning guidance, takes a hit on Wall St. and some of the leading proponents of ‘life-after-marketing’ take credit?

First the facts. Dell lowered Q2 revenue guidance from $14.4 Billion to $14 Billion. Dell saw 11.6 percent growth in this quarter, remaining the largest mfg of PC’s in the world. DELL stock has lost about 33% of its value thus far in 2006.

Is it even remotely possible to attribute $400 million in unrealized expectation to Dell Hell? If so, how do you explain nearly 12% growth? Isn’t it far more likely that the customer service issues are just one tiny factor in a massively complex situation? Do we need to pretend we’ve toppled Dell with a couple of blog posts just to build confidence that we’re on the right track in the blogosphere?

I firmly believe that companies are best served by engaging in open conversations with their markets. And that we’re seeing the beginnings of a fundamental power-shift based on the ease with which consumers can share experiences and opinions, and discover the experiences and opinions of others. But it’s the beginning of the beginning, and most of the consumers in the world and most of the business results in the world are as yet completely unaffected.

BL Ochman, who I swear I really admire and usually agree with, implies that both the problem and the solution are found in conversations and experiences. In particular, she suggests that the recent stock decline is indicative of the company’s customer service results. But a look at a 10-year chart shows DELL share price going straight up, except for the bubble-burst and the past 12-months. Of course, nobody believes that Dell’s customer service quality was steadily improving and the suddenly crashed last summer.

For explanations as to the recent problems, Wall St. offers a few other possibilities:

… 85 percent of its business comes from commercial entities, and those organizations buy PCs in upgrade cycles, said Charles Smulders, an analyst with Gartner. The last cycle started around 2002, three or so years after companies started buying PCs ahead of the perceived Y2K problems. It's now coming to an end, and business customers aren't expected to upgrade again until they've done extensive testing of Microsoft's Windows Vista… Dell also suffers from a dependency on desktops and U.S. sales, Smulders said. Desktop PCs account for 36 percent of Dell's overall revenue… (but) commercial desktop shipments are expected to decline by 4.5 percent this year… {via News.com]

Scoble attributes Dell’s slide to the fact that his son got a new power supply at the Apple Genius Bar over at the mall, and Dell obviously couldn't replicate that. But in his comments he relates another story: “I had a Dell go out at work once and they just sent a whole new one. It took a business day.”

Away from this debate, Nick Carr uses the Dell numbers to explore a more interesting thesis; that the direct model offers cost efficiencies in production and sales but inefficiencies in support. This may be true in terms of real hardware support issues, but what if Dell tapped its user base for a support wiki and amazing ‘shared experience search engine’? I gotta believe a lot of what makes Dell users unhappy are things that other Dell users know how to solve. If the company centrally delivered the infrastructure to support it, user-generated content may be able to turn around a lot of this mess fairly quickly.

Since I seem to be defending Dell a lot recently, I’ll disclose that I own a Dell laptop, build my own home PC’s with parts from NewEgg, and we’ve bought a dozen Dell PCs and laptops at Commerce360 recently. I’ve had one customer service issue, with a new T620 that died a week after birth, and it was replaced rather promptly (I even talked them out of a component upgrade in the process). I haven’t owned any Dell stock in at least 5 years.