Dell customers can't get no satisfaction

Consumers apparently aren't the only ones bent out of shape about customer service at Dell.

A survey of US server buyers found that Dell dropped from first place to third place in terms of satisfaction in the third quarter of 2005. IBM, stuck at number three for most of the last eight years, is now number one. HP remained in its number two spot, according to the survey conducted by Technology Business Research.

Except for two other quarters, Dell has held first place in TBR's server survey since the third quarter of 1997. Customers dinged Dell for its poor on-site and phone support, as well as hardware reliability and product value. By contrast, IBM customers surveyed said they were increasingly pleased by the company's performance in those same areas.

While the swings in overall satisfaction aren't huge — Dell's score fell two points to 83 percent while IBM swung in the opposite direction — Big Blue is touting the results to its advantage.

"IBM's winning position in the third quarter of 2005 was bolstered by continually improving positions across all aspects of server support (on-site, phone, replacement parts availability) and a carryover of its recent improvements in how customers perceive its server management tools," the firm said in a report.

Dell's score also fell for notebook and desktop satisfaction, although it remained number one in those categories.

The survey results came on the heels of a string of problems for Dell, a company usually associated with hyperefficiency and relentless growth. This week, the company announced that revenue for its quarter ending in September would be lower than expected. Layoffs, a rarity for Dell, are also expected to take place.

Further, Dell's PC sales growth has slowed. The company's PC shipments grew 17.6 percent during the third quarter, which is only slightly faster than the overall market growth. Dell typically surpasses industry growth by a wider margin. Its growth roughly matched rival HP, according to Gartner.

Dell's lingering problems with consumer satisfaction and focus on higher-priced PCs have also dampened its consumer computer sales in the US

TBR, though, noted that it can be dangerous to read too much into the server survey numbers. Customer sentiment shifted suddenly, the firm said, and only involved a few percentage points.

"Dell customers abruptly changed course in their opinions of the brand in the second half of the reporting period. This followed a long period of reasonable stability and domination," the firm wrote. "Because the shift occurred so suddenly, and affects only a three-month timeframe, we must not be too hasty to suggest this is the beginning of a new trend."

Part of the recent dissatisfaction with Dell's phone service could stem from the hiring and training of many new phone-support employees during September, said Julie Perron, an analyst at the firm. Nonetheless, Linux customers tend to be less satisfied with Dell than Windows customers, which could be a longer-term problem to solve.

In 2004, Dell experienced a drop in overall customer satisfaction ratings (not just with servers), but the company recovered by the end of year. These latest results are at the same level as the 2004 decline. A full report will come out later.