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Ah, Dell. Once the glorious child of the PC industry. Now, a slumping share price and negative revenue growth are causing you to flail around in any direction. The latest attempt will be two Dell-branded stores that will open in upscale malls in Dallas and New York. The company has had kiosks in a lot of malls (two local malls that I know of have them) and has been making money on them so they wanted to expand the concept.

The problem is that they are trying to copy a model that’s not really applicable. The real motiviation is the Apple stores around the country, especially after seeing the crazy opening of the 5th Avenue store in New York (open 24/7/365).

There are several problems with copying the Apple concept. First, Dell doesn’t have nearly the err, um, fandom of that Apple has. The Apple-branded stores have definitely benefited from this. Second, the Apple stores have free tech support through the Genius Bar and free wireless internet available. Dell doesn’t appear to be doing this. Third, you walk into an Apple store, play with the products, and then walk out with an iPod or MacBook. Dell won’t have any inventory in the stores. You can’t walk out with a Inspiron.

Oh, and there’s a little thing called the iPod that is driving foot traffic. Dell doesn’t have anything like it to draw in traffic. They do have tvs and other things that Apple doesn’t have, but none of it has the cool factor like the iPod.

I’d expect this will end up like Dell’s foray into Sears stores (remember those? neither did I) and they will have to pull back. Dell is flailing because its direct-to-consumer model is no longer the advantage it used to be. A lot of people like to play with laptops because each one is different and you can’t do that with a Dell. The other computer companies have also copied Dell’s inventory methods that have so long been a source of competitive advantage.

Dell’s stock has been in a free-fall and has fallen nearly 50% in the past year. It’s P/E of 16.5 is well below the traditional average and is half of what HPs is. The stock is probably fairly priced right now, but it doesn’t pay a dividend. I wouldn’t sell the stock now if you’re in but I don’t know that I’d buy here either as I think the stock will keep dropping as Dell gets more and more distracted trying to manufacture growth in the US.

Technorati Tags: Dell, Apple, Genius Bar, iPod, MacBook