On Wednesday, Microsoft's announced that it is moving towards a service-based model, a strategy change in which Microsoft would deliver many of its key products and services on line.  In this annoucement there is an important footnote about Dell. 

Dell's success can be largely attributed to the Wintel monopoly of the past 10 years.  Every single Dell computer was shipped with an Intel processor and a Windows operating system.  Dell's business model of on-line sales, and low price via a highly efficient supply chain gave them the foothold into the business and consumer market place.  Dell was one of the most important distribution channels for Microsoft. 

Not anymore.

Now with on-line service delivery, Microsoft has effectively cut Dell out of their value chain.  So tell me, why should I buy a new computer from Dell if I can download a new Operating System from the Internet?  And if I can download an Operating System from the Internet, do I really want something that looks like the Dell PC on my desktop?

Intel has already made attempts to diversify away from the Wintel - Dell cash cow.  Intel is pushing its small, lower power chips which can go in a variety of devices (Blackberrys, for example.)  And they made a nice deal with Apple that at least bought them some look at us! we're-doing-new-things! publicity.

Meanwhile on Monday, Dell lowered its third quarter forecast.  This is the second quarter that Dell had to warn and predictably the stock was pounded in trading.

Poor Dell.  It would seem that someone didn't invite them to the party or let them know the party was over.