Posts Tagged ‘Nagra’

How’s that supply chain working for you now?

The boring thing to call this post is Supply chain comparisons in commodity versus specialty products. The fun thing would be Dell, you screwed up.

See, Dell recently ended up shipping servers with malware in the firmware. The firmware. The very heart of the machine. Servers. Not consumer computers, but machines business rely on to actually, well, do business.

In the film and music industries, there are a lot of gearheads, myself included. We require reliability and manufacturer support, because it really sucks when a $50,000/hour shoot comes grinding to a halt because a $0.25 connector failed. We look for quality, because spending $5 instead of $0.25 on a connector seems like a great deal, in the face of $50,000/hour downtime.

At any rate, in the film and audio industries, outside the fiercely ‘indie’ realm, the professionals look for quality and pay for it. From Altman for lights to Manley Labs for outboard audio gear to Zaxcom for digital production recorders and wireless, quality is the supreme factor, because it is cheaper in the long run.

So what does this all have to do with Dell? Let’s do a little comparison:

Company 1: Kudelski SA

We can look at certain devices like the Nagra VI recorder (link to David Waelder’s excellent review), and appreciate a lot of details: The Nagra VI is, of course, made in Switzerland by the Kudelski Group’s NagraVision SA division, a company with a very long history in recording technology and data security. They made cold-war spy gear. They made the Nagra tape machines, the standard production recorder for decades.

The Nagra VI recorder is made by a largely vertically integrated company. The metal case, the circuit boards, the firmware programming, even the transformer winding…It’s all done by NagraVision inhouse, not a subsupplier. The few things that are subbed are obtained from equally quality-obsessed companies. Take a look at this factory tour. They consider the aesthetics of everything: What will the knob feel like after a 200 day shooting schedule? Will the transformers work in Death Valley one week and on Denali the next?

Now, the other interesting thing about the Nagra VI is the core processor choice. They started using and programming their own FPGAs in the 80s with their first digital products. NagraVision sources the chip from Altera (Specifically, Altera’s Korean plant), but they program it and write the firmware themselves, and have complete control over the code. Altera does nothing buy deliver a blank slate. There is more info here (PDF).

End result: Someone working on a feature film, or recording that once-in-a-lifetime concert tour can rest assured that the Nagra VI will work.  Not only will it work, but you feel the Swiss engineering in every facet of the machine…decades of experience and quality engineering lineage wrapped up into a single small package.

The choice to buy a Nagra (or Zaxcom, Schoeps, Neumann, Sound Devices, and other quality gear) is easy when the cost of the equipment is virtually nothing compared to the cost of failure. Your cheap recorder died on set? Took a bunch of takes with it? Well, a single day of ADR with an A-list actor, the director and entourage costs as much or more than a Nagra VI (list: about $8,000 USD).

Company 2: Dell

How does this relate to Dell? Well, simply put, Dell doesn’t have control over their own production, engineering, supply chains or much else that actually is a Dell computer…

Dell has had to scramble recently to get replacement firmware to their customers. It seems that somewhere along their vast supply chain, some servers ended up with malware on them.  Instead of managing firmware in-house, as Nagra does, Dell seems to let someone else handle the brain of the hardware, as well as many other critical components like power supplies. Big mistake. Y’all lost the soul of the machine. Your users don’t seem happy either.

Dell is no stranger to quality issues: The Optiplex had it’s share of problems, and Dell didn’t recall them.

So what is Dell?  They are a marketing and support firm, not a manufacturer.

Is it better to buy a computer from a marketing company with support division, or from a company that is in the business of designing and manufacturing computers?

The Blame Game

People working in film and music make large capital investments in quality equipment, because even if it goes obsolete faster than we like, it is rock-solid.  When is it acceptable to sacrifice long-term quality and buy on the cheap? Never…Unless someone comes up with a really complicated way of saying it.

Dell’s Customers: Have you taken advantage of short-term capital cost savings, while  minimizing your exposure to high capital investments in quickly depreciating technologies?

Yeah. Customers bought cheap to save money upfront, hoping it would go obsolete before it broke…Or before accounting identified even more ‘cost savings’ in “extending the deployment cycle of high-replacement cost technologies.”

Do the accountants even once think about including the cost of failure and downtime? Rarely. Do the CxOs listen even if they do? Hardly ever.

Look inside, Dell’s customers. You are not just victims here…

Dell’s Shareholders: Does your pervasive neurotic focus on quarterly results prevent Dell from making long-term capital investments that might hurt short-term projections?

About that:

Dell also said it will have spent an unscheduled $450 million, or roughly 14 cents per share, on operational issues. This will make its projected third-quarter earnings per share about 25 cents versus the previous estimate range of 39 cents to 41 cents.

“The charge also includes the costs of workforce realignment, product rationalizations and excess facilities,” the company said.

“Michael Dell basically said, ‘Well, if we can’t trade them up or sell a monitor, we really don’t want that business,'” Kay recounted.

…But those quarterlies? Yeah, the cake is a lie:

For years, Dell’s seemingly magical power to squeeze efficiencies out of its supply chain and drive down costs made it a darling of the financial markets. Now it appears that the magic was at least partly the result of a huge financial illusion.

But shareholders keep demanding the cake…Over and over and over, even if it’s a lie. Think beyond next quarter…Or watch your investment crash like a non-conforming mortgage on an underwater house.


Y’all simply screwed up. Big Time. Own it. Realize you have been screwing up for the better part of a decade.

Then make it better and get back to what you used to do: Lean computer manufacturing, with at least a touch of concern about quality…If  your institutional flaws ever allow you to vertically integrate your production. I’m not holding my breath. After all, you’ve done this:

“There was a sequence of human errors that led to the issue, That being said, we have identified and implemented 16 additional process steps to make sure this doesn’t happen again,” said Dell spokesman Jim Hahn.

Nice band-aid. Nice 16 band-aids. It still doesn’t solve the problem: How many more will you try and stick on to an increasingly festering gangrenous supply chain?

The bottom line:

Film and audio equipment is purchased based on total cost: The upfront+cost of repairs+potential cost of failure+ease of use/efficiency+aesthetic appeal+etc. Dell is very lucky, because most corporate accounting practices segment those costs across multiple books, so the true cost of owning lower quality equipment is never considered. This isn’t good for Dell, or the customer.

I guess my whole rambling point is this: Dell, get some Soul.