• Austin American-Statesman , Wednesday, September 17, 2008 10 AM

Dell's stock price fell to levels it hasn't seen in more than a decade Tuesday -- a fresh reminder of the growing pains that the company faces as it expands beyond Michael Dell's innovative direct model.

A decade ago, the business model and the company were darlings of Wall Street but the model has run out of steam in the past three years, largely because of the rising popularity of notebook computers and increasing sales to home users and customers in emerging markets such as China and India.

Those new growth engines of the PC industry have lessened the advantage of Dell's build-to-order, quick-delivery operation, and they have forced the company to reshape its model into one that more and more resembles the way its rivals go about their business. Computer makers are in a fight to see which company can better execute on the details.

"A couple years ago, you might have said [Hewlett-Packard] has no competitive advantage in PCs because they can't direct-build like Dell does," said Louis Miscioscia, an analyst at Cowen and Co., a research firm and investment bank. "But the market has changed."

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