Why did Dell stop making TVs?

If you bought a TV in late 2003, you may have come across a familiar brand that seemed completely out of its usual territory: Dell. Yes, the undisputed king of desktop towers was suddenly selling LCD TVs. However, the venture was short-lived, as the company shut down production a few years later in 2007. What caused another huge change in direction for the Texas-based PC giant? The short answer is that Dell ultimately wanted to focus on computers and not TVs.

At the time, Dell was virtually untouchable in the computer hardware business, and its mail-order computer business was booming. During this time, the home entertainment market was in the midst of a revolution. Bulky CRT TVs were beginning to disappear, and sleek, flat screens were the go-to gadget. But Dell wasn’t just throwing spaghetti at the wall to see what remained; its leaders had a great vision for the future. They envisioned a modern living room where the family computer would serve as the ultimate entertainment center, which would be connected to (you guessed it) a huge dynamic Dell brand screen.

Given that the company was already producing millions of computer monitors for its offices around the world, getting into the consumer TV game seemed like an easy and profitable win. Dell executives probably figured they could just use their massive supply chain to make displays more cheaply and tap into their endless list of loyal computer buyers to take over people’s living rooms overnight. It was a bold plan, to be sure.

Dell’s seemingly out of nowhere obsession with conquering the living room finally began to hurt its core business. Just when it was trying to convince ordinary consumers to buy Dell home theaters, the company lost its coveted crown as the world’s number one PC maker to its biggest rival: Hewlett-Packard, also known as HP. It’s no surprise that other underrated PC brands capable of competing with Dell have also thrived.

By 2007, the writing was definitively on the wall. Founder Michael Dell returned to the CEO role to clean up the mess and steady the ship, and one of his first strategic moves was to scale back the company’s extensive television lineup. By the middle of that year, Dell-branded televisions were permanently removed from the market.

The reason for this sudden withdrawal was incredibly simple: Dell wanted to refocus on the computing side of its business. The television experience was decidedly not a worthwhile distraction, and it didn’t pay the bills. By moving away from the cutthroat TV market, Dell was able to focus its energy and money on what it did best: making high-end laptops, desktops, and business hardware, despite common problems with Dell laptops. Following this adventure, however, the company decided that it would begin installing its computers at Walmart, so that they would be just as visible to shoppers as those of other brands. Swallowing his pride and abandoning the saloon wasn’t just a hasty retreat, it was a good survival tactic that kept his major PC empire alive and thriving.

Dell’s original plan for its TV empire was simple: sell reasonably priced TVs directly to buyers through the company’s website, completely undercutting other electronics brands. And for a minute, the tech world was abuzz about it. Early adopters appreciated the aggressive discounts, which were part of the same pricing model that made Dell’s online-only custom computers so incredibly popular in the first place.

But it turned out that creating blockbuster TVs is an entirely different thing than shipping a professional workstation or gaming rig. While Dell was an absolute champ when it came to online shopping carts, everyday TV buyers in the 2000s weren’t quite ready to buy a living room main display sight unseen (an understandable sentiment, even today). Even today, people still prefer to walk into a Best Buy or Circuit City, stare at a giant wall of glowing screens, compare colors side by side, and carry a huge cardboard box out to their minivan. Dell’s online-only setup simply couldn’t match the crucial in-store experience. It was this, along with the choice to remain focused on computers, that ultimately killed the company’s television project.