Why Dell will not bounce back: "Bottom line is this: the only innovations worth making are the ones involving product ideas and product design. I mean, Duh. Right? It's pretty obvious. What's amazing to me is how few companies actually seem to realize it. To sustain an edge in any market you must make better products than your competitors, consistently, over and over and over again. Just making the same products as everyone else but taking a little friction out of the system can give you an advantage, but only a temporary one."
Bingo. And combined with the current move to virtualisation, I think that all the major PC and Server builders out there are in for a very rough ride in the next 5-10 years. As others have mentioned, the current commodity PC is a race to the bottom, but nobody's mentioned what happens when you hit the bottom.
The other missing piece of this equation is loyalty. If price is the only major differentiator, then there's no reason for me to be a repeat customer. If you offer me something that nobody else is able to offer, then I have a reason to become a repeat customer.