Dell

Dell Inc. is an American privately owned multinational computer technology company based in
Round Rock, Texas, United States, that develops, sells, repairs and supports computers and
related products and services. Bearing the name of its founder, Michael Dell, the company is one
of the largest technological corporations in the world, employing more than 103,300 people
worldwide.
[3]

Dell sells personal computers, servers, data storage devices, network switches, software,
computer peripherals, HDTVs, cameras, printers, MP3 players and also electronics built by other
manufacturers. The company is well known for its innovations in supply chain management and
electronic commerce, particularly its direct-sales model and its "build-to-order" or "configure to
order" approach to manufacturingdelivering individual PCs configured to customer
specifications.
[4][5]
Dell was a pure hardware vendor for much of its existence, but a few years
ago with the acquisition of Perot Systems, Dell entered the market for IT services. The company
has since made additional acquisitions in storage and networking systems, with the aim of
expanding their portfolio from offering computers only to delivering complete solutions for
enterprise customers.
History
Main article: History of Dell

Dell's first logo from 1984 to 1989.
Dell traces its origins to 1984, when Michael Dell
[13]
created PC's Limited
[14]
while a student of
the University of Texas at Austin. The dorm-room headquartered company sold IBM PC-
compatible computers built from stock components.
[15]
Dell dropped out of school to focus full-
time on his fledgling business, after getting about $300,000 in expansion-capital from his family.
In 1985, the company produced the first computer of its own design, the Turbo PC, which sold
for $795.
[16]
PC's Limited advertised its systems in national computer magazines for sale directly
to consumers and custom assembled each ordered unit according to a selection of options. The
company grossed more than $73 million in its first year of operation.
In 1986, Michael Dell brought in Lee Walker, a 51-year-old venture capitalist, as president and
chief operating officer, to serve as Michael's mentor and implement Michael's ideas for growing
the company. Walker was also instrumental in recruiting members to the board of directors when
the company went public in 1988. Walker retired in 1990 due to health, and Michael Dell hired
Morton Meyerson, former CEO and president of Electronic Data Systems to transform the
company from a fast-growing medium-sized firm into a billion-dollar enterprise.
[17]

The company changed its name to Dell Computer Corporation in 1988 and began expanding
globally. In June 1988, Dell's market capitalization grew by $30 million to $80 million from its
June 22 initial public offering of 3.5 million shares at $8.50 a share.
[18]
In 1992, Fortune
magazine included Dell Computer Corporation in its list of the world's 500 largest companies,
making Michael Dell the youngest CEO of a Fortune 500 company ever.
[19]

In 1993, to complement its own direct sales channel, Dell planned to sell PCs at big-box retail
outlets such as Wal-Mart, which would have brought in an additional $125 million in annual
revenue. However, Bain consultant Kevin Rollins persuaded Michael Dell to pull out of these
deals, believing they would be money losers in the long run.
[20]
Indeed, margins at retail were
thin at best and Dell left the reseller channel in 1994.
[21]
Rollins would soon join Dell full-time
and eventually become the company President and CEO.
Growth in 1990s and early 2000s
Originally, Dell did not emphasize the consumer market, due to the higher costs and
unacceptably low profit margins in selling to individuals and households; however, this changed
when the companys Internet site took off in 1996 and 1997. While the industrys average selling
price to individuals was going down, Dells was going up, as second- and third-time computer
buyers who wanted powerful computers with multiple features and did not need much technical
support were choosing Dell. Dell found an opportunity among PC-savvy individuals who liked
the convenience of buying direct, customizing their PC to their means, and having it delivered in
days. In early 1997, Dell created an internal sales and marketing group dedicated to serving the
home market and introduced a product line designed especially for individual users.
[21]

From 1997 to 2004, Dell enjoyed steady growth and it gained market share from competitors
even during industry slumps. During the same period, rival PC vendors such as Compaq,
Gateway, IBM, Packard Bell, and AST Research would struggle and eventually leave the market
or get bought out.
[22]
Dell surpassed Compaq to become the largest PC manufacturer in 1999.
Operating costs made up only 10 percent of Dell's $35 billion in revenue in 2002, compared with
21 percent of revenue at Hewlett-Packard, 25 percent at Gateway, and 46 percent at Cisco.
[23]
In
2002, when Compaq merged with Hewlett Packard (the fourth-place PC maker), the newly
combined Hewlett Packard took the top spot but struggled and Dell soon regained its lead. Dell
grew the fastest in the early 2000s.
Rollins as CEO and disappointments
However in 2005, while earnings and sales continued to rise, sales growth slowed considerably,
and the company stock lost 25% of its value that year.
[29]
By June 2006, the stock traded around
$25 USD which was 40% down from July 2005the high-water mark of the company in the
post-dotcom era.
[30][31]

The slowing sales growth has been attributed to the maturing PC market, which constituted 66%
of Dell's sales, and analysts suggested that Dell needed to make inroads into non-PC businesses
segments such as storage, services and servers. Dell's price advantage was tied to its ultra-lean
manufacturing for desktop PCs,
[32]
however this became less important as savings became harder
to find inside the company's supply chain, and as competitors such as Hewlett-Packard and Acer
made their PC manufacturing operations more efficient to match Dell, weakening Dell's
traditional price differentiation.
[33]
Throughout the entire PC industry, declines in prices along
with commensurate increases in performance meant that Dell had fewer opportunities to upsell to
their customers (a lucrative strategy of encouraging buyers to upgrade the processor or memory).
As a result the company was selling a greater proportion of inexpensive PCs than before, which
eroded profit margins.
[22]
The laptop segment had become the fastest-growing of the PC market,
but Dell produced low-cost notebooks in China like other PC manufacturers which eliminated
Dell's manufacturing cost advantages, plus Dell's reliance on Internet sales meant that it missed
out on growing notebook sales in big box stores.[3]
[30]
CNET has suggested that Dell was getting
trapped in the increasing commoditization of high volume low margin computers, which
prevented it from offering more exciting devices that consumers demanded.
Acquisitions
For more details on this topic, see List of Dell ownership activities.
In 2006, Dell acquired Alienware, a manufacturer of high-end PCs popular with gamers.
[97][98][99]

The company acquired EqualLogic on January 28, 2008, to gain a foothold in the iSCSI storage
market.
[100][101]
Because Dell already had an efficient manufacturing process, integrating
EqualLogic's products into the company drove manufacturing prices down.
[102]


In 2009, Dell acquired Perot Systems, a technology services and outsourcing company, mainly active in
the health-sector, founded by former presidential hopeful H. Ross Perot
In 2009, Dell acquired Perot Systems, based in Plano, Texas, in a reported $3.9 billion deal, and
amalgamated into Dell Services.
[103][104]
The acquired business provided Dell with applications
development, systems integration, and strategic consulting services through its operations in
the U.S. and 10 other countries. In addition, the acquisition of Perot brought a variety of
business process outsourcing services, including claims processing and call center operations.
[105]

On February 10, 2010, the company acquired KACE Networks a leader in Systems Management
Appliances. The terms of the deal were not disclosed.
[106]

On August 16, 2010, Dell announced plans to acquire the data storage company 3PAR.
[107][108]
On
September 2, Hewlett-Packard offered $33 a share for 3PAR, which Dell declined to
match.
[109][110]

On November 2, 2010, Dell acquired Software-as-a-Service (SaaS) integration leader Boomi.
Terms of the deal were not disclosed.
Manufacturing
From its early beginnings, Dell operated as a pioneer in the "configure to order" approach to
manufacturingdelivering individual PCs configured to customer specifications. In contrast,
most PC manufacturers in those times delivered large orders to intermediaries on a quarterly
basis.
[149]

To minimize the delay between purchase and delivery, Dell has a general policy of
manufacturing its products close to its customers. This also allows for implementing a just-in-
time (JIT) manufacturing approach, which minimizes inventory costs. Low inventory is another
signature of the Dell business modela critical consideration in an industry where components
depreciate very rapidly.
[150]

Assembly of desktop computers for the North American market formerly took place at Dell
plants in Austin, Texas (original location) and Lebanon, Tennessee (opened in 1999), which have
been closed in 2008 and early 2009, respectively. The plant in Winston-Salem, North Carolina
received $280 million USD in incentives from the state and opened in 2005, but ceased
operations in November 2010, and Dell's contract with the state requires them to repay the
incentives for failing to meet the conditions.
[52][53]
Most of the work that used to take place in
Dell's U.S. plants was transferred to contract manufacturers in Asia and Mexico, or some of
Dell's own factories overseas. The Miami, Florida facility of its Alienware subsidiary remains in
operation, while Dell continues to produce its servers (its most profitable products) in Austin,
Texas.
Products
Scope and brands

Dell's tagline 'Yours is Here', as seen at their Mall of Asia branch in Pasay City, Philippines
The corporation markets specific brand names to different market segments.
Its Business/Corporate class represent brands where the company advertising emphasizes long
life-cycles, reliability, and serviceability. Such brands include:
OptiPlex (office desktop computer systems)
Dimension (home desktop computer systems)
Vostro (office/small business desktop and notebook systems)
n Series (desktop and notebook computers shipped with Linux or FreeDOS installed)
Latitude (business-focused notebooks)