Company – Dell
Founder – Michael Saul Dell
Dell is a world-renowned computer and peripherals manufacturing and service providing company. It is headquartered at Round Rock, Texas in USA and is one of the largest technological companies in the world. Dell was founded by Michael Dell, after which the company was subsequently named, in the year of 1984 as a customized computer manufacturer.
From such humble beginnings, Dell has grown to employ over 100,000 people all over the over and has an annual turnover of around 79 billion dollars.
Michael Dell started his own personal computer (PC) assembling business while he was studying at the University of Austin, Texas. He built custom-made PCs from the stock parts of IBM machines. In 1985, he left college and started his own company, PC’s Limited, with seed money of 1,000 dollars taken from his family.
Michael’s business model garnered good response from the customers and eventually his company bought their own brand of PCs in the market. Named Turbo PC, it retailed for 795 dollars apiece.
PC systems followed a more direct approach in selling their product to its customers. They put up advertisements in the national daily newspapers and custom-built their orders individually according to a preset list of offered options chosen by the customers. The focus was on personal interaction with the buyer and service technicians were sent directly from the company’s office to the site in case of technical issues.
This system of sales and service was appreciated by the consumers and the company garnered more than 70 million dollars sales in its first year of business.
The Road to Success
In order to further expand his business by infusing capital, Michael Dell invited Lee Walker in 1986, a venture capitalist, to helm the company as its president and Chief Operating Officer. He would become the mentor and help with the implementation of Dell’s various ideas of the company’s growth and expansion. In 1987, Michael changed the company’s name to Dell Computer Corporation and started shipping his computers internationally.
Within a year it became a public limited company and its capital grew from the initial offering of 30 million to 80 million. Walker was chiefly responsible for selecting the board of directors of the company when it went public. After Walker retired in 1990 citing health reasons, Michael Dell invited Morton Meyerson, formerly the CEO and president of Electronic Data Systems, to further help with the process of building his company into a multi-billion dollar enterprise.
Dell Computer Corporation steadily gained market share from the late 1980s to the early 1990s. In 1992, Fortune magazine incorporated the company in its coveted Fortune 500 Companies list, making Michael Dell the youngest ever CEO of such a prestigious organization.
To further increase business, Dell partnered with large retail chains like Walmart to sell pre-assembled ready-to-use PCs from their counters. But Kevin Rollins, then consultant at Bain, eventually persuaded Michael Dell to sever these deals owing to thin margins and eventual higher overheads.
Rollins would join Dell and eventually rise in the ranks to become its president and CEO. Thus, Dell Computer Corporation was not initially inclined to sell computers to individual buyers or domestic casual users owing to minimum margins and high level of services required to sustain hold on the market. But, with the launch of its official Internet website during 1996 and 1997 Dell stared online selling of PCs to buyers who wanted custom-built machines with high-end configuration and performance. To this effect, a new division was formed for the home segment and new product lines were launched.
With new strategies in place, increase in customer base and superior customer service kept Dell Computer Corporation’s business revenues on the rise through the late 1990s to the start of the new millennium. Even with the general computer business on the slowdown, Dell managed to stay in the green owing to much lesser operating margins than its peers. In 2002, operating costs made up only 10% of its 34 billion dollar earnings while it always earned top ratings on PC reliability and customer services.
To further increase its product portfolio and market presence, Dell started selling low-end enterprise servers along with its already established PC and laptop ranges. Their market share increased steadily in this segment from virtually zero to 31% in 2001 owing to the smart strategy of incorporating Windows NT operating system in their enterprise servers which bypassed the need of buying proprietary software needed to run servers of the rival companies.
Dells first among many acquisitions occurred in 1999 – it bought ConvergeNet Technologies as it needed a functioning enterprise storage system for its rapidly burgeoning server market. The year 2002 saw Dell diversifying into newer electronic products like handheld computers, television, audio players and printers. The company was renamed as Dell Incorporated in 2003 to recognize its broader scope and vision.
After several more acquisitions like Alienware, Perot Systems, Gale Technologies and several others, Dell eventually acquired EMC Corporation, an enterprise software and data storage company for 67 billion dollars in 2016 which is the highest amount paid for acquiring a technological company. Following this, both EMC and Dell Incorporated were formed into separate divisions under Dell Technologies, the newly-formed parent organization.
- Michael Dell’s strategy of direct selling to customers without any intervening agencies or channels remained his company’s primary mode of business
- With the advent of Internet, Dell started selling its products and providing after-sales services through the digital media along with the conventional means
- The company’s marketing strategies hinged upon competitive pricing all round the year and offering free products like printers along with shipping materials at no extra cost with every purchase
- Regular price cuts and reduction of its operating margins substantially also contributed towards maintaining its market share
- Timely usage of all kinds of media advertising to educate the customer about its products, schemes and offers. Television, digital and social media, newspapers and catalogues are used for public communication
- From 2011, a yearly conference is being held by the company in Austin, Texas called “Dell World” to showcase its products and technologies for the consumers
Dell’s journey to become a global conglomerate from a single-room personal enterprise is a prime example of excellent entrepreneurship. The global giant currently sells a host of other products like network switches, data storage devices, cameras among others along with products from different manufacturers.
Dell will always be known for the focus on its customers and the pioneer of direct sales in the computer business. With an annual turnover of around 79 billion dollars in 2018, Dell is already focused towards the future with its wealth of experience and confidence in its business model.
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