Dell, Inc.

ViJiT

Vijith Pujari
Dell, Inc.

Type Public (NASDAQ: DELL)
Founded Austin, Texas (1984) (as PC's Limited)
Location Round Rock, Texas, United States
Key people Michael Dell, Founder & Chairman
Kevin Rollins, President & CEO
Industry Computer hardware
Products Desktops
Servers
Laptops
Peripherals
Printers
Revenue $49.205 billion USD (2004)
Operating Income {{{operating_income}}}
Net Income {{{net_income}}}
Employees 63,700
Parent {{{parent}}}
Subsidiaries {{{subsid}}}
Website www.dell.com

History

Michael Dell, while still a student at the University of Texas at Austin, founded the company as "PC's [sic] Limited" in 1984 to sell IBM-compatible computers built from stock components. He founded the company on the principle that by selling personal computer systems directly to customers, PC's Limited could best understand their needs and provide the most effective computing solutions to meet those needs.

In 1985, the company produced the first computer of its own design (the "Turbo PC"), which contained an Intel 8088-compatible processor running at a speed of 8 MHz. It advertised the systems in national computer magazines for sale directly to consumers, and custom-assembled each ordered unit according to a selection of options. This offered buyers prices lower than those of retail brands, but with greater convenience than assembling the components themselves. Although not the first company to use this model, PC's Limited became one of the first to succeed with it. Michael Dell dropped out of school to run the business full-time. The company grossed more than $6 million in its first year.

In 1987, PC's Limited set up its first on-site-service programs in order to compensate for the lack of local retailers prepared to act as service centers. Also in 1987, the company set up its first operations in the United Kingdom, eleven more international operations followed within the next four years. In 1988, Dell's market capitalization grew by $30 million to $80 million on its initial public offering day. The company changed its name to "Dell Computer Corporation" in 1988.

In 1990, Dell Computer tried selling its products indirectly through warehouse clubs and computer superstores, but met with little success, and the company re-focused on its more successful direct-to-consumer sales model. In 1992, Fortune magazine included Dell Computer Corporation in its list of the world's 500 largest companies. In 1999 Dell overtook Compaq to become the largest seller of personal computers in the United States of America. To recognize the company's expansion beyond computers, the stockholders approved changing the company name to "Dell Inc." at the annual company meeting in 2003. In March 2004 Dell attempted to expand by tapping into the multimedia and home entertainment markets with the introduction of televisions, handhelds, and digital jukeboxes. Dell has also produced Dell-brand printers for home and small-office use. On December 22, 2004, the company announced that it would build a new assembly plant near Winston-Salem, North Carolina; the city and county provided Dell with $37.2 million in incentive packages; the state provided approximately $250 million in incentives and tax breaks.

In January 2005 the share of sales coming from international markets increased, as revealed in the company's press releases for the first two quarters of its fiscal 2005 year. In November 2005, BusinessWeek magazine published an article titled "It's Bad to Worse at Dell" about shortfalls in projected earnings and sales, with a worse-than-predicted third-quarter financial performance - a bad omen for a company that routinely underestimated its earnings. Dell acknowledged that faulty capacitors on the motherboards of the Optiplex GX270 and GX280 had already cost the company $300 million. Chief Executive Officer (CEO) Kevin Rollins attributed the bad performance partially to Dell's focus on low-end PCs.

In an effort to improve support and reduce long wait-times, Dell has opened a pilot-project of Dell-owned/operated technical support operating out of Edmonton, Alberta. Supporting both Dell and non-Dell hardware and software, this site has quickly begun taking over from outsourced call centers. As of 2006 Dell Inc. has started to divert some of its support work to another Canadian office in Ottawa, Ontario. Dell International Services functions as a support division of Dell.

Dell received a 100% rating in the third (2004) Corporate Equality Index released by the Human Rights Campaign group to evaluate gender-preference practices of commercial bodies in the United States of America. In February 2005, Dell appeared in first place in a ranking of the "Most Admired Companies" published by Fortune magazine.

In October 2005, Dell International Services opened its Customer Call Center Operations in Manila, Philippines. The spoken accent of operators emerged as a customer-service issue. Some people believe that a Filipino accent more closely resembles an American accent than the accent used in India.

Dell has operated a domestic call center in Twin Falls, Idaho since 2002.

Products

The corporation markets specific brand names to different consumer segments. It typically sells the OptiPlex, Latitude, and Precision names to medium-sized and large business customers, where the company's advertising emphasizes long life-cycles, reliability and serviceability. The Dimension, Inspiron, and XPS brands have an orientation towards consumers, students, and small home office environments, emphasizing value, performance and expandability. Dell recently re-introduced the Dell XPS brand to target the lucrative gaming market. Dell XPS desktop systems use silver (rather than the black cases found on newer Dell PCs). Dell has also expanded into non-computer products, including the Dell Digital Jukebox ("Dell DJ") (a portable digital audio player), USB keydrives, LCD televisions, Windows Mobile-powered PDAs, and printers.

Dell uses several brand-names for its product ranges, including:

OptiPlex for office Desktop computer systems
Dimension for consumer Desktop systems
Latitude for commercially-focused laptops
Inspiron for consumer laptops
Precision for workstation systems and high-performance laptops
PowerEdge for larger corporate servers
PowerVault for direct-attach and some network-attached storage (NAS)
Dell EMC for storage area networks
XPS for enthusiast/high-performance systems
Axim for PDAs utilizing Microsoft's Windows Mobile
Dell Digital Jukebox (DJ) MP3 Player for MP3 fanatics
Dell LCD/Plasma TVs and Projectors for HDTV and Monitor enthusiasts
Dell on call - extended support services (mainly for the removal of spyware and of viruses)
Dell currently ships Microsoft Windows XP as the operating system of choice for most of its new computers, but it also offers Red Hat and SUSE for servers. Dell has sought to offer "bare-bones" computers without any pre-installed software - at significantly lower prices. Due to Dell's licensing contracts with Microsoft, customers can obtain such systems only upon request and Dell has to ship them with a FreeDOS disk included in the box and issue a so-called Windows refund or a merchandise credit after sale of the system at the "regular" retail price.

On Dell's Windows machines the manufacturer bundles a large quantity of software. Some have accused Dell of shipping spyware, specifically Myway Search Assistant and claim that its technical support team have instructions not to support its de-installation. Although the Dell support forum provides instructions for removing this software, they seem extremely complicated. One cannot uninstall the software using the Microsoft Windows "Add/Remove Programs" utility.

Dell openly supported offering Apple Computer's new Intel version of its Mac OS X operating system, but to this point Apple has stated the OS will only run on Macintosh machines, and will not agree to licensing Mac OS X to Dell.

Business model

Dell sells all its products both to consumers and corporate customers, using a direct-sales model via the Internet and the telephone network. Dell also showcases its consumer-oriented products at kiosks in major shopping malls. Dell maintains a negative cash conversion cycle through use of this model. The Internet has significantly enhanced Dell’s business model, making it easier for customers to contact Dell directly. Other computer manufacturers, including Gateway and Compaq, have adapted this same business model.

Organization

A Board of Directors of nine people runs the company. Both Michael Dell, the founder of the company, and Kevin Rollins, the CEO, serve on the board. Other board members include Donald Carty, William Gary, Judy Lewent, Klaus Luft, Alex Mandl, Michael A. Miles and Sam Nunn. Shareholders elect the nine board members at meetings, and those board members who do not get a majority of votes must submit a resignation to the board, which will subsequently choose whether or not to accept the resignation. The board of directors usually sets up five committees which have oversight over specific matters. These committees include the Audit Committee, which handles accounting issues, including auditing and reporting; the Compensation Committee, which approves compensation for the CEO and other employees of the company; the Finance Committee, which handles financial matters such as proposing mergers and acquisitions; the Governance and Nominating Committee, which handles various corporate matters including nomination of the board; and the Antitrust Compliance Committee, which attempts to prevent company practices from violating antitrust laws.

The corporate structure and management of Dell extends beyond the board of directors. The Dell Global Executive Management Committee sets the strategic direction for how the corporation keeps customers at the forefront, from designing and manufacturing computer systems to offering products that meet customers' requirements to providing the sufficient service and support. Dell has regional senior vice presidents for countries other than the United States, including Paul Bell for EMEA and Stephen J. Felice for Asia/Japan. Other officers include Martin Garvin, senior vice president for worldwide procurement, and Susan E. Sheskey, vice president and chief information officer

Marketing

Dell advertisements have appeared in several types of media including television, the Internet, magazines, catalogs and in newspapers. Dell constantly lowers product prices at all times of the year, offering free bonus products (such as Dell printers) and free shipping to encourage more sales.

A popular television and print ad campaign in the USA in the early 2000s featured the actor Ben Curtis playing the part of "Steven", a lightly mischievous blond-haired kid who came to the assistance of bereft computer purchasers. Each television advertisement usually ended with Steven's catch-phrase: "Dude, you're gettin' a Dell!". Dell fired Curtis shortly after his arrest for marijuana possession outside Central Park, New York in 2003, however, they deny that the firing resulted from his arrest, stating that the "Steven" ads had run for three years and characterizing them as "stale".

A subsequent advertising campaign featured interns at Dell headquarters.

Competition

Dell's major competitors include Hewlett-Packard/Compaq, Packard Bell, Sun Microsystems, Gateway/Emachines, Lenovo, Sony, and Toshiba. Enthusiast market competition takes place with Alienware, Falcon Northwest, WidowPC and other manufacturers. In 2004, Dell had a 17.9% share of the worldwide personal-computer market, compared to HP with 15.8%. By using their business model, Dell attempts to undercut competitors and offer consumers a more attractive choice of personal computers and other equipment. In August 2003, Dell lowered product prices by 22% in an attempt to generate more sales, however this disappointed shareholders, sending Dell shares down by 2% in late Wall-Street trading, amid fears of a sector-wide slump

Criticism

Dell has a policy of only selling computers with Intel processors, and does not offer AMD-based systems. Commentators have speculated that Dell may have signed an exclusive arrangement with Intel, possibly in return for discount prices or for advertising incentives. Dell's major competitors offer a choice of either AMD or Intel processors. This has cost Dell some sales of higher-end desktop systems, especially in the content-creation field, where benchmarks show AMD processors function better for most render-intensive 64-bit applications. Dell laptops, notabily the 5100 series, also have the tendency to overheat and shut down: Dell issued a little-publicised recall for this product.

In 2005, two class-action lawsuits accused Dell of marketing with bait-and-switch tactics and of conspiring with its financial unit to offer zero percent financing, only to revoke the offer after the return period had expired.
 
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