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Dell

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Dell Inc
Company typePublic (NASDAQ: DELL)
IndustryComputer hardware
FoundedAustin, Texas (1984) (as PC's Limited)
HeadquartersRound Rock, Texas, United States
Key people
Michael Dell, Founder & Chairman
Kevin Rollins, President & CEO
ProductsDesktops
Servers
Laptops
Peripherals
Printers
Revenue$49.205 billion USD (2004)
5,771,000,000 United States dollar (2022) Edit this on Wikidata
2,442,000,000 United States dollar (2022) Edit this on Wikidata
Number of employees
63,700
Websitewww.dell.com

Dell Inc. (Nasdaq: DELL) (SEHK: 4332) , one of the the world's largest computer hardware companies, employed more than 63,700 persons worldwide and achieved global annual sales of $49.2 billion in 2004. Dell designs, manufactures, sells and supports a wide range of personal computers, servers, data storage devices, network switches, personal digital assistants (PDAs), software, peripherals and more. According to the Forbes 500 2005 list, Dell ranks as the 28th-largest company in the United States by revenue. In 2005, Fortune magazine ranked Dell as No. 1 on its annual list of the most-admired companies in the United States, displacing Wal-Mart, which had held the top spot for the previous two years and fell to No. 4. Dell, Inc has its corporate headquarters in Round Rock, Texas, United States.

History

Michael Dell, while still a student at the University of Texas at Austin, founded the company as PC's Limited [sic] 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, 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. Dell International Services functions as a support division of Dell.

File:DellParmerBuilding.jpg
The Dell Parmer Office Building in Austin, Texas

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.

Products

File:Dell dimension.JPG
A Dell Dimension desktop PC, circa 2004

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.

A de-coding of some Dell brand-names follows:

Software

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 and claim that its technical support team have instructions not to support its de-installation. Dell openly supported offering Apple Computer's upcoming 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.

Corporate affairs

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.

Corporate management

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 William J. Amelio 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 Inc. released Curtis from its employ after his arrest for marijuana possession outside Central Park, New York in 2003 (the arresting officer allegedly commenting, "Dude, you're gettin' a cell"). Dell Inc., however, denies firing Curtis as a result of his arrest.

Competition

Dell's major competitors include Hewlett-Packard/Compaq, Sun Microsystems, Gateway/Emachines, Lenovo, Sony, and Toshiba. Enthusiast market competition takes place with Alienware, Falcon Northwest 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 attempt 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. It is speculated that they may have signed an exclusive arrangement with Intel, possibly in return for discount prices or 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 many believe AMD processors function better for render intensive 64-bit applications.

Dell has also suffered some criticism for faulty hardware. These relate specifically to:

  • hard-drive failures, with repeated occurrences even after sending the computer/hard drive in for repair), possibly related to a problem with the manufacturer Maxtor (recent replacements from Seagate do not appear to exhibit the same problems)
  • failing to facilitate upgrading hardware (through warranty restrictions, again common and in no way limited to Dell)
  • generic monopoly complaints from the Internet/Build Your Own communities.
  • use of proprietary parts, resulting in certain components like the power-supply and motherboard not being easily replaceable with generic parts.

As with any manufacturer, Dell quality can suffer due to third-party supplied parts and assembly-line deficiencies (for example, a batch fault on some D6xx series batteries and some GX270 series desktop logic boards). Dell is generally reasonably flexible in applying their warranty rules, but much less so when it comes to the possibility of on-site versus off-site replacement.

Possibly because of the size of the corporation, different customers have also reported different treatment and resolution to similar problems. While some customers received free products or USD$100 coupons when they complained and requested a refund, some faced paying a 15% restocking fee and shipping and handling for returning a defective product. Dell offered a free upgrade disk to Windows Mobile 5.0 for customers who purchased the Axim X50V near the release date of the new operating system. However, some customers received 0 copies while others have reportedly received up to 10 copies of the same product. Mistakes in orders are not uncomon, usually resolved by offering free upgrades or even an extra product at no cost to the end user.

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.

References

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