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. Eponymously named after 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 (PCs), servers, data storage devices, network switches, software, computer peripherals, HDTVs, cameras, printers, MP3 players, and 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 manufacturing—delivering individual PCs configured to customer specifications.[4][5] Dell was a pure hardware vendor for much of its existence, but with the acquisition in 2009 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.[6][7]
Dell was listed at number 51 in the Fortune 500 list, until 2014.[8] After going private in 2013, the newly confidential nature of its financial information prevents the company from being ranked by Fortune. In 2014 it was the third largest PC vendor in the world after Lenovo and HP.[9] Dell is currently the #1 shipper of PC monitors in the world.[10] Dell is the sixth largest company in Texas by total revenue, according to Fortune magazine.[11] It is the second largest non-oil company in Texas – behind AT&T – and the largest company in the Greater Austin area.[12] It was a publicly traded company (NASDAQ: DELL), as well as a component of the NASDAQ-100 and S&P 500, until it was taken private in a leveraged buyout which closed on October 30, 2013.
Contents [hide]
1 History
1.1 Growth in the 1990s and early 2000s
1.2 Disappointments
1.3 Dell 2.0 and downsizing
1.4 2013 buyout
2 Acquisitions
2.1 Acquisition of EMC
3 Dell facilities
3.1 Manufacturing
4 Products
4.1 Scope and brands
4.2 Technical support
5 Security
5.1 Self-signed root certificate
5.2 Dell Foundation Services
6 Commercial aspects
6.1 Organization
6.2 Marketing
6.2.1 Dell partner program
6.2.2 Criticisms of marketing of laptop security
6.3 Retail
6.3.1 United States
6.3.1.1 Kiosks
6.3.1.2 NorthPark Service Center
6.3.2 Retail stores
6.4 Competition
6.5 Partnership with EMC
7 Environmental record
7.1 Green initiatives
8 Criticism
9 See also
10 References
11 Further reading
12 External links
History
Main article: History of Dell
Dell's first logo from 1984 to 1989
Dell traces its origins to 1984, when Michael Dell created Dell Computer Corporation, which at the time did business as PC's Limited,[13][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 $1,000 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 dropped the PC’s Limited name in 1987 to become Dell Computer Corporation 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. Bain consultant Kevin Rollins persuaded Michael Dell to pull out of these deals, believing they would be money losers in the long run.[20] 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 the 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; this changed when the company’s Internet site took off in 1996 and 1997. While the industry’s average selling price to individuals was going down, Dell's 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 struggled and eventually left the market or were 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.[4]
Dell attained and maintained the number 1 rating in PC reliability and customer service/technical support, according to Consumer Reports, year after year, during the mid-to-late 90s through 2001 right before Windows XP was released.
In 1996, Dell began selling computers through its website.
In the mid-1990s, Dell expanded beyond desktop computers and laptops by selling servers, starting with low-end servers. The major three providers of servers at the time were IBM, Hewlett Packard, and Compaq, many of which were based on proprietary technology, such as IBM's Power4 microprocessors or various proprietary versions of the Unix operating system. Dell's new PowerEdge servers did not require a major investment in proprietary technologies, as they ran Microsoft Windows NT on Intel chips, and could be built cheaper than its competitors.[24] Consequently, Dell's enterprise revenues, almost nonexistent in 1994, accounted for 13 percent of the company's total intake by 1998. Three years later, Dell passed Compaq as the top provider of Intel-based servers, with 31 percent of the market. Dell's first acquisition occurred in 1999 with the purchase of ConvergeNet Technologies for $332 million, after Dell had failed to develop an enterprise storage system in-house; ConvergeNet's elegant but complex technology did not fit in with Dell's commodity-producer business model, forcing Dell to write down the entire value of the acquisition.[23]
In 2002, Dell expanded its product line to include televisions, handhelds, digital audio players, and printers. Chairman and CEO Michael Dell had repeatedly blocked President and COO Kevin Rollins's attempt to lessen the company's heavy dependency on PCs, which Rollins wanted to fix by acquiring EMC Corporation.[25]
In 2003, the company was rebranded as simply "Dell Inc." to recognize the company's expansion beyond computers.[26]
In 2004, Michael Dell resigned as CEO while retaining the position of Chairman,[27] handing the CEO title to Kevin Rollins, who had been President and COO since 2001. Despite no longer holding the CEO title, Dell essentially acted as a de facto co-CEO with Rollins.[25]
Under Rollins, Dell began to loosen its ties to Microsoft and Intel, the two companies responsible for Dell's dominance in the PC business. During that time, Dell acquired Alienware,[28] which introduced several new items to Dell products, including AMD microprocessors. To prevent cross-market products, Dell continues to run Alienware as a separate entity, but still a wholly owned subsidiary.
Disappointments
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 2005—the 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] but 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.[32]
Despite plans of expanding into other global regions and product segments, Dell was heavily dependent on U.S. corporate PC market, as desktop PCs sold to both commercial and corporate customers accounted for 32 percent of its revenue, 85 percent of its revenue comes from businesses, and Sixty-four percent of its revenue comes from North and South America, according to its 2006 third-quarter results. U.S. shipments of desktop PCs were shrinking, and the corporate PC market which purchases PCs in upgrade cycles had largely decided to take a break from buying new systems. The last cycle started around 2002, three or so years after companies started buying PCs ahead of the perceived Y2K problems, and corporate clients were not expected to upgrade again until extensive testing of Microsoft's Windows Vista (expected in early 2007), putting the next upgrade cycle around 2008.[34][35] Heavily depending on PCs, Dell had to slash prices to boost sales volumes, while demanding deep cuts from suppliers.[25]
Dell had long stuck by its direct sales model. Consumers had become the main drivers of PC sales in recent years,[35] yet there had a decline in consumers purchasing PCs through the Web or on the phone, as increasing numbers were visiting consumer electronics retail stores to try out the devices first. Dell's rivals in the PC industry, HP, Gateway and Acer, had a long retail presence and so were well poised to take advantage of the consumer shift.[36] The lack of a retail presence stymied Dell's attempts to offer consumer electronics such as flat-panel TVs and MP3 players.[32] Dell responded by experimenting with mall kiosks, plus quasi-retail stores in Texas and New York.[34]
Dell had a reputation as a company that relied upon supply chain efficiencies to sell established technologies at low prices, instead of being an innovator.[25][25][36][37] By the mid-2000s many analysts were looking to innovating companies as the next source of growth in the technology sector. Dell's low spending on R&D relative to its revenue (compared to IBM, Hewlett Packard, and Apple Inc.)—which worked well in the commoditized PC market—prevented it from making inroads into more lucrative segments, such as MP3 players and later mobile devices.[29] Increasing spending on R&D would have cut into the operating margins that the company emphasized.[4] Dell had done well with a horizontal organization that focused on PCs when the computing industry moved to horizontal mix-and-match layers in the 1980s, but by the mid-2000 the industry shifted to vertically integrated stacks to deliver complete IT solutions and Dell lagged far behind competitors like Hewlett Packard and Oracle. [33]
