Dell Computer Corporation Case Study

Identification of Customers, Markets, Products, Competitors

Dell Computer Corporation was established in 1984 and today ranks among the world’s largest computer systems companies. Dell pioneered the concepts of selling personal computer systems directly to customers; offering build-to-order computer systems; and providing direct, toll-free technical support and next-day, on-site service. The company designs and customizes products and services to end-user requirements, and offers an extensive selection of peripherals and software (Thompson, Strickland, Gale).

Dell’s complete range of high-performance computer systems include: Dell Dimension and OptiPlex desktop computers, Latitude notebook computers, and Power Edge network servers. The company s products and services are sold in more than 140 countries and territories to customers extending from major corporations, government agencies and medical and educational institutions to small businesses and individuals. The company employs approximately 11,000 people. Headquarters are located in Round Rock, Texas, with manufacturing facilities in Austin, Texas; Limerick, Ireland; and Penang, Malaysia (Dell).

The company was plagued by management changes during the mid-1980s. Renamed Dell Computer, it added international sales offices in 1987. A year later it started selling to government agencies and added a sales-force to serve larger customers. That year Dell went public in a 34.2 million offering (Hoovers).

Dell tripped in 1990, reporting a 64 drop in profits. Sales were growing, but so were costs, mostly because of Dell's efforts to design a PC using proprietary components and RISC chips. Also, the company's warehouses were oversupplied. Within a year Dell turned itself around by cutting inventories and coming out with eight new products.

Dell entered the retail arena by letting Soft Warehouse Superstores now CompUSA in 1990 and office supply chain Staples in 1991 sell its PCs at mail-order prices. Also in 1991 Dell opened a plant in Limerick, Ireland.

In 1992 Xerox agreed to sell Dell machines in 19 Latin American countries. That year Dell sold a new line of PCs through the Price Club . Dell opened subsidiaries in Japan and Austria in 1993 and began selling PCs through Best Buy stores in 16 US states.

The computer maker abandoned retail stores in 1994 to refocus on its mail-order origins. The company took a 40 million charge to retool its troubled notebook computer line and later that year released its Latitude notebook to general acclaim. The company also introduced a line of servers (NPR).

In 1995 the firm offered Pentium-based notebooks, and hastened the interest in its desktops by cutting prices and releasing a dual-processor PC. The following year Dell ramped up its efforts in the Asian computer market with new mail-order service in Hong Kong, Japan, and Singapore; a new Asia Pacific Customer Center in Malaysia; and direct-sales operations in South Korea and Taiwan.

In 1997 Dell and Toronto-based Newcourt Credit Group formed Dell Financial Services, a joint venture that will provide financing for Dell customers. That year Dell also announced plans to enter the market for engineering, analysis, and design computers called workstations. Dell built up its consumer business in 1997 by separating that operation from its small-business unit and beginning a leasing program for individuals (Wikipedia).

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The CEO of Dell Computer Corp. is of course Michael Dell. He started the company with a mere 1000 and has turned it into a multi-billion dollar computer giant. Mr. Dell attended The University of Texas at Austin. In 1999, Mr. Dell wrote the bestselling book Direct from Dell: Strategies That Revolutionized an Industry, his story of the rise of Dell Computer Corporation and the strategies he has refined that apply to all businesses. He is a member of the Board of Directors of the United States Chamber of Commerce, the World Economic Forum, and the Computerworld Smithsonian Awards. Mr. Dell serves on the nominating committee for the National Technology Medal of Honor, and is a member of The Business Council. He is also a member of the Computer Systems Policy Project (Thompson, Strickland, Gale).

Dell began selling a $999 PC in 1999. (Dell phased out the WebPC line after just seven months due to slow sales.) That year the company made its first acquisition -- storage area network equipment maker ConvergeNet and opened a plant in Brazil. In 2000 Dell broadened its high-end network servers and Internet-related services offerings, and formed a division for its storage operations.

Faced with slumping PC sales in early 2001, the company eliminated 1,700 jobs about 4% of its workforce. Soon after it announced