Appendix: Dell, an Innovative Change

Appendix: Dell, an Innovative Change

Appendix: Dell, An Innovative Change

History of Dell

Michael Dell, who is the founder of Dell Computers, began his venture towards revolutionizing the computer industry in 1980. In 1980, Dell purchased his first computer; an Apple II, and took it apart to understand how it was designed and made (Dell & Fredman, 1999, p. xi). In 1981, IBM introduced the Personal Computer (PC) and Dell saw this as a business opportunity. Dell switched from the Apple computer to the IBM PC and began to learn all of the possible components. Michael Dell’s hobby was to disassemble computers, rebuild them with improved components, and sell them directly to the user according to the biography by Mr. Dell in Smart Computing (2007). “Traditionally, in the computer industry, manufacturing companies built computers, which were distributed to resellers and dealers who sold them to businesses and individual consumers” (Dell & Fredman, 1999, p. 11). Dell noticed that IBM also sold their computers to through the distribution method, and in 1984, Mr. Dell made his business venture official. The original name for Michael Dell’s company was registered in the state of Texas as “PC’s Limited.” The organization transformed and renamed the company to Dell Computer Corporation in 1988.

In the beginning, the PC’s Limited company was purchasing stripped-down computers, upgrading them and then selling them for a profit (Dell & Fredman, 1999, p. 14). Dell & Fredman (1999) indicated “People were becoming more interested and more knowledgeable about computers” (p. 14). The consumers expected upgraded versions of the IBM personal computer, but IBM had not yet produced an upgrade. Michael Dell decided to create his own personal computer with the vision of enhancing PC Limited’s business. When Dell began to build its own computers, it was the perfect opportunity and timing because there was minimal competition in upgrading computer systems. A new upgrade, computer chips, simplified the PC design because the new design only required a few chip sets and some skilled engineers (Dell & Fredman, 1999, p. 14). By implementing new technology through ASIC (Application Specific Integrated Circuit) chips, this chip helped ease the company’s entry into the PC world. After designing their first major PC, known as the Turbo PC, Dell became the second largest PC manufacturer in the U.S. with Compaq as the leader. The new enhancements proved Dell to be a strong contender in the PC market and Compaq was prompted to imitate Dell by entering the custom computer business (Saunders, 2000). Dell Computers manufactured more PC’s than Compaq in 1990; which put Dell Computers as the number one manufacturer.

Dell attempted to be like its competitors and tried to sell their products through warehouse clubs and magazines, but was unsuccessful. After Dell Computers refocused on direct-to-consumer sales, it became the largest PC manufacturer. Dell Computers’ concept then was focused on extreme growth, but the concept was evolving into the order of “liquidity, profitability, and growth”, which prevented the company from failure (Dell & Fredman, 1999, p. 49). This new concept provided Dell with the opportunity to analyze every business segment and to develop a profit and loss statement for each section (Dell & Fredman, 1999, p. 49). For a while, Dell Computers approached business as a company who jumped at every new opportunity, which resulted in growth; however, the organization eventually had to select only the opportunities that would make the most of their strengths. Dell Computers had to rethink its strategies and focus on the infrastructure versus the market opportunity, such as building systems and processes (Dell & Fredman, 1999, p. 58). Dell stated the change to the infrastructure was a significant adjustment; however, the change enhanced the products previously created and helped them reach their full potential instead of creating more new things (Dell & Fredman, 1999, p. 58). Rebecca Saunders (2000), author of the book entitled Be Direct! Business the Dell Way, she states there are two kinds of entrepreneurs: those who continuously jump from venture to venture hoping to land a goldmine, and those who develop a company based on an idea, develop and constantly improve the idea, and adapt to changes without losing the strategic focus. Dell is an example of the latter type of entrepreneur. After Dell’s changes in 1993, Michael Dell was named “Turnaround CEO of the Year” in 1993 by Upside magazine (Saunders, 2000). Michael Dell stated “the real key to success comes from within; knowing their strengths and being open to experimentation” (Dell & Fredman, 1999, p. 227). Experimentation comes through