Dell

Dell is an American technology company that develops, sells, repairs, and supports computers and related products and services and is owned by its parent company, Dell Technologies. Dell sells personal computers (PCs), servers, data storage devices, network switches, software, computer peripherals, HDTVs, cameras, printers, and electronics built by other manufacturers. 

Dell is a publicly-traded company (Nasdaq: DELL), as well as a component of the NASDAQ-100 and S&P 500. It is the 3rd largest personal computer vendor as of January 2021. Dell is ranked 31st on the Fortune 500 list in 2022, up from 76th in 2021. It is also the sixth-largest company in Texas by total revenue, according to Fortune magazine. It is the second-largest non-oil company in Texas.

Founding and start-up

Michael Dell founded Dell Computer Corporation, doing business as PC's Limited, in 1984 while a student at the University of Texas at Austin. Operating from Michael Dell's off-campus dormitory room at Dobie Center, the start-up aimed to sell IBM PC-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs. Michael Dell dropped out of college upon completion of his freshman year at the University of Texas at Austin in order to focus full-time on his fledgling business, after getting about $1,000 in expansion-capital from his family.

In 1985, the company produced the first computer of its own design — the "Turbo PC", sold for US$795 — containing an Intel 8088-compatible processor capable of running at a maximum speed of 6.66 MHz. PC's Limited 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 business model, PC's Limited became one of the first to succeed with it. The company grossed more than $73 million in its first year of trading.

Growth in the 1990s and early 2000s

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 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 at that time.

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. Margins at retail were thin at best and Dell left the reseller channel in 1994. Rollins would soon join Dell full-time and eventually become the company president and CEO.

From 1997 to 2004, Dell steadily grew 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. 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. Dell grew the fastest in the early 2000s.

In 2002, Dell expanded its product line to include televisions, handhelds, digital audio players, and printers. 

In 2003, at the annual company meeting, the stockholders approved changing the company name to "Dell Inc." to recognize the company's expansion beyond computers.

Under Rollins, Dell purchased the computer hardware manufacturer Alienware in 2006. Dell Inc.'s plan anticipated Alienware continuing to operate independently under its existing management. Alienware expected to benefit from Dell's efficient manufacturing system.

Key events

In 2005, while earnings and sales continued to rise, sales growth slowed considerably, and the company stock lost 25% of its value that year. By June 2006, the stock traded around US$25 which was 40% down from July 2005—the high-water mark of the company in the post-dotcom era.

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 business segments such as storage, services, and servers. Dell's price advantage was tied to its ultra-lean manufacturing for desktop PCs, 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.

Despite plans of expanding into other global regions and product segments, Dell was heavily dependent on US 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. US 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. Heavily dependent on PCs, Dell had to slash prices to boost sales volumes, while demanding deep cuts from suppliers.

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. 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.

Dell's reputation for poor customer service, since 2002, which was exacerbated as it moved call centers offshore and as its growth outstripped its technical support infrastructure, came under increasing scrutiny on the Web. 

There was also criticism that Dell used faulty components for its PCs, particularly the 11.8 million OptiPlex desktop computers sold to businesses and governments from May 2003 to July 2005, that suffered from faulty capacitors.

2006 marked the first year that Dell's growth was slower than the PC industry as a whole. 

Michael Dell resumes CEO role

After four out of five quarterly earnings reports were below expectations, Rollins resigned as president and CEO on January 31, 2007, and founder Michael Dell assumed the role of CEO again.

Dell 2.0 and downsizing

Dell announced a change campaign called "Dell 2.0," reducing the number of employees and diversifying the company's products. While chairman of the board after relinquishing his CEO position, Michael Dell still had significant input in the company during Rollins' years as CEO. 

On April 23, 2008, Dell announced the closure of one of its biggest Canadian call-centers in Kanata, Ontario, terminating approximately 1100 employees, with 500 of those redundancies effective on the spot, and with the official closure of the center scheduled for the summer. 

By the late 2000s, Dell's "configure to order" approach of manufacturing—delivering individual PCs configured to customer specifications from its US facilities was no longer as efficient or competitive with high-volume Asian contract manufacturers as PCs became powerful low-cost commodities.

Attempts at diversification

The release of Apple's iPad tablet computer had a negative impact on Dell and other major PC vendors, as consumers switched away from desktop and laptop PCs. Dell's own mobility division has not managed success with developing smartphones or tablets, whether running Windows or Google Android. The Dell Streak was a failure commercially and critically due to its outdated OS, numerous bugs, and low resolution screen. InfoWorld suggested that Dell and other OEMs saw tablets as a short-term, low-investment opportunity running Google Android, an approach that neglected user interface and failed to gain long-term market traction with consumers.

Dell has responded by pushing higher-end PCs, such as the XPS line of notebooks, which do not compete with the Apple iPad and Kindle Fire tablets. The growing popularity of smartphones and tablet computers instead of PCs drove Dell's consumer segment to an operating loss in Q3 2012. In December 2012, Dell suffered its first decline in holiday sales in five years, despite the introduction of Windows 8.

2013 buyout

After several weeks of rumors, which started around January 11, 2013, Dell announced on February 5, 2013, that it had struck a $24.4 billion leveraged buyout deal, that would have delisted its shares from the NASDAQ and Hong Kong Stock Exchange and taken it private. 

Recent history

On November 19, 2015, Dell, alongside ARM Holdings, Cisco Systems, Intel, Microsoft, and Princeton University, founded the OpenFog Consortium, to promote interests and development in fog computing.

On October 12, 2015, Dell Inc. announced its intent to acquire EMC Corporation in a cash-and-stock deal valued at $67 billion, which has been considered the largest-ever acquisition in the technology sector.

The announcement came two years after Dell Inc. returned to private ownership, claiming that it faced bleak prospects and would need several years out of the public eye to rebuild its business. It's thought that the company's value has roughly doubled since then. 

The combined business was expected to address the markets for scale-out architecture, converged infrastructure and private cloud computing, playing to the strengths of both EMC and Dell. 

In July 2018, Dell announced intentions to become a publicly traded company again by paying $21.7 billion in both cash and stock to buy back shares from its stake in VMware, offering shareholders roughly 60 cents on the dollar as part of the deal.

Post-acquisition, Dell was re-organized with a new parent company, Dell Technologies; Dell's consumer and workstation businesses are internally referred to as the Dell Client Solutions Group, and is one of the company's three main business divisions alongside Dell EMC and VMware.

In January 2021, Dell reported $94 billion in sales and $13 billion operating cash flow during 2020.

Dell’s mission statement is “to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of the Highest quality.” 

Dell’s core values include “customer-oriented, innovation, results, and integrity.” Dell has consistently maintained a rich corporate culture for over 35 years due to the presence of these guiding principles.

At Dell, the customer is considered the primary influencer of the success in the company. That shows the passion for designing innovations that are not only sensitive but also meet their needs.

Dell’s vision statement is “It’s the way we do business. It’s the way we interact with the community. It’s the way we interpret the world around us– our customers’ needs, the future of technology, and the global business climate. Whatever changes the future may bring our vision — Dell Vision — will be our guiding force. So Dell needs full customer satisfaction. In order to become the most successful computer company, they need the newest technology and loyal customers.” In this statement, Dell outlines its major attitudes and practices that demonstrate it is the leader in the computer technology industry.