Dell

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This article is about the corporation Dell, Inc.. For other topics, see Dell (disambiguation).
Dell Inc
Company typePublic (Nasdaq: DELL SEHK: 4331)
IndustryComputer hardware
FoundedAustin, Texas (1984) (as "PC's Limited")
Headquarters
Round Rock, Texas
,
USA
Key people
Michael Dell, Founder and CEO
Don Carty, CFO
ProductsDesktops
Servers
Notebooks
Peripherals
Printers
RevenueIncrease$55.908 Billion USD (2006)
5,771,000,000 United States dollar (2022) Edit this on Wikidata
Increase$3.572 Billion USD (2006)
(6.39% profit margin)
Number of employees
65,200
SubsidiariesAlienware
Websitewww.dell.com

Dell Inc. (Nasdaq: DELL SEHK: 4331), an American computer-hardware company based in Round Rock, Texas, develops, manufactures, sells and supports a wide range of personal computers, servers, data storage devices, network switches, personal digital assistants (PDAs), software, computer peripherals, and more. As of 2006 Dell employs more than 63,700 people worldwide and manufactures more computers than any other organization in the world. According to the Fortune 500 2006 list, Dell ranks as the 25th-largest company in the United States by revenue. In 2006, Fortune magazine ranked Dell as No. 8 on its annual list of the most-admired companies in the United States. One publication has identified Dell as one of 38 high-performance companies in the S&P 500 which consistently out-performed the market over the previous 15 years. [1]

History

Michael Dell, the founder, chairman and CEO of Dell.

Michael Dell, while still a student at the University of Texas at Austin in 1984, founded the company as PC's Limited with just $1000. From Michael Dell's off-campus dorm room at Dobie Center [1], the startup aimed to sell IBM-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. Dell dropped out of the school to focus on his fledgling computer business full-time

In 1985, the company produced the first computer in China 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. 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 June 1988, Dell's market capitalization grew by $30 million to $80 million from its initial public offering of 3.5 million shares at $8.50 a share. The company changed its name to "Dell Computer Corporation" in 1988.

In 1990, Dell Computer Corporation 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. 1996 was the year Dell began selling computers on its web site.

In 1999, Dell overtook Compaq to become the largest seller of personal computers in the United States of America with $25 billion in revenue reported in January 2000. 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 audio players. Dell has also produced Dell-brand printers for home and small-office use. Michael Dell stepped aside as Chief Executive Officer (CEO) on July 16, 2004 but retained his position as Chairman of the Board. He was succeeded by Kevin Rollins, who had held a number of executive posts at Dell.

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 February 2005, Dell appeared in first place in a ranking of the "Most Admired Companies" published by Fortune magazine.

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. Then CEO Kevin Rollins attributed the bad performance partially to Dell's focus on low-end PCs.

On 23 March 2006, Dell purchased the computer hardware manufacturer Alienware. The plan envisaged Alienware continuing to operate independently under its existing management. Alienware expected to benefit from Dell's efficient manufacturing system.[2]

On Jan. 31, 2007, Kevin Rollins, CEO of the company since 2004, resigned abruptly as both CEO and as a director, being replaced by Dell himself. Investors and many shareholders had been calling for Rollins resignation because of poor company performance. At the same time, the company announced that, for the fourth time in five quarters, earnings would fail to reach consensus analyst estimates.

Dell and AMD

On August 17, 2006, a Dell press-release stated that starting in September 2006, Dell Dimension desktop computers would have AMD processors and that later in the year Dell would release a two-socket, multi-processor server using AMD Opteron processors, moving away from using Dell's traditional Intel processors.

CNet's News.com on August 17, 2006 cited Dell's Then-CEO Kevin Rollins as attributing the move to AMD processors to cost advantage and to AMD technology. AMD's senior VP in commercial business, Marty Seyer, stated: "Dell's wider embrace of AMD processor-based offerings is a win for Dell, for the industry and most importantly for Dell customers.""

On October 23, 2006, Dell announced two new AMD-based servers — the PowerEdge 6950 and the PowerEdge SC1435 — marking its entry into the AMD-based server market.

On November 1, 2006 Dell's website began offering notebooks with AMD processors (the Inspiron 1501 with a 15.4" display) with the choice of a single-core MK-36 processor, dual-core Turion X2 chips or Mobile Sempron.

Technical information

Products

A typical Dell-based home user workstation.

Scope and brands

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. XPS desktop systems use silver rather than the black cases found on newer Dell PCs. Dell has also diversified its product line to include peripheral products such as USB keydrives, LCD televisions, and printers.

Dell uses several brand-names for its product ranges, including:

Dell currently ships Microsoft Windows Vista as the default operating system for most of its new computers[3] but also offers Red Hat and SUSE Linux for servers as well as "bare-bones" computers without pre-installed software (N series by default and XPS as well as Inspiron notebooks upon request) at significantly lower prices. Due to Dell's licensing contract with Microsoft, Dell cannot offer those systems on their website and customers have to request them explicitly. Dell has to ship such systems with a FreeDOS disk included in the box and must issue a so-called "Windows refund" or a merchandise credit after sale of the system at the "regular" retail price.

When Dell customers elect to use Microsoft Windows as the operating system of a newly specified Dell system, Dell bundles a large quantity of software with it.

Dell has expressed willingness to offer Apple's new Intel version of the Mac OS X operating system to its customers, but to this point Apple has stated that the OS will only run on Macintosh machines, and will not agree to licensing Mac OS X to Dell.[4]

Manufacturing

Dell has a general policy of manufacturing its products close to their customers, but with many exceptions.[citation needed] Some claim that the assembly of most of their less-expensive desktop computers takes place in China.[citation needed] Others say that assembly for desktop computers for the North American market takes place at Dell plants in Nashville, Tennessee in Austin, Texas and in Winston-Salem, North Carolina, with servers built in Austin, Texas. Dell, Inc. assembles computers for Europe in Limerick in the Republic of Ireland.

Dell's assembly plants in Penang, Malaysia, and in China assemble 95% of Dell notebooks; the remaining percentage comes from Dell European Manufacturing Facilities 1, 2, and 3 in Limerick.[citation needed] Dell plans to consolidate manufacturing to Malaysia and China in 2007 and has also decided to enlarge its plant in Malaysia.[citation needed] For additional quality, Dell routes these computers through 'fulfillment centers' in the United States.

Service Tags

Dell Inc associates a Service Tag, a unique number, with most of its products.

Given numerous different made-to-order PCs, the company needs a way to identify systems in its database in order to provide support for them.

The service tag number, represented in Base 36, has a length of five to seven characters.

As a general rule, European service tags will end with the letter J, Chinese/Japanese tags with the letter X, Indian/Middle-Eastern tags with the letter S and all others with the number 1 - though this rule does not always apply, particularly in the cases of printers, PDAs, and televisions.

Service tags appear in the following locations:

  • PCs, servers, and storage devices: On a white barcoded label on the rear of the chassis of the system.
  • Notebook Computers: On a long, thin barcoded label on the underside of the notebook.
  • PDAs: Underneath the battery on the PDA itself.
  • Printers: On the rear of the printer on a barcoded label.
  • LCD and plasma televisions: On the rear of the set.

Dell Inc does not tag its monitors. Monitors bought as part of a system get support via the tag of the system itself. Monitors bought separately get support via the Dell Order Number or the monitor's serial number.

Dellconnect

The DellConnect program is a remote access tool that gives Dell Support technicians the ability to remotely access the computer for troubleshooting purposes. Utilizing this tool, support technicians can analyze the configuration of your system, view and edit your files and registry, view and comment on your screen, or take control of your system for troubleshooting purposes.

The tool has a server part which is downloaded from remote.dellfix.com and the client software is installed on the system of dell technicians. They use it to remote access and help resolve issues of customers

Commercial aspects

Business model

Dell sells all its products both to end-use consumers and to corporate customers, using a direct-sales model via the Internet and the telephone network. Dell maintains a negative cash conversion cycle through use of this model: in other words, Dell Inc. receives payment for the products before it has to pay for the materials. Dell also practices just-in-time (JIT) inventory management, profiting from its attendant benefits. Dell’s JIT approach utilizes the “pull” system by building computers only after customers place orders and by requesting materials from suppliers as needed. In this way Dell mirrors Toyota by following Toyota Way Principle #3 ("Use 'pull' systems to avoid overproduction"). Since the original dominance of telephone ordering, the Internet has significantly enhanced Dell’s business model, making it easier for customers and potential customers to contact Dell directly. Other computer manufacturers, including Gateway and Hewlett-Packard, have attempted to adapt this same business model, but due to timing and/or retail-channel pressures they have not achieved the same results as Dell.

Organization

A Board of Directors of nine people runs the company. Michael Dell, the founder of the company, serves on the board. Other board members include Don 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 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).

Support

Dell Inc routes technical support queries according to component-type and to the level of support purchased with a unit. Currently Dell offers four levels of customer supportand encourages customers to educate themselves on the differences between these service types.

Dell Inc brands its current service agreements at four levels:

  1. Basic
  2. Silver
  3. Gold
  4. Platinum Plus.

A primary criticism of Dell's customer-support states that, because of the variety in service types available, the Dell system sometimes transfers customer calls several times between queues before they reach the appropriate department.

Though the service-agreements between Dell and its customers on the higher-level support agreements (Silver, Gold, and Platinum Plus) do not specifically state the guarantee of American-agent technical support, Dell has opened up several new call-centers in the United States and Canada to begin handling enterprise-class technical support requests.

According to the Better Business Bureau however, complaints about Dell more than doubledin 2005, to 1,533.

In the Americas, Dell has customer-contact centers in Ottawa, Ontario; Central Texas; Middle Tennessee; Chesapeake; Roseburg, Ore; Twin Falls, Idaho; Oklahoma City, Okla; San Salvador, El Salvador; as well as Glace Bay, Nova Scotia and Panama City, Panama.[2]

In the Asia-Pacific region, Dell provides customer support from Pasay City, Philippines; Penang, Malaysia; and Xiamen and Dalian, China. A second Philippine site in Quezon City will open sometime in 2007.[3]

In India, Dell has customer support centers in the northern cities of Gurgaon and Mohali; and in the southern cities of Hyderabad and Bangalore[4].

Marketing

File:LOGODELL.gif
Nameplate used on the bezels of many Dell computers, monitors, and printers

Dell advertisements have appeared in several types of media including television, the Internet, magazines, catalogs and newspapers. Some of Dell Inc's marketing strategies include lowering prices at all times of the year, offering free bonus products (such as Dell printers), and offering free shipping in order to encourage more sales and to stave off competitors. In 2006, Dell cut its prices in an effort to maintain its 19.2% market share. However, this also cut profit-margins by more than half, from 8.7 to 4.3 percent. To maintain its low prices, Dell continues to accept most purchases of its products via the Internet and through the telephone network, and to move its customer-care division to India and El Salvador.[citation needed]

A popular United States television and print ad campaign 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 fired Curtis shortly after his arrest for marijuana possession in 2003 on the Lower East Side of Manhattan; however, Dell denies that the firing resulted from his arrest, stating that the "Steven" ads had run for three years and characterizing them as "stale". The Dell ads featuring Curtis had stopped playing before his arrest, thus lending credence to Dell's statement. [5]

Dell Direct Store, Brisbane, Australia

A subsequent advertising campaign featured interns at Dell headquarters (with Curtis' character appearing in a small cameo at the end of one of the first commercials in this particular campaign).

In the early 2000s, Dell opened kiosk locations in shopping malls across the United States in order to give personal service to customers who preferred this channel to using the Internet or telephones. Despite the added expense, prices at the kiosks equalled or even undercut prices available on Dell's other retail channels. During 2005, Dell opened kiosk locations in shopping malls across Australia, and in 2006 opened kiosk locations in shopping malls across Canada, following the approach used in the United States.

A Dell advertising campaign for the XPS line of gaming computers featured in print in the September 2006 issue of Wired Magazine. It used as a tagline the common term in Internet and gamer slang: "FTW", meaning "For The Win". However, Dell Inc. soon dropped the campaign.

Dell Stores

On July 26, 2006, Dell Inc. opened a full store in Northpark Mall in Dallas, Texas. It planned to operate the 3,000-square-foot Dallas outlet seven days a week and to display about 36 models, including PCs and televisions. But customers cannot walk out of this store with products. Instead, they order online or by telephone from the store and await delivery. Dell Inc plans to use the Dallas store to house about three times as many products as it displays in more than 160 kiosks in malls and airports in the United States of America. In addition to showcasing products, the store also supports onsite warranties or non warranty service ("Dell on Call"). Services offered include repairing computer video-cards and removing spyware from harddrives.

Competition

Dell's major competitors include Apple, Hewlett-Packard, Sun Microsystems, Gateway, Lenovo, Sony, and Toshiba. Dell and its division, Alienware, compete in the enthusiast market against Falcon Northwest, Voodoo PC (a division of HP), WidowPC and other manufacturers. In the second quarter of 2006, Dell had between 18% and 19% share of the worldwide personal-computer market, compared to Hewlett-Packard with roughly 15%. By leveraging its business-model, Dell attempts to undercut competitors and offer customers a more attractive choice of personal computers and other equipment.

Dell recently lost its once-substantial lead in the PC business to Hewlett-Packard. Both Gartner and IDC estimated that in the third quarter of 2006, HP shipped more units world-wide than did Dell. Dell's 3.6% growth paled in comparison to HP's 15% growth during the same period. The problem worsened in the fourth quarter, when Gartner estimated that Dell PC shipments declined 8.9% (versus HP's 23.9% growth). As a result, at the end of 2006 Dell's overall PC market share stood at 13.9% (versus HP's 17.4%).

Criticism

In October 2005, Dell filed a lawsuit in a Paris court to sue Menorca-based independent website designer Paul Dell "Dellimages". for engaging in “parasitism and unfair competition”. This related to his company website "DellWebsites".

Critics of Dell have seen Dell Inc. as "hounding" Paul Dell without justification, considering that the title of his enterprise merely reflects his family name. [6] Friends and fellow web-designers have since started a 'Help Paul Dell' campaign. [7] The case continues.

In 2006, Dell acknowledged that it had problems with customer service, including transfers of more than 45% of calls and long wait-times. Dell's blog detailed the response: "We’re spending more than a $100 million — and a lot of blood, sweat and tears of talented people — to fix this." Later in the year, the company increased its spending on customer service to $150 million.

On August 14, 2006, Dell and Sony recalled over 4.2 million notebook batteries after the discovery of flaws that could cause the Sony-manufactured batteries to overheat and catch fire. Subsequent announcements by almost every major laptop manufacturer in the world (including Apple, Lenovo, Toshiba, Hitachi and Fujitsu) led to a recall of nearly 9.6 million Sony-manufactured batteries and led Sony executives to apologize on October 24, 2006 for the inconvenience.

2007 Investor Lawsuit

On January 31, a lawsuit was filed by shareholders accusing Dell and Intel of conspiring, and accusing Dell executives, including Michael Dell, of options backdating and propped financial reports. [5]

Citations

References

Notes

  1. ^ Needles, Belvard E. Jr.; Frigo, Mark L.; and Powers, Marian (2006). "Strategy and Integrated Financial ratio Performance Measures: Further Evidence of the Financial Performance Scorecard and High Performance Companies".
  2. ^ Lee, Louise (March 23, 2006). "Dell Goes High-end and Hip". BusinessWeek. {{cite news}}: Check date values in: |date= (help)
  3. ^ http://www.dell.com/content/topics/global.aspx/solutions/en/winvista?c=us&cs=&l=en&s=dhs
  4. ^ http://www.pcworld.com/article/121421-1/article.html
  5. ^ http://www.snopes.com/radiotv/tv/delldude.asp
  6. ^ http://www.theregister.co.uk/2005/01/26/dell_domain_dispute/
  7. ^ http://www.help-paul-dell.com/

See also

Wikimedia Commons has media related to Dell.

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