Dell

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Dell Inc
Company typePublic (Nasdaq: DELL SEHK: 4331)
IndustryComputer hardware
FoundedAustin, Texas (1984) (as PC's Limited)
HeadquartersRound Rock, Texas, United States
Key people
Michael Dell, Founder & Chairman
Kevin Rollins, President & CEO
ProductsDesktops
Servers
Laptops
Peripherals
Printers
RevenueIncrease$56.74 Billion USD (2006)
5,771,000,000 United States dollar (2022) Edit this on Wikidata
Increase$3.40 Billion USD (2006)
(7.45% profit margin)
Number of employees
65,200
Websitewww.dell.com
This article discusses the corporation Dell, Inc. For other Dells, see Dell (disambiguation)

Dell Inc. (Nasdaq: DELL SEHK: 4331), an American computer hardware company based in Round Rock, Texas, develops, manufactures, supports, and markets a wide range of personal computers, servers, data storage devices, network switches, personal digital assistants (PDAs), software, computer peripherals, and more. As of 2006 it employs more than 63,700 people worldwide and manufactures more computers than any other organization in the world. According to the Forbes 500 2005 list, Dell ranks as the 28th-largest company in the United States by revenue. In 2005, Fortune magazine ranked Dell as No. 1 on its annual list of the most-admired companies in the United States, displacing Wal-Mart, which had held the top spot for the previous two years and which fell to No. 4.

History

File:MichaelDell.jpg
Michael Dell, the founder and chairman of Dell.

Michael Dell, while still a student at the University of Texas at Austin, founded the company as "PC's [sic] Limited" with just $1000, in his room at Dobie, an off campus dorm, in 1984 to sell IBM-compatible computers built from stock components. He founded the company on the principle that by selling personal computer systems directly to customers, PC's Limited could best understand their needs and provide the most effective computing solutions to meet those needs.

In 1985, the company produced the first computer 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. Michael Dell dropped out of school to run the business full-time. 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 1988, Dell's market capitalization grew by $30 million to $80 million on its initial public offering day. The company changed its name to "Dell Computer Corporation" in 1988.

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 magazine included Dell Computer Corporation in its list of the world's 500 largest companies. In 1999, Dell overtook Compaq to become the largest seller of personal computers in the United States of America. 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 jukeboxes. Dell has also produced Dell-brand printers for home and small-office use. 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.

Dell received a 100% rating in the third (2004) Corporate Equality Index released by the Human Rights Campaign group to evaluate gender-preference practices of commercial bodies in the United States.

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 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. Chief Executive Officer (CEO) Kevin Rollins attributed the bad performance partially to Dell's focus on low-end PCs.

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

In October 2005, Dell filed a lawsuit in a Paris court to sue Menorca-based independent website designer Paul Dell for engaging in “parasitism and unfair competition”. This related to his company website 'DellWebsites'. Critics of Dell, Inc. have argued that Dell's "hounding" of Paul Dell has no justification, considering that the title of his enterprise merely reflects his family name.[1] Friends and fellow webdesigners have since started a 'Help Paul Dell' campaign.[2] The case continues.

On 23 March 2006, Dell officially purchased the computer hardware manufacturer Alienware. Despite this acquisition, Alienware will still operate on its own under its current management. However, because of this acquisition, Alienware expects to benefit from Dell's efficient manufacturing system, since executives of Alienware have consistently stated that build-times have swelled to up to a month.[3]

Products

File:Dell computer.jpg
A Dell Optiplex desktop computer.
File:Inspn 8500.jpg
A Dell Inspiron consumer laptop PC.

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 expanded into non-computer products, including the Dell Digital Jukebox ("Dell DJ") (a portable digital audio player), USB keydrives, LCD televisions, Windows Mobile-powered PDAs, and printers.

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

Dell currently ships Microsoft Windows XP as the operating system of choice for most of its new computers, but it also offers Red Hat and SUSE for servers. Dell also sells "bare-bones" computers without any pre-installed software (the N series) - at significantly lower prices. Due to Dell's licensing contracts with Microsoft, customers can obtain such systems only upon request, and Dell has to ship them with a FreeDOS disk included in the box and issue a so-called Windows refund or a merchandise credit after sale of the system at the "regular" retail price.

On Dell's Windows machines the manufacturer bundles a large quantity of software. Some have accused Dell of shipping spyware, specifically Myway Search Assistant and claim that its technical support team have instructions not to support its de-installation, although it is not true. Although the Dell Support Forum provides instructions for removing this software,[4] they seem extremely complicated. One could not uninstall the software completely using the Microsoft Windows "Add or Remove Programs" utility and had to instead rely on the Windows Installer CleanUp Utility to finish the job and remove the entry. This was due to a misconfigured installer that would not de-list the software in add/remove programs list. Coupled with the fact the remove button would no longer appear it seemed downright nefarious but fortunately it has since been rectified and new computers uninstall the program easily.

Dell openly supported offering Apple Computer's new Intel version of its Mac OS X operating system,[citation needed] but to this point Apple has stated the OS will only run on Macintosh machines, and will not agree to licensing Mac OS X to Dell.[citation needed]

Manufacturing

Dell has a general policy of manufacturing its products close to their customers.[citation needed] The assembly of desktop computers for the North American market takes place at Dell plants in Austin, Texas and in Winston-Salem, North Carolina, with servers built in Nashville, Tennessee. Dell, Inc. assembles computers for Europe in Limerick City, Ireland.

Dell's assembly plants in Penang, Malaysia, and in China assemble 95% of Dell laptops; the remaining percentage comes from Dell European Manufacturing Facilities 1, 2, and 3 in Limerick City.[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.

Support

In an effort to improve support and reduce long wait-times, Dell has opened a pilot-project of Dell-owned/operated technical support operating out of Edmonton, Alberta. Supporting both Dell and non-Dell hardware and software, this site has quickly begun taking over from outsourced call centers. As of 2006 Dell Inc. has started to divert some of its support work to another Canadian office in Ottawa, Ontario. Dell International Services functions as a support division of Dell. In the spring 2006, Dell announced it would increase its workforce in Ottawa from 500 to 1500.

In October 2005, Dell International Services opened its Customer Call Center Operations in Manila, Philippines. The spoken accent of operators emerged as a customer-service issue. Some people believe that a Filipino accent more closely resembles an American accent than the accent used in India.

Dell has operated a domestic call center in Twin Falls, Idaho since 2002.

Business model

Dell sells all its products both to consumers and corporate customers, using a direct-sales model via the Internet and the telephone network. Dell also showcases its consumer-oriented products at kiosks in major shopping malls. Dell maintains a negative cash conversion cycle through use of this model. The Internet has significantly enhanced Dell’s business model, making it easier for customers to contact Dell directly. Other computer manufacturers, including Gateway and Compaq, have attempted to adapt this same business model, but due to timing and retail channel pressures, they have not achieved the same success as Dell.

Organization

A Board of Directors of nine people runs the company. Both Michael Dell, the founder of the company, and Kevin Rollins, the CEO, serve on the board. Other board members include Donald 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.

Marketing

Dell advertisements have appeared in several types of media including television, the Internet, magazines, catalogs and in newspapers. Dell constantly lowers product prices at all times of the year, offering free bonus products (such as Dell printers) and free shipping to encourage more sales. Recently, Dell became the lowest-price major computer-manufacturer in the United States.[citation needed] To maintain its low prices, Dell continues to accept most of the purchases via the Internet and the telephone network, and to move its customer-care division to India.[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 outside Central Park in New York City, 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.[citation needed]

A subsequent advertising campaign featured interns at Dell headquarters.

Competition

Dell's major competitors include Apple, Hewlett-Packard/Compaq, Packard Bell, Sun Microsystems, Gateway/Emachines, Lenovo, Sony, Toshiba, and MDG Computers in Canada. Enthusiast market competition takes place with Alienware (now a Dell division), Falcon Northwest, Voodoo PC, WidowPC, and other manufacturers. In 2004, Dell had a 17.9% share of the worldwide personal-computer market, compared to HP with 15.8%.[citation needed] By leveraging its business model, Dell attempts to undercut competitors and offer consumers a more attractive choice of personal computers and other equipment. In August 2003, Dell lowered product prices by 22% in an attempt to generate more sales, however this disappointed shareholders, sending Dell shares down by 2% in late Wall-Street trading amid fears of a sector-wide slump.[citation needed]

Criticism

Dell had a policy of only selling computers with Intel processors, and did not offer AMD-based systems until May 19, 2006, when Dell announced that they would offer servers based on AMD Opteron processors. The announcement stated that Dell would offer the Opteron in the sucessor to the 6800/6850 series of quad Xeon MP based systems, which Dell had only recently updated to support the 800MHz FSB Dual Core Xeon MP processors. The lack of AMD-based systems had undoubtedly cost Dell some sales of higher-end desktop systems, especially in the content-creation field, where benchmarks showed AMD processors function better for most render-intensive 64-bit applications. However, Dell plans to use the Opteron processors only in quad-CPU servers, and has not announced any plans to use desktop AMD processors in any of its systems.

Dell's purchase of Alienware in March 2006 had increased speculation regarding the company's interest in AMD processors.

In 2005, two class-action lawsuits accused Dell of marketing with bait-and-switch tactics and of conspiring with its financial unit to offer zero-percent financing, only to revoke the offer after the return period had expired.

Citations

References

Notes

  1. ^ http://www.theregister.co.uk/2005/01/26/dell_domain_dispute/
  2. ^ http://www.help-paul-dell.com/
  3. ^ Lee, Louise (March 23, 2006). "Dell Goes High-end and Hip". BusinessWeek. {{cite news}}: Check date values in: |date= (help)
  4. ^ http://forums.us.dell.com/supportforums/board/message?board.id=si_virus&message.id=42328&c=us&l=en&cs=19&s=dhs
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