Developed companies

Dell

Dell

Dell is an American computer and technology company headquartered in Round Rock, Texas, that develops, manufactures, sells, and supports personal computers and other computer-related products. By 2008 Dell employed more than 88,000 people worldwide.

During the 1980s and 1990s Dell grew to become (for a period) the largest seller of computers and service providers. In 2008, it ranked second in computer sales among computer manufacturers after Hewlett-Packard. Dell currently sells personal computers, servers, data storage devices, network adapters, and televisions.

In 2006, Fortune magazine ranked Dell as the 25th largest

company on the Fortune 500 list, and 8th in its annual list of the most valued companies in the United States.

A 2006 publication cited Dell as the 38th highest performing company in the S&P 500, having performed significantly in the markets over the past 15 years.

Company History Company

Background

While a student at the University of Texas at Austin, Michael Dell established the company as “PC’s Limited” with a capital of US$1,000. The initial company was selling IBM-compatible computers. Michael Dell started the business believing that when he sold personal computer systems directly to users, his company would achieve a greater understanding of

customers’ requirements and provide them with the most effective computing products to meet those requirements. Michael Dell

dropped out of school in order to devote himself to his new business, especially after obtaining a $300,000 equity expansion from his family.

In 1985, the company produced its first computer of its own design, the “Turbo PC”, which sold for $795. Its design included an Intel 8088-compatible processor running at 8 MHz. The company advertised this product in national computer magazines in order to sell them

directly to customers, and assembled each computer specifically according to the customer’s choices. This gave buyers lower prices than the trading companies, but with greater efficiency than assembling the components themselves. Although PC’s Limited was not the first company to pursue this business style, it became one of the first to succeed in this way. It raised more than $73 million in total revenue during its first year.

Origins

The Dell Corporation has its origins in 1984, when Michae

l Dell created the Dell Computer Corporation, then operating as the Personal Computer Corporation, Ltd.,

while he was a student at the University of Texas at Austin.

Dale dropped out to focus full time on his fledgling business, after receiving an estimated $1,000 in capital from his family.

In 1985, the company produced its first computer of its own design, the Turbo PC, which sold for $795. In national computer magazines, PC, Inc. has announced that its systems are for sale directly to consumers and custom-installed with a choice of options. The company made more than $73 million in its first year of operation.

In 1986, Michael Dell brought Lee Walker, a 51-year

-old venture capitalist, and appointed him as President and CEO of Operations, to act as Michael Dell’s

advisor and implement Dell’s ideas for growing the company. Walker was instrumental in recruiting members to the board of directors when the company went public in 1988. Walker retired in 1990 due to health

, and Michael Dell appointed Morton Myerson as CEO and Head of Electronic Data Systems to transform the company from a fast-growing mid-sized company to A billion dollar company.

The company dropped the Personal Computer Corporation name in 1987 to become the Dell Computer Corporation and began expanding globally. In June 1988, Dell’s

market capitalization

grew from $30 million to $80 million from its initial public offering on the stock exchange on June 22; Where the value of each share increased from 3.5 million dollars per share to 8.5 million dollars per share. In 1992, Fortune magazine included Dell Computer Corporation in its list of the world’s 500 largest companies, making Michael Dell the youngest CEO of a company to enter the Fortune Global 500 list

. In 1993, to complete its direct sales channel, Dell planned to

sell computers in Large retail stores such as Walmart, which would have brought in an additional $125 million in annual

revenue. Bain consultant Kevin Rollins persuaded Michael Dell

to withdraw from these deals, believing that they would be a loser of money in the long run. Retail revenue was poor at best and Dell left the retail channel in 1994. Rollins would soon join Dell full time and eventually become president and CEO of the company.

Growth in the 1990s and early 2000s

Originally, Dell did not focus on the consumer market

, due to high costs and unacceptably low profit margins when selling to individuals and families; This changed when the company’s website went live in 1996 and 1997. While the average selling price for individuals in the industry was

declining, the average selling price for individuals at Dell was rising, as second and third-time PC buyers wanted powerful PCs with multiple features. And they don’t need a lot of technical support so they chose Dell. Dell found an opportunity among computer savvy individuals

who loved the ease of buying outright, customizing their computers to their capabilities, and having it delivered within days. In early 1997,

Dell created an in-house marketing and sales group dedicated to serving the local market and introduced a product line tailored to individual users.

From 1997 to 2004, Dell enjoyed steady growth and gained market shares at the expense of its competitors even while… During the same period, rival PC vendors such

as Compaq, Gateway, IBM, Packard Bell and IST Research struggled and eventually left the market or

were bought out. Dell overtook Compaq to become the largest PC maker in 1999. Operating costs made up just 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 in Cisco. In 2002, when Compaq merged with Hewlett-Packard (the fourth-placed PC maker), the newly merged Hewlett-Packard company took first place but ran into difficulties and Dell soon regained its lead. Dell was the fastest growing company in the early 2000s.

In the mid-1990s, Dell expanded beyond desktop computers and laptops by selling servers, starting with low-cost servers. The three main server providers at the

Dell earned and maintained the highest rating in PC reliability and

customer service/tech support, according to Consumer Reports, year after year, through the mid-to-late 1990s until 2001, just before the release of Windows XP.

In 1996, Dell began selling computers through its website.

time were IBM, Howlett-Packard, and Compaq, many of which

were based on proprietary technology, such as IBM’s Power4 processors or different versions

of the Unix operating system. The new Dell PowerEdge servers didn’t require a huge investment in proprietary technologies, ran Windows NT on Intel chips, and could be made cheaper than their competitors. As a result, Dell’s server revenue, which

was virtually non-existent in 1994, made up 13 percent of the company’s total revenue by 1998. Three years later, Dell overtook Compaq as the top provider of Intel-based servers, with 31 percent of the market . Dell’s first acquisition was in 1999 with Converge Net

Technologies Inc. for $332 million, after Dell failed to develop an in-house enterprise storage system; ConvergeNet’s

elegant and sophisticated technology did not fit the business model of Dell’s core product makers, forcing Dell to write down the full value of the acquisition.

In 2002, Dell expanded its product line to include televisions, portable devices, digital audio players, and printers. Chairman and CEO Michael Dell has repeatedly prevented President

and COO Kevin Rollins from reducing the company’s heavy reliance on computers, and Rollins wanted to reduce the company’s reliance on computers through the acquisition of EMC.

In 2004, Michael Dell resigned as CEO while retaining the position of

Chairman of the Board, handing the position of CEO to Kevin Rollins, who had been President and CEO of Operations since 2001. Although he did not have the title of CEO, Michael Dell Acted de facto as the co-CEO of Rollins.

Under Rollins’ leadership, Dell acquired Alienware, a high-end PC manufacturer, primarily targeting the gaming market.

Disappointments

In 2005, while profits and sales continued to rise, sales growth slowed

dramatically, and the company’s stock lost 25% of its value that year. By June 2006,

the stock was trading at around $25, which was a 40% drop from July 2005 – the company’s highest in the post-dotcom era.

In the PC industry, price drops coupled with proportionate increases in

performance meant that Dell had fewer opportunities to sell its products to its customers (a profitable strategy to encourage buyers to upgrade the processor or memory). As a result, the company was selling more cheap computers than before, eroding profit margins. The laptop segment became the fastest growing in the PC market, but Dell produced low-cost laptops in China like other PC manufacturers,

eliminating the advantages of Dell’s low manufacturing cost, as well as Dell’s reliance on Internet sales

leading to to the loss of the increased sales of laptop computers in the giant stores. Cnet suggested that Dell was stuck in the commodification of low-margin large computers, which prevented it from offering more exciting devices that consumers demanded.

Despite plans to expand into other global regions and various product segments, Dell has been heavily reliant on selling computers to US companies. percent of their revenue

from North and South America, according to third-quarter 2006 results. U.S. desktop PC shipments were shrinking, and companies buying PCs with upgrade (after-sales service) cycles were reluctant to buy new systems so they decided to stop buying them. for a while.

Because of its heavy reliance on computers, Dell has had to cut

prices to increase sales, while demanding significant discounts from suppliers.

Dell has long stuck with its direct sales model. Consumers have become

the main driver of computer sales in recent years, however there has been a decline in consumers buying computers through the web or over the phone, as more and more numbers are visiting electronics stores to try out the devices first.

Dell’s absence from the retail market frustrated the company’s

attempts to offer consumer electronics such as flat-screen televisions and MP3 players. Dell responded by experimenting with commercial kiosks, as well as semi-retail stores in Texas and New York.

By the mid-2000s, many analysts were looking to corporate

innovation as the next source of development and growth in the technology sector. Dell’s low spending on research and development relative to its revenue (compared to IBM, Hewlett-Packard and Apple) –

which was high in the PC market – prevented it from making headway into more lucrative segments, such as MP3 players and later mobile devices. . Increased spending on research and development would have reduced the supply chain profit margins that the company has emphasized. Dell did well as a horizontal organization focused on computers in the 1980s when the computer industry was adopting a horizontal organization characterized by fewer and overlapping levels of management between employees and administrators. But by the mid-2000s, the industry had shifted to relying on integrated hierarchies to provide complete technology solutions, but Dell had fallen far behind competitors such as Hewlett-Packard and Oracle.

In an attempt to solve the problem, CEO Kevin Rollins changed Dick Hunter’s

position from head of manufacturing to head of customer service. Hunter, who noted that

the cost-cutting mindset in Dell’s DNA was a “get in the way”, tried to reduce the number of call forwards

and have call center staff solve customer inquiries and requests in a single call. By 2006, Dell had spent $100 million in just a few months to improve this and the Dellconnect service was introduced to answer customer inquiries more quickly. In July 2006, the company started its own blog called

Direct2Deal, and then in February 2007, Michael Dell launched a company

website called Idea Storm, asking customers for their opinions and advice on several topics,

including the issue of selling Linux-enabled computers and the issue of reducing «Pre-installed

applications» placed on computers for promotional purposes. These initiatives succeeded in reducing negative reviews on the blog from 49% to 22%, as well as reducing searches for the “Dell Hell” logo (“Dell Hell”, a slogan used to criticize Dell and its products) that was

prominent on Internet search engines.

There was also criticism that Dell used defective or defective

components in its computers, particularly those 11.8 million Optiplex desktop computers sold to businesses and

governments from May 2003 to July 2005, which contained defective capacitors. As a result of a fire in a Dell laptop, the type of batteries used in the device was withdrawn

from the market in August 2006, and this incident caused the company to receive a lot of criticism and negative evaluations, but later, it was discovered that Sony is responsible for that batteries.

2006 was the first year that Dell’s growth was slower than the growth of the personal computer market. By the fourth quarter of 2006, Dell had lost its title as the largest PC maker to rival Hewlett-Packard, which had revitalized its personal systems portfolio thanks to a restructuring initiated by CEO Mark Hurd.

After receiving four out of five reports where earnings were

below expectations, Kevin Rollins resigned as President and CEO on January 31, 2007, and founder Michael Dell took over as CEO again.

Dell 2.0 and Downsizing

Dell announced a campaign of changes called “Dell 2.0”, reducing the number of employees and diversifying the company’s products. During Michael Dell’s tenure as CEO after stepping down as CEO, Dell still made significant inroads into the company’s decisions during Kevin Rollins’ years as CEO. With Michael Dell’s return as CEO, the company saw immediate changes in its operations department, as many

of the former senior vice presidents were laid off and new hires brought in from outside the company. Michael Dell has announced a number of initiatives

and plans (as part of the “Dell 2.0” campaign) to improve the company’s financial performance. These measures include eliminating employee bonuses for the year 2006 and in return some recognition awards, reducing the number of officials who report directly

to Michael Dell from 20 to 12, and taking measures to combat “bureaucracy” within the company. Jim Schneider has retired as Chief Financial Officer due to the company’s submission to a SEC investigation into its accounting practices, and has been replaced by Donald Carty.

On April 23, 2008, Dell announced the closure of one of its largest call centers in Kanata, Ontario, Canada, which resulted in the layoffs of approximately 1,100 employees. About 500 of these layoffs were immediate. A new call center opened in 2006 after the Canadian capital, Ottawa, won an offer to host it. Less than a year later, Dell planned to hire 3,000 workers to increase its workforce in order to add a new center. These plans were undone, due to the Canadian

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