Dell Essay ⋆ Business Essay Examples ⋆ EssayEmpire

An international computer manufacturing and sales company of the United States, Dell, Inc., was founded by Michael Dell (1965–) in 1984. With capital of $1,000, Dell set up PC’s Limited while a student at the University of Texas, Austin. He left the university to work full time in his business enterprise, helped by $300,000 from his family. The “Turbo PC” with an Intel 8088-compatible processor with a speed of 8 MHz was the first computer manufactured by the company in 1985. It netted about $73 million in the same year.

After four years PC’s Limited founded the first on-site service program. It began outside the United States with a branch in Great Britain, followed by 11 outlets throughout the world. With a new name, Dell Computer Corporation, from 1988, the company’s market capitalization increased from $30 million to $80 million with an initial public offering (IPO) of 3.5 million shares. Selling directly to consumers was one of the reasons for the phenomenal growth of the company. By 1992 it became one of the world’s 500 largest companies named by the Fortune magazine.

After four years, Dell adopted the innovative method of selling computers from its Web site. The strategy of adopting online commerce resulted in market valuation of Dell growing at an incredible rate of 7,600 percent. The introduction of dell.com was advantageous for both consumers and the company and reduced the cost of taking orders by telephone. The inventory turnover of the company also became much faster.

By the end of the 20th century, Dell Computer Corporation had become number one in sales of personal computers, and its revenue was $25 billion in January 2000. The company expanded from personal computers into multimedia and printers. It changed its name to Dell, Inc., by which it is known today. Apart from its headquarters at Round Rock, Texas, Dell, Inc., set up an assembly plant in Winston-Salem, North Carolina, in 2004. In February 2005, Fortune magazine placed Dell first among its “Most Admired Companies.”

Not everything went smoothly for Dell. It incurred losses of $300 million because of defective capacitors for Optiplex GX270 and GX280 motherboards. Its first forays into using the Linux operating system as an alternative to the dominant Microsoft Windows stalled. A second attempt in 2007 resulted in selling computers with pre-installed Ubuntu Linux 7.04 in France, Germany, and Great Britain only. Dell was also losing to its competitor Hewlett-Packard by the end of 2006; the latter’s market share was 17.4 percent in comparison to Dell’s 13.9 percent. Its sales and net income went down 5 percent and 33 percent, respectively, by March 2007 versus the previous year. Dell also faced innumerable lawsuits over alleged claims in advertising, exaggerated financial reports, backdating, and delayed service to consumers.

Despite its problems, Dell has become a pioneer of the information technology industry in recycling programs. It has also strived to reduce carbon emissions and to manufacture the “greenest personal computer.” The company has also not lagged in philanthropic activities. The University of Texas, Austin received a grant from the Michael and Susan Dell Foundation of $50 million for a pediatric research institute, computer science building, and a center for healthy childhood development.

The international operations of Dell have made it a truly global concern. Apart from centers in Europe, it has assembly plants, production units, and customer contact centers in Asian countries including China, Japan, India, Malaysia, Singapore, and the Philippines. However, recession in the United States, decline of the American dollar, and increasing strength of local currencies have decreased profits in early 2008, impacting Dell call centers in India to an extent.

With a net worth of $15.8 billion, Michael Dell became the 30th richest person in the world in 2007 as estimated by Forbes. In the age of fierce competition in the computer market, Dell has not fared badly. Its growth has been the result of an innovative marketing strategy, avoidance of overproduction, and willingness to provide service to customers around the clock.

Bibliography:

Damon Darlin, “Dell Accounting Inquiry Made Formal by S.E.C.,” New York Times (November 16, 2006);
“Dell: Going After Apple,” Business Week (August 25, 2008);
Michael Dell and Catherine Fredman, Direct from DELL (HarperCollins, 1999);
“Face Value: Michael Dell, Dell’s Inventor and Reinventor,” Economist (May 3, 2008);
Gary Fields, “Innovation, Time and Territory: Space and the Business Organization of Dell Computer,” Economic Geography (v.82/2, 2006);
Steven Holzner, How Dell Does It (McGraw-Hill, 2006);
Joshua Lipton, “Dell’s Investigation Comes To a Close,” Forbes (August 17, 2007).

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