Dell History

Headquartered in Austin, Texas, Dell is the number 1 PC company in the world in terms

of total sales. Dell also is also a provider of products and services, including those

required for customers to build their own information technology and Internet

infrastructures. Dell's dominant position in PC industry can be attributed to its persistent

focus on delivering the best possible customer experience by directly selling products and

services based on industry-standard technology .

Dell was founded in 1984 by Michael S. Dell, a student at the University of Texas, who

with $1,000 dollars in capital starting selling custom built computers for customers

looking for a lower cost alternative to more mainstream systems. He worked out of his

dormitory room, and would later drop out of school to pursue his small, yet profitable

venture. He based his business around one simple concept: that by selling computer

systems directly to customers, Dell could best understand their needs in a way no

middleman ever could, and thus he could efficiently provide them with computer based

solutions that best suit their requirements. This approach, called the direct business

model, allowed Dell to customize each system to the unique needs of each customer,

while providing them with a competitive price, high quality, leading edge technology and

personalized customer support. Because Dell sells directly to its customers, they do not

need to go through slow-moving, indirect business and retail channels, which allows

them to keep their products as up to date as possible with the most current technology.

This also allows them to keep inventory costs at a minimum, which is made possible

through close, integrated links with their key suppliers. The model also provides them

with direct contact to their customers, which allows them to tailor support offerings to fit

the demands of each customer in a quick, and timely manner. The significance of the

direct business model cannot be underestimated, as it has radically changed the way in

which companies in the computer industry view the ways in which they do business. The

direct business model has been, and will continue to be, the key concept behind Dell's

success, as it has proven itself to be an invaluable resource to Dell.

The Internet proved to be a logical way for Dell to expand their reach to their customers

in an unprecedented way that was never possible before. By applying the direct business

model to incorporate the efficiencies and the global reach provided by the Internet, Dell

can enhance and broaden the fundamental competitive advantages provided by the model

in ways never before possible. Dell led the way in commercial migrations to the Internet

by launching www.dell.com in 1994, and adding an e-commerce capability in 1996. The

following year Dell became the first company to record $1 million in online sales, paving

a pathway for others to follow suite.

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Dell's product line can be divided into three categories:

! Personal computers for home and small business use

Product lines in this category include: Dimension desktops and Inspiron laptops.

Customers of these products desire competitive prices, high quality, fast

performance, and industry standard levels of customer support.

! Computer system solutions for medium to large businesses

Product lines in this category include: Dell Precision workstations, OptiPlex

desktops, PowerEdge servers, PowerApp appliance servers, PowerConnect

switches, and PowerVault storage products. Customers of these products demand

the highest levels of quality, reliability, performance, and customer service.

! Complete consulting, deployment, and support services

The product offered in this category is under the name of Dell Premier Services.

These services provide customers with a full range of computer-based solutions

for their business. Dell Premier clients include industry giants such as Boeing and

Proctor and Gamble.

Dell also sells peripherals from various top manufacturers, including: Microsoft, HP,

Canon, Iomega, and APC. About three-quarters of its sales are from desktop and

notebook PCs, with its enterprise products and services making up the other quarter.

Competitive Strategy Statement

The following two excerpts were taken from Dell's FY2001 Annual Report:

! " However, as proud as we are of our operating results, they don't describe why more and

more customers choose to do business with Dell. That explanation begins with our oneto-

one relationships and determination to provide the best possible customer

experience. "

! " The competitive advantages of our direct business model are particularly compelling in

challenging times.