Dell

Dell, Inc.

Type	Public (NASDAQ: DELL) & (SEHK: 4331)
Founded	Austin, Texas (November 4, 1984) (as "PC's Limited"). IPO on June 22, 1988, at $8.50/share[1]: approximately 3 years and 7 months after founding
Founder(s)	Michael S. Dell
Headquarters	Round Rock, Texas  United States
Area served	Worldwide
Key people	Michael S. Dell (Chairman & (CEO)
Industry	Technology
Products	Desktops Servers Notebooks Peripherals Printers
Market cap	US$ 45.09 Billion (2008)[2]
Revenue	▲ US$ 61.133 Billion (2008)[3]
Operating income	▲ US$ 3.440 billion (2008)[3]
Net income	▲ US$ 2.947 billion (2008)[3]
Total assets	▲ US$ 27.561 billion (2008)[3]
Total equity	▼ US$ 3.735 billion (2008)[3]
Employees	82,700 (2008)
Subsidiaries	Alienware ASAP Software EqualLogic
Website	Dell.com

The multinational technology company Dell, Inc. develops, manufactures, sells, and supports personal computers and other computer-related products. Based in Round Rock, Texas, Dell employs more than 88,000 people worldwide.^[3]

Dell grew during the 1980s and 1990s to become (for a time) the largest seller of PCs and servers. As of 2008^[update] it held the second spot in computer-sales within the industry behind the Hewlett-Packard Company. The company currently sells personal computers, servers, data storage devices, network switches, software, computer peripherals and televisions.

In 2006, Fortune magazine ranked Dell as the 25th-largest company in the Fortune 500 list, 8th on its annual "Top 20" list of the most-admired companies in the United States.^[4] In 2007 Dell ranked 34th and 8th respectively on the equivalent lists for the year. A 2006 publication identified Dell as one of 38 high-performance companies in the S&P 500 which had consistently out-performed the market over the previous 15 years.^[5]

History

Dell's headquarters are in Round Rock, Texas.

Background and origins

While a student at the University of Texas at Austin in 1984, Michael Dell founded the company as PC's Limited with capital of $1000.^[6] Operating from Michael Dell's off-campus dorm-room at Dobie Center [1], the startup aimed to sell IBM PC-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. Michael Dell dropped out of school in order to focus full-time on his fledgling business, after getting about $300,000 in expansion-capital from his family.

In 1985, the company produced the first computer of its own design — the "Turbo PC", sold for US$795^[7] — which contained an Intel 8088-compatible processor running at a speed of 8 MHz. PC's Limited 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 $73 million in its first year of trading.

The company changed its name to "Dell Computer Corporation" in 1988. In 1989, Dell Computer 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. 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.

In 1996, Dell began selling computers via 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.

In 2002, 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.

In 2003, at the annual company meeting, the stockholders approved changing the company name to "Dell Inc." to recognize the company's expansion beyond computers.

In 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 July, Michael Dell stepped aside as Chief Executive Officer while retaining his position as Chairman of the Board. Kevin Rollins, who had held a number of executive posts at Dell, became the new CEO.

In 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 had 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. The CEO, Kevin Rollins, attributed the bad performance partially to Dell's focus on low-end PCs.

In 2006, Dell purchased the computer hardware manufacturer Alienware. Dell Inc.'s plan anticipated Alienware continuing to operate independently under its existing management. Alienware expected to benefit from Dell's efficient manufacturing system.^[8]

On January 31, 2007, Kevin B. Rollins, CEO of the company since 2004, resigned as both CEO and as a director, and Michael Dell resumed his former role as CEO. Investors and many shareholders had called 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.

In February 2007 Dell became the subject of formal investigations by the US SEC^[9] and the United States Attorney for the Southern District of New York.^[10] The company has not formally filed financial reports for either the third or fourth fiscal quarter of 2006, and several class-action lawsuits^[11] have arisen in the wake of its recent^[update] financial performance. Dell Inc's lack of formal financial disclosure would normally subject the company to de-listing from the NASDAQ,^[12] but the exchange has granted Dell a waiver, allowing the stock to trade normally.^[13]

On March 1, 2007, the company issued a preliminary quarterly earnings report which showed gross sales of $14.4 billion, down 5% year-over-year, and net income of $687 million (30 cents per share), down 33%. Net earnings would have declined even more if not for the effects of eliminated employee bonuses, which accounted for six cents per share. NASDAQ extended the company's deadline for filing financials to May 4.^[14]

Dell and AMD

When Dell acquired Alienware early in 2006, some Alienware systems had AMD chips. 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, quad-processor server using AMD Opteron chips, moving away from using Dell's traditional Intel processors.

CNet's News.com on August 17, 2006 cited Dell's 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 new AMD-based servers — the PowerEdge 6950 and the PowerEdge SC1435.

On November 1, 2006, Dell's website began offering notebooks with AMD processors (the Inspiron 1501 with a 15.4-inch (390 mm) display) with the choice of a single-core MK-36 processor, dual-core Turion X2 chips or Mobile Sempron.

Dell and desktop Linux

First attempt (2000)

In 1998 Ralph Nader asked Dell (and five other major OEMs) to offer alternate operating systems to Microsoft Windows, specifically including Linux, for which "there is clearly a growing interest"^[15][16] Possibly coincidentally, Dell started offering Linux notebook systems which "cost no more than their Windows 98 counterparts" in 2000,^[17] and soon expanded, with Dell becoming "the first major manufacturer to offer Linux across its full product line"^[18] However, by early 2001 Dell had "disbanded its Linux business unit."^[19]

The reason(s) for such a quick reversal remain the subject of debate. Court documents accused Microsoft of coercing OEMs to drop Linux:

Microsoft executive Joachim Kempin described his plan of retaliation and coercion to shut down competition from Linux: "I am thinking of hitting the OEM harder than in the past with anti-Linux actions" and will "further try to restrict source code deliveries where possible and be less gracious when interpreting agreements — again without being obvious about it," continuing "this will be a delicate dance"^[20]

While in a 2003 interview Michael Dell denied that Microsoft pressured Dell Inc. into doing an about-face with regard to desktop Linux, citing a lack of sales: "unfortunately the desktop Linux market didn't develop in volume. It's more of a server opportunity" but adding: "We continue to offer Linux on the desktop and there is nothing else to say."^[21] However, a 2004 report noted that Dell no longer offered pre-installed desktop Linux:

So what does it mean "factory installed Linux"? If you want Dell to install Linux for you, first add on $119. But here is the annoying part. They won't send you a computer with Linux pre-installed. They sell you the computer and the boxes of software on the side, and then they make an appointment to send you someone who comes to your house or business and installs it there.^[22]

Ubuntu on Dell systems

Dell has supplied Ubuntu on some of its computers since 2007

On February 26, 2007 Dell announced that it had commenced a program to sell and distribute a range of computers with pre-installed Linux distributions as an alternative to Microsoft Windows. Dell indicated that Novell's SUSE Linux would appear first.^[23] However, Dell on February 27, 2007 announced that its previous announcement related to certifying the hardware as ready to work with Novell SUSE Linux and that it (Dell) had no plans to sell systems pre-installed with Linux in the near future.^[24] On March 28, 2007, Dell announced that it would begin shipping some desktops and laptops with Linux pre-installed, although it did not specify which distribution of Linux or which hardware would lead.^[25] On April 18, 2007 a report appeared suggesting that Michael Dell used Ubuntu on one of his home systems.^[26] On May 1, 2007, Dell announced it would ship the Ubuntu Linux distribution.^[27] On May 24, 2007, Dell started selling models with Ubuntu Linux 7.04 pre-installed: a laptop, a budget computer, and a high-end PC.^[28]

On June 27, 2007, Dell announced on its Direct2Dell blog that it planned to offer more pre-loaded systems (the new Dell Inspiron desktops and laptops). After the IdeaStorm site supported extending the bundles beyond the US market, Dell later announced more international marketing.^[29] On August 7, 2007, Dell officially announced that it would offer one notebook and one desktop in the UK, France and Germany with Ubuntu "pre-installed". At LinuxWorld 2007 Dell announced plans to provide Novell's SUSE Linux Enterprise Desktop on selected models in China, "factory-installed".^[30] On November 30, 2007 Dell reported shipping 40,000 Ubuntu PCs.^[31] On January 24, 2008 Dell in Germany, Spain, UK and France launched a second laptop, a XPS M1330 with Ubuntu 7.10, for 849 euro or GBP 599 upwards.^[32] On February 22, 2008 Dell announced plans to sell Ubuntu in Canada and in Latin America^[33] From September 16, 2008, Dell has shipped both Dell Ubuntu Netbook Remix and Windows XP Home versions of the Inspiron Mini 9. currently mini 9 laptop is being shipped with ubuntu 8.04 version. soon ubuntu 8.10 would be shipped with mini 9 and mini 12 is also expected to be shipped with ubuntu.

Personnel

On January 31, 2007 Michael Dell returned to the company as CEO. As chairman of the board, Mr. Dell had significant input into the company's operations during Rollins' years as CEO. However with the return of Michael Dell as CEO, the company saw immediate changes in operations, the exodus of many senior vice-presidents and new blood brought in from outside the company.

Departures announced include:

• Kevin Rollins, CEO^[34]
• James Schneider, CFO^[34]
• John Medica, senior vice president, consumer products^[35]
• Joe Marengi, senior vice president, Americas^[35]
• John Hamlin, senior vice president, worldwide online operations^[36]
• Paul McKinnon, senior vice president, human resources^[35]
• Rosenda Parra, senior vice president/general manager, home and small business group^[37]
• Glenn E. Neland, senior vice president, procurement^[38]

Additions announced include:

• Michael Dell, CEO and co-Chairman of the Board (previously Chairman of the Board)
• Don Carty, CFO and co-Chairman of the Board (previously Board member)
• Michael R. Cannon, former CEO of Solectron, as President, Global Operations^[39]
• Ron Garriques, who formerly headed Motorola's mobile phone unit, as President, Global Consumer Group^[40]
• Stephen F. Schuckenbrock, Senior Vice President, Global Services^[38]

Mr. Dell announced a number of initiatives and plans (part of the "Dell 2.0" initiative) to improve the company's financial performance. These include:

• elimination of 2006 bonuses for employees with some discretionary awards
• reduction in the number of managers reporting directly to Mr. Dell from 20 to 12
• in a noted departure from previous years, "build, partner, and buy" to increase services capabilities
• reduction of "bureaucracy"

On April 23, 2008, Dell announced the closure of one of its biggest Canadian call-centers in Kanata, Ontario — terminating approximately 1100 employees, with 500 of those redundancies effective on the spot, and with the official closure of the center scheduled for the summer. (The call-center had opened in 2006 after the city of Ottawa won a bid to host it. Less then a year later, Dell Inc planned to double its workforce to nearly 3,000 workers and to add a new building. Journalists cited a high Canadian dollar and suggested high pay-rates as among the reasons for the cuts.^[41] The company had also announced the shutdown of its Edmonton, Alberta office, losing 900 jobs. In total, Dell announced the ending of about 8,800 jobs in 2007-2008 — 10% of its workforce.^[42]

Products

Scope and brands

The corporation markets specific brand names to different market segments:

• Business Class: including OptiPlex, Latitude, and Precision, where the company's advertising emphasizes long life-cycles, reliability and serviceability:

• OptiPlex - office desktop computer systems
• n Series - desktop and notebook computers shipped with Linux or FreeDOS installed
• Vostro - small-business desktop and notebook systems
• Latitude - commercially-focused notebooks
• Precision - workstation systems and high-performance notebooks. (Some of them including Linux pre-installed.^[43])
• PowerEdge - business servers
• PowerVault - direct-attach and some network-attached storage (NAS)
• PowerConnect - network switches
• Dell EMC - storage area networks (SANs)
• EqualLogic - enterprise class iSCSI SANs

• Home/Consumer Class: including Inspiron and XPS brands, emphasizing value, performance and expandability:

• Inspiron - consumer desktop and notebook systems
• Studio - medium-end consumer slim hybrid desktop and laptop systems
• XPS - enthusiast and high-performance desktop and notebook systems
• Alienware (XPS Extreme) - high-performance gaming systems

• Peripherals: Dell has also diversified its product line to include peripheral products such as USB keydrives, LCD televisions, and printers.

• Dell monitors LCD TVs, plasma TVs and projectors for HDTV and monitors

• Services and support:

• Dell On Call - extended support services (mainly for the removal of spyware and computer viruses)
• Dell Support Center - extended support services (similar to "Dell On Call") for customers in the EMEA. The Solution Centers also support hardware for customers outside of warranty.
• Dell Business Support - a commercial service-contract that provides an industry-certified technician with a lower call-volume than in normal queues; it covers hardware- and some software-support.
• Your Tech Team - a new^[update] support-queue available to home users who purchased their systems through either Dell's website or Dell phone-centers. These customers gain access to a specialized queue currently^[update] located in Tampa, Florida. Customers can request a technician with whom they have worked previously, and the technicians can troubleshoot a wider range of problems — including some that would fall under the "Dell on Call" category. Data backup and virus removal remain out-of-scope for this queue.

Dell also offers Red Hat and SUSE Linux for servers; as well as "bare-bones" computers without pre-installed software (available on n Series by default and by request on XPS and Inspiron systems) at significantly lower prices. Due to Dell's licensing contract with Microsoft, Dell allegedly cannot offer those systems on their website and customers have to request them explicitly. (Dell does offer those systems on their web site at http://www.dell.com/content/products/features.aspx/precn_n?c=us&cs=04&l=en&s=bsd&redirect=1 ). 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.

• Discontinued products/brands:

• Axim - PDAs using Microsoft's Windows Mobile (discontinued on April 9, 2007^[44])
• Dimension - home and "small office, home office" desktop computers (discontinued July 2007; replaced by Inspiron desktops)
• Dell Digital Jukebox - MP3 players (discontinued August 2006)
• Dell PowerApp - application-based severs
• Dell Omniplex - 486- and Pentium-based desktop and tower computers previously supported to run server and desktop operating systems.

Manufacturing

In the 1980s Dell became a pioneer in the “configure to order” approach to manufacturing – delivering individual PCs configured to customer specifications. In contrast, most PC manufacturers in those times delivered large orders to intermediaries on a quarterly basis.^[45]

To minimize the delay between purchase and delivery, Dell has a general policy of manufacturing its products close to its customers. This also allows for implementing a just-in-time (JIT) manufacturing approach, which minimizes inventory costs. Low inventory is another signature of the Dell business model – a critical consideration in an industry where components depreciate very rapidly.^[46]

Dell’s manufacturing process covers assembly, software installation, functional testing (including "burn-in"), and quality control. Throughout most of the company’s history, Dell manufactured desktop machines in-house and contracted out manufacturing of base notebooks for configuration in-house.^[47] However, the company's approach appears to have started to change. The 2006 Annual Report states “we are continuing to expand our use of original design manufacturing partnerships and manufacturing outsourcing relationships.” The Wall Street Journal reported in September, 2008 that “Dell has approached contract computer manufacturers with offers to sell" their plants.^[48]

Assembly of desktop computers for the North American market takes place at Dell plants in Austin TX (original location), Lebanon TN and Nashville, Tennessee (opened in 1999), Winston-Salem NC (opened in 2005) and at the Miami, Florida facility of its Alienware subsidiary. Dell servers come from Austin TX.

Dell assembles computers for the EMEA market at Limerick in the Republic of Ireland, and employs about 4,500 people in that country. European Manufacturing Facility 1 (EMF1, opened in 1990) and EMF3 form part of the Raheen Industrial Estate near Limerick. EMF2 (previously a Wang facility, later occupied by Flextronics, situated in Castletroy) closed in 2002, and Dell Inc has consolidated production into EMF3 (EMF1 now contains only offices^[49]). Dell’s Alienware subsidiary also manufactures PCs in an Athlone, Ireland plant. Construction of EMF4 in Łódź, Poland has started^[update]: Dell planned to start production there in autumn 2007.^[50]

Dell opened plants in Penang, Malaysia in 1995, and in Xiamen, China in 1999. These facilities serve the Asian market and assemble 95% of Dell notebooks. Dell Inc has invested an estimated (U.S.) $60 million in a new manufacturing unit in Chennai, India, to support the sales of its products in the Indian subcontinent. Indian-made products will bear the "Made in India" mark. In 2007 the Chennai facility had the target of producing 400,000 desktop PCs, and plans envisaged it starting to produce notebook PCs and other products in the second half of 2007.

Dell moved desktop and PowerEdge server manufacturing for the South American market from the Eldorado do Sul plant opened in 1999, to a new plant in Hortolandia, Brazil in 2007.^[51]

Technical support

Dell routes technical support queries according to component-type and to the level of support purchased. Dell Inc brands its service agreements at five levels for their business customers:^[52]

1. Basic support provides business-hours telephone support and next business-day on-site support.
2. Silver support provides 24×7 telephone support and 4-hour on-site support after telephone-based troubleshooting.
3. Gold support provides additional benefits over and above Silver support, including: customer-declared severity; priority access to support; expedited escalation of support; 4-hour on-site support in parallel with telephone-support.
4. Platinum Plus support provides additional benefits to Gold Support, including: performance benchmarking; real-time tracking; custom planning and reporting; a dedicated technical account-manager.
5. 2-hour on-site support, offered in some cities: mostly limited to major metropolitan areas.

Dell's Consumer division offers 24x7 phone based and online troubleshooting rather than only during business hours. Gold Technical support is not offered for customers purchasing through the consumer department, and neither is Same-Day Onsite response.

On February 4, 2008 Dell launched a revamped services-and-support scheme for businesses named "ProSupport", offering customers more options to tailor services to fit their needs. Rather than take a one-size-fits-all approach, Dell has put together packages of options for each category of its customers: small and medium-sized businesses, large businesses, government, education, and health-care- and life-sciences.

Dell now offers separate support options for IT staff and for non-IT professionals. For the latter, the company offers "how-to" support for software applications, such as Microsoft Office. Dell also offers collaborative support with many third-party software vendors. For IT departments, Dell offers "fast-track dispatch" of parts and labor and access to a crisis-center to handle major outages, virus-attacks, or problems caused by natural disasters.

Besides offering response-options for handling problems, Dell has launched "Proactive Maintenance", which offers assessment and recommendations for updating drivers and firmware and for the application of customer-approved patches and system-updates. Dell also offers assessment-services for storage area networks, as well as for Dell's computing hardware.

The new offerings replace Dell's tiered services-structure in which customers could choose from a variety of service levels, such as platinum, gold, or silver. The latest system takes a more customizable approach to support.

Service Tags

Dell associates a Service Tag, a unique alpha-numeric identifier, with most of its products, which resembles a serial number. The Service Tag number, represented in base 36, has a length of five or seven characters. Software can read the Service Tag in a computer's DMI table. Monitors bought as part of a computer system get support via the Service Tag of the computer. Monitors bought separately get support via the Dell Order Number or via the monitor's serial number.

Dell links its Service Tags to Express Service Codes, usually found together with the service tag on a sticker physically attached to a system. Computer-owners can usually find this tag on the bottom of laptops; or on the side or on the back of the computer tower of desktops. The Express Service Code, a purely numerical conversion of the service tag, serves for use in Dell's trunkline for routing a customer to the appropriate phone-technician. Dell's technical support for consumers requires the customer to enter in their Express Service Code into their touch-tone phone and if they do not provide it when prompted customers will experience increased hold-time before reaching a support-representative.

DellConnect

The DellConnect program, a remote-access tool, gives technicians within Dell Support the ability to access customer computers from a remote location for troubleshooting purposes. By using this tool, support technicians can analyze the configuration of a computer system, view and edit its files and software environment, view and comment on the screen, or take control of the computer system (with the customer's approval) to carry out troubleshooting.

As of 2007 Dell Inc replaced its proprietary remote-access tool with the newer DellConnect 2.0 manufactured by Citrix — a Dell-branded GoToAssist. After reaching the website, customers simply run this software, which can permit a support technician to view and work on their computer from a remote location; including the ability to reboot the computer remotely and continuing the same session, to share clipboards, and to redirect customers to a specific website.

World-wide technical support

For the Americas, Dell's Customer Contact Centers is redirected to India. Customer support lines no longer are answered in the United States.

In the Asia-Pacific region Dell provides customer support from Pasay City and Quezon City, Philippines; Cyberjaya and Penang, Malaysia^[53]; and Xiamen and Dalian, China.

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

On January 31, 2008 Dell announced that it would close its call center in Edmonton, Alberta effective May 2, 2008, laying off over 900 workers and abandoning the sweetheart-deal it had agreed to with the city of Edmonton. The company planned to close the Ottawa center in July 2008, leaving no support centers in Canada.

On October 15, Dell sold its Dell El Salvador facilities to Stream Global Services to continue providing support to Spanish-speaking US Customers and also Latin American customers.^[54]

In 2006 The New York Times published a humorous review of the company's situation in an article by David Pogue. Pogue lamented the difficulties customers face when attempting to reach tech-support by phone. "When you are ready to MAKE THE CALL", he wrote, "go to the bathroom, take an aspirin, get a book or crossword, stock up on water and nibbles (preferably ones with high sugar content and no nutritional value; Twinkies are good)".^[55]

Commercial aspects

Traditional business-model

Traditionally, Dell has sold all its products — whether to end-use consumers or to corporate customers — using a direct-sales model via the Internet and the telephone-network. Dell maintains a negative cash conversion cycle (CCC) 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 practises 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 days of 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. This model also has enabled Dell to provide very customizable systems at an affordable rate, since Dell's manufacturing arm builds specifically for each customer. Other computer-manufacturers, including Gateway and Hewlett-Packard, have attempted to adapt similar business-models, but due to timing and/or retail-channel pressures they have not achieved the same results as Dell.

A Dell executive writes^[56]:

Analysts say : They (Dell) have a negative 45 days CCC, which means that their sales are converted in hard cash 45 days BEFORE the sale.

I say : They have a negative 45 days CCC, which means that their sales are converted in hard cash 45 days BEFORE Dell needs to pay for purchase invoices to vendors.

Dell has also sold at retail, as explained in the "Marketing" section of this article.

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 Gray, 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 proposed 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 sufficient service and support. Dell has regional senior vice presidents for countries other than the United States, including David Marmonti for EMEA and Stephen J. Felice for Asia/Japan. As of 2007^[update], other officers included 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 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.^[57]

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!"

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).Michael Dell visited India in 2008.

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.

In the first-person shooter game F.E.A.R. Extraction Point, several computers visible on desks within the game have recognizable Dell XPS model characteristics, sometimes even including the Dell logo on the monitors.

In 2007 Dell switched advertising agencies in the US from BBDO to Mother. In July 2007, Dell released new advertising created by Mother to support the Inspiron and XPS lines. The ads featured music from the Flaming Lips and Devo who re-formed especially to record the song in the ad "Work it Out".

Criticisms of Dell's Laptop Security Marketing

Recently^[update] Dell has received a lot of press coverage over its claim of having the world's most secure notebooks, specifically, its Latitude D630 and Latitude D830. ^{[58] [59] [60]}

According to a National Advertising Division (NAD) report released in late June 2008, Dell did not have enough evidence to support its claim as maker of the "world's most secure laptops" ^[61] within its marketing campaign. Lenovo filed the complaint to NAD accusing Dell of making unverified claims. ^[60]

Most of the criticism made by NAD relates to data encryption, both disk-encryption software and disk-encryption hardware, used in Dell's commercial notebooks. Dell uses hardware-based full disk encryption and software-based full disk encryption from third-party vendors such as Seagate Technology.^[60]

"Although NAD determined that the advertiser could truthfully advertise its position as the first in the industry to combine these particular third-party components in creating secure systems for large businesses, NAD observed the distinction between the security provided to the individual computers and the security provided to a large network of computers." "Since not all of the components of the FDE Encryption Solution are equally relevant for all sizes of business, NAD recommended the advertiser make this distinction to the extent it intends to make broad security claims." "On the basis of the evidence in the record, NAD determined that advertiser demonstrated that it offered features of computer security that were both unique and meaningful to consumers."

The market expects laptops with full disk encryption to have data-at-rest (DAR) protection, but they remain vulnerable to cold boot attack, a type of side channel attack, which takes advantage of data remanence^{[62] [63]} "However, it also determined that the broad claim "World's Most Secure" was not adequately supported and was appropriately discontinued."^[60]

Dell voluntarily discontinued the "world's most secured laptops" advertisement after the announcement of the NAD investigation.

Dell's original claim^[61] included:

"The industry-first solution delivers improved performance versus software-based encryption and automated compliance reports so customers are confident that encryption is enabled." "'Dell is at the forefront of laptop security because it ranks as a top concern for customers in an environment where more data is produced by an increasingly mobile work force,' said Margaret Franco, director, Dell Product Group. 'The industry-first solution we’re announcing today adds to our multi-pronged approach to security that delivers an ironclad assurance of protection.'”

Dell kiosks

Dell Direct Store, Brisbane, Queensland

Starting in 2002, Dell opened kiosk locations in shopping malls across the United States in order to give personal service to customers who preferred this method of shopping to using the Internet or the telephone-system. Despite the added expense, prices at the kiosks match or beat prices available through other retail channels. Starting in 2005, Dell expanded kiosk locations to include shopping malls across Australia, Canada, Singapore and Hong Kong.

On January 30 2008 Dell shut down all 140 kiosks in the US due to expansion into retail stores such as Wal-Mart, Best Buy, and Staples.

Dell stores in the United States of America

In 2006 Dell Inc. opened one full store, 3,000-square-foot (280 m²) in area, at NorthPark Center in Dallas, Texas. It operates the 3,000-square-foot (280 m²) retail outlet seven days a week to display about 36 models, including PCs and televisions. As at the kiosks, customers can only see demonstration-computers and place orders through agents. Dell then delivers purchased items just as if the customer had placed the order by phone or over the Internet.

Dell Inc planned to use the Dallas store to house about three times as many products as it displayed in more than 160 kiosks in malls and airports. In addition to showcasing products, the stores also support on-site warranties and non-warranty service ("Dell on Call"). Services offered include repairing computer video-cards and removing spyware from hard drives.

On Valentine's Day, February 14, 2008, Dell closed the Service Center in its Dallas NorthPark store and laid off all the technical staff there.

Dell Partner Program

In late 2007 Dell Inc announced that it planned to expand its program to value-added resellers (VARs), giving it the official name of "Dell Partner Direct" and a new website [2]. Dell Inc realized that this program, once a small factor in Dell Inc sales, had become a growing sector of its business and it desired to leverage this growing outlet for its products. It promised VARs who joined this program increased discounts on product and the ability to use the Dell name and logo in their marketing efforts. ConnectU became an early member of the program.

The overall success of this program — as a new development for Dell Inc — remains unclear.

Retail in the United States of America

In the early 1990s Dell also sold its products through Best Buy, Costco and Sam's Club stores in the United States. Dell stopped this practice in 1994, citing low profit-margins on the business. In 2003, Dell briefly sold products in Sears stores in the U.S. In 2007, Dell started shipping its products to major retailers in the U.S. once again, starting with Sam's Club and Wal-Mart. Staples, the largest office-supply retailer in the U.S., and Best Buy, the largest electronics retailer in the U.S., became Dell retail partners later that same year.

Retail in Canada

As of the end of February 2008^[update], Dell products shipped to one of the largest office-supply retailers in Canada, Staples Business Depot. In April 2008, Future Shop and Best Buy began carrying a sub-set of Dell products, such as certain desktops, laptops and monitors.

Direct retail in Eastern Europe

Since some shoppers in certain markets show reluctance to purchase technological products through the phone or the Internet, Dell has looked into opening retail operations in some countries. In April 2007, Dell opened a retail store in Budapest. In October of the same year, Dell opened a retail store in Moscow.

Retail in the UK

Since December 2007 HMV's flagship Trocadero store has sold Dell XPS PCs. From January 2008 the UK stores of DSGi have sold Dell products (in particular, through Currys and PC World stores). As of 2008, the large supermarket-chain Tesco has sold Dell laptops and desktops in outlets throughout the UK.

Retail in Australia

In May 2008, Dell reached an agreement with office supply chain, Officeworks, to stock a few modified models in the Inspiron desktop and notebook range. These models have slightly different model numbers, but almost replicate the ones available from the Dell Store. Dell continued its retail push in the Australian market with its partnership with Harris Technology in November of the same year.

Competition

Dell's major competitors include Apple, Hewlett-Packard (HP), Sun Microsystems, Gateway, Lenovo, Sony, Acer, Toshiba and Asus. Dell and its subsidiary, Alienware, compete in the enthusiast market against Falcon Northwest, Voodoo PC (a subsidiary of HP), and other manufacturers. In the second quarter of 2006 Dell had between 18% and 19% share of the worldwide personal computer market, compared to HP 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 in late 2006^[update] lost its lead in the PC-business to Hewlett-Packard. Both Gartner and IDC estimated that in the third quarter of 2006, HP shipped more units worldwide than did Dell. Dell's 3.6% growth paled in comparison to HP's 15% growth during the same period. The problem got worse 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%).

IDC reported that Dell lost more server market share than any of the top four competitors in that arena. IDC's Q4 2006 estimates show Dell's share of the server market at 8.1%, down from 9.5% in the previous year. This represents a 8.8% loss year-over-year, primarily to competitors EMC and IBM.^[64]

Environmental record

Dell became the first company in the information technology industry to establish a product-recycling goal (in 2004) and completed the implementation of its global consumer recycling-program in 2006.^[65] On February 6 2007, the National Recycling Coalition awarded Dell its "Recycling Works" award for efforts to promote producer responsibility.^[66] On July 19 2007, Dell announced that it had exceeded targets in working to achieve a multi-year goal of recovering 275 million pounds of computer equipment by 2009.^[67] The company reported the recovery of 78 million pounds (nearly 40,000 tons) of IT equipment from customers in 2006, a 93-percent increase over 2005; and 12.4% of the equipment Dell sold seven years earlier.^[68]

On June 5 2007 Dell set a goal of becoming the greenest technology company on Earth for the long term. The company launched a zero-carbon initiative that includes:

1. reducing Dell's carbon intensity by 15 percent by 2012
2. requiring primary suppliers to report carbon emissions data during quarterly business reviews
3. partnering with customers to build the "greenest PC on the planet"
4. expanding the company's carbon-offsetting program, "Plant a Tree for Me".

The company introduced the term "The Re-Generation" during a round table in London commemorating 2007 World Environment Day. "The Re-Generation" refers to people of all ages throughout the world who want to make a difference in improving the world's environment. Dell also talked about plans to take the lead in setting an environmental standard for the "technology industry" and maintaining that leadership in the future.

Lawsuits and other legal action

• In 1997 Håkan Lans sued Dell for infringement of his colorgraphics display patent without paying royalties. Dell won the case due to a technical error: Lans's American laywer used his name instead of that of his company, although he had stated that the company owned the patent.

• In 2005, Dell began the construction of a facility in Winston-Salem, North Carolina.^[69] Many claims emerged that Dell had used unfair practices to obtain huge incentives.^[70] Dell Inc. fought a lawsuit which the court system later dismissed.^[71]

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

• On January 31 2007, some shareholders filed a lawsuit accusing Dell and Intel of conspiring, and accusing Dell executives (including Michael Dell) of options-backdating and of propped financial reports.^[72] Specific allegations claimed that:
  • Dell had received kickbacks from Intel to maintain Intel exclusivity
  • Dell had used the funds to prop up its sales-figures
  • Dell reduced the period and scope of its warranties and cut corners on manufacturing and testing in order to funnel additional funds to sales; causing the stock-price to inflate to around $40 per share
  • once stock-prices had peaked, several Dell executives, including Michael Dell, sold massive amounts of their personal stock-holdings to benefit from the artificially inflated stock-price

• On February 8 2007, seven current and former workers at a call-center in Roseburg, Oregon sued the computer-maker, saying the company worked its sales reps "off the clock", failed to provide proper rest-breaks and improperly recorded their lunch-periods.^[73] Moves have begun to turn the case into a class action. Dell suddenly closed down the facility at Roseburg, Oregon on August 2 2007.^[74] The facility had consisted of computer and electronics sales-agents and of customer-service representatives.

• In March 2007 an article titled "Computer Giant Faces Consumer Lawsuit Consumers Allege They Didn't Get the Tech Support They Paid For" appeared on an ABC News website.^[75] "Part of the suit claims that though Dell gave the impression of an "award-winning service" available to consumers "24 hours a day, seven days a week", consumers faced "nightmarish obstacles" to get help and technical service for their computers. New York State Attorney General Andrew Cuomo said that New York had received 700 complaints about Dell — more than the number of complaints for any other related subject.

• In May 2007, Andrew Cuomo filed a lawsuit against Dell for "false advertising and deceptive business practices, including offering misleading financing, and failing to honor rebates, warranties and service contracts." [3] Dell spokesman Bob Pearson portrayed the lawsuit as based on only a small portion of Dell's customers and as in no way reflecting the way the company treats its customers. Dell's hardware-warranty contract says that customers must troubleshoot over the phone — including possibly opening the computer — before Dell will send a technical service provider to replace a part. On May 27 2008, State Supreme Court Justice Joseph Teresi required that Dell clarify its financing and warranty criteria, saying the computer maker engaged in fraud, false advertising, deceptive business and abusive debt-collection practices.^[76] Parties have filed more than 1,000 additional complaints with the attorney general's office since the initial filing of the lawsuit in May 2007.^[77]

• On December 5 2007, Typhoon Touch Technologies filed a lawsuit naming Dell inc. along with other defendants, and alleging patent-violations over Dell's use of touch-screen technology.^[78]

SEC investigation

On August 17 2007, the Dell Inc announced that after an internal investigation into its accounting practices it would restate and reduce earnings from 2003 through to the first quarter of 2007 by a total amount of between $50 million and $150 million, or 2 cents to 7 cents per share.^[79] The investigation, begun in November 2006, resulted from concerns raised by the U.S. Securities and Exchange Commission over some documents and information that Dell Inc. had submitted.^[80]

Criticism

In the 1990s Dell switched from using primarily ATX motherboards and PSU to using boards and power-supplies with mechanically identical but differently wired connectors. This meant customers wishing to upgrade their hardware could encounter unforeseen problems. However, company practice in this respect changed in 2003.^[81][82]

In 2005, complaints about Dell more than doubled to 1,533, after earnings grew 52% that year.^[83]

In 2006, Dell acknowledged that it had problems with customer service. Issues included call-transfers^[84] 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."^[85] Later in the year, the company increased its spending on customer service to $150 million.^[86]

In May, 2008 the New York Supreme Court ruled that Dell and Dell Financial Services "engaged in fraud, false advertising, deceptive business practices, and abusive debt collection practices." The relevant lawsuit aimed primarily to highlight and seek restitution for a lack of technical support given to customers by Dell. The court plans to hold further proceedings to determine how much money Dell has to pay out to customers and how much profit Dell made unlawfully, in New York.^[87]

Over the years, many complaints have been made about the quality of Dell's notebook batteries and power adapters. ^[88]

References

Further reading

See also

• List of computer system manufacturers
• List of mergers and acquisitions by Dell

External links

• Dell Inc. Website
• Dell Corporate blog
• Dell Forums
• Dell's Idea Storm - Dell clients' think tank
• Dell's love for Linux.
• Dell Organization Chart