Dell is an American multinational company that is well-known around the world for its range of computer-related products and services. Founded by Michael Dell in 1984, the business continues to prosper in the contemporary age. However, it hasn’t been a straight-line to success, and part of Dell’s storied history revolves around their ability to bounce back from and overcome various challenges. In this article, we take an in-depth look at Dell.
The company that would eventually be called Dell was founded by Michael Dell in 1984. It was initially called ‘PC’S Limited’. Dell founded the company while studying at the University of Texas. To begin with, Dell sold IBM-compatible computers, albeit with altered specifications. IBM were the industry leader at the time. At first, the company was headquartered in Dell’s dormitory room. His family were impressed by his venture, and handed him $1,000 in capital, allowing Dell to drop out of University and put his efforts into the company.
By 1985, PC’s Limited had produced the first computer to be branded with their own name. It was named the Turbo PC – with a price tag of $795. Dell found a gap in the market by offering customisable machines, Each buyer could provide Dell with their exact specification. This customisation proved very popular, and Dell earned much needed exposure through advertisements in computer magazines with a national reach. At the end of its first year of operation, the company grossed more than $73million!
Inevitably, it was necessary for Michael Dell to bring in some business expertise. He was just 19 at the time, and wanted help in turning PC’s Limited into a large company. He brought in Lee Walker, a well-renowned venture capitalist, to be President and Chief Operating Officer. The duo would forge a fine partnership. In 1987, the company changed its name to Dell Computer Corporation. This change also coincided with a global expansion for the firm.
This led to an initial public offering in 1988. Investors were queuing up to invest in Dell – who had managed to claw significant market share away from IBM. After Walker retired, Morton Meyerson was hired – with the remit to transform Dell into a billion-dollar enterprise. Due to the success of Dell’s public offering, they were well on their way to securing the billion-dollar valuation. In 1992, Dell became one of the world’s largest 500 companies, earning Michael Dell the distinction of being the youngest CEO of a Fortune 500 company ever!
Dell enjoyed growth in the 1990’s, with the advent of the internet key in helping the company’s progression. Dell were able to put more effort into the wider consumer market. Again they found a gap in the market – consumers who wanted a powerful computer, as opposed to standard entry-level devices. The ability to buy directly from a manufacturer was rare at the time, as was the quick speed that Dell would process a customer’s order, regardless of their choice of specifications.
The company didn’t rest on its laurels, and in the mid 1990’s expanded into other areas. They once again took on IBM by selling servers. Dell worked out a way to using certain specifications to ensure their products could be built cheaper than competitors. Dell used Microsoft-based technology, and would eventually surpass Compaq as the top provider of Intel-based servers around the world. Furthermore, Dell also overhauled IBM as the leading computer manufacturer during the 1990s. Dell was going from strength to strength.
Around the turn of the millennium, several technology companies struggled due to a saturated market. Household names like IBM, Compaq and Packard Bell were among those to see a marked fall in sales growth. In 1999, Dell overtook Compaq to once again become the worlds largest PC manufacturer. By the early 2000’s, Dell had expanded into further technological areas such as televisions, audio players and printers. This lessened Dell’s reliance on their computing division. During 2004, Michael Dell left his position as CEO of the company, though he remained as Chairman.
By 2005, sales had continued to rise, however sales growth had stalled. This led to Dell losing 25% of its stock value. This was largely down to a matured computer market which was awaiting its latest innovation. The computer market was reponsible for the lionshare of Dell’s income. Moreover, its previous dominance in terms of undercutting the costs of its opposition had been eroded, with Acer and Hewlett Packard both improving.
Dell also struggled for the first time in over twenty years with their model of selling directly to the consumer. In an unexpected change, analysts noted that consumers were shifting towards trying out computers in stores – meaning Dell were losing many customers. Competitors too were placed in these stores. Dell was far behind its competitors by 2006, who all offered a range of technological solutions, unlike Dell, who had even lost its place as the largest manufacturer of computers – with Hewlett Packard wrestling the title away from them.
With the business floundering, Michael Dell returned as CEO, and set about changing the fortune of the company. He engaged in a cost-cutting drive, with call-centres moved abroad and 10% of the Dell workforce made redundant. Dell’s strategy of building customisable computers was shelved, with several plants closed. But with consumers taking to tablets more after the introduction of Apple’s iPad, Dell continued to struggle. Dell lost many customers to Lenovo, with the company seemingly unprepared for the move towards tablets.
But, as with any great tech company, they have launched a comeback which has facilitated a resurgence. In 2013, Dell announced a $24.4billion leveraged buyout deal. The deal was spearheaded by founder Michael Dell, and involved taking the company private for the first time in a quarter of a century. Dell has since returned to stability, while diversifying its product range. In 2016, they acquired EMC Technologies for $67billion – with analysts commending the deal. By purchasing EMC, Dell have been able to improve its services markedly. Tentative predictions suggest Dell have doubled in value since going private. The future is unknown, but Dell appear to be in a positive place.
Making good decisions has been key to Dell’s success in the last thirty-plus years. There is no doubting they have made some mistakes – ‘Dell Hell’ was a popular Google search due to disgruntled customers voicing their disgruntlement. Moreover, their first ever acquisition – a company called ConvergeNet had to be completely written off, costing $332million! But it has been Dell’s ability to overcome these challenges, and react to an ever-changing climate, while largely sticking to its original philosophy – which has been so vital to their various triumphs as a business.
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Dell continue to be one of the largest PC vendors in the world, and are currently the number one shipper of PC monitors in the world. After an incredible start to life as a company, the business had a lull. But they have fought back well, and appear to be going strong. Michael Dell deserves considerable credit for the job he has done with Dell – and it looks like he will leave a lasting legacy on this world. Wherever Dell as a company go in the future, a legacy is inevitable. Just think how differently life could have been if he had stayed in college… We’ll leave you with this: