Michael Dell and Dell Computer Corporation's business success

Dell Computer Corporation was founded by Michael Dell, a savvy entrepreneur whose ambition was evident from the early days of his life. When Dell was a high school senior, he sold so many newspapers that he paid for a BMW in cash. Since then, Dell, now in his 30's, has sold so many computers, he could probably buy the entire BMW corporation.

Dell is now a multibillionaire and has earned a regular spot on the Forbes 400 list of wealthiest Americans. Interestingly, Dell does not even possess a college degree, as he dropping out of college after only one year to found Dell Computer Corp. This paper will examine the history and background of Dell Computer Corp. It will also discuss how Dell has evolved over the years and where it stands today. Finally, this paper will look at Dell's future strategies in an effort to determine whether or not Dell is successful as a company.

History and Background

In 1983, as a freshman at the University of Texas, Austin, Michael Dell started selling personal computers out of his dorm room. According to Dell, he was paranoid that his parents would think he was neglecting his studies so he would hide the computers in his roommate's bathtub when his parents came to visit. His success grew within the university and he decided to ranch out. Putting school on hold gave him the time and energy to concentrate on building his business. Two years later, he was a successful business owner with a staff of 250 people. Within eight years, Dell had a 23,000-person company and was the youngest CEO of a Fortune 500 company in history.

Dell Computer Corp. is famous for building custom computers, shipping them out quickly and providing excellent technical support. Dell's strategy has proved to be successful. The price of Dell's stock climbed by 63,000% between 1989 and 1998 (Shanklad, 2003). Revenue was $16.8 billion for the 12-month period ending in 1998. Even the dot-com bust of 1999 and 2000 couldn't stop Dell. Dell was the only competitor in the top four server market whose sales increased from 2001 to 2002. While its revenue declined, it managed to recover. Its revenue grew 6% from $3 billion to $3.2 billion, while its market share grew 1 percentage point to 7.5%.

The company's success has a lot to do with the fact that it does not have the expensive inventory costs that many other computer makers do. Despite increasing competition, plummeting average PC prices and global business turmoil, Dell remains the world's fastest-growing major computer company and the largest manufacturer selling directly to end users.

Current Status of Dell

When looking at Dell's current position, it is important to look at how the company dealt with the technology bust that occurred in 1999-2000. When Michael Dell and Dell President Kevin Rollins met privately in 2001, they were confident that the company was recovering from the global crash in personal computer sales that resulted from the technology bust (Park, 2003). However, their employees were not so sure. Already unsure of their job status, many employees expressed dissatisfaction with the company, especially due to Michael Dell's apparent standoffishness and apparent disinterest in Dell's future.

What You Don't Know About Dell NOVEMBER 3, 2003

Andrew Park.

According to Park (2003): "What happened next says much about why Dell is the best-managed company in technology. At other industry giants, the CEO and his chief sidekick might have shrugged off the criticism or let the issue slide. Not at Dell. Fearing an exodus of talent, the two execs focused on the gripes. Within a week, Dell faced his top 20 managers and offered a frank self-critique, acknowledging that he is hugely shy and that it sometimes made him seem aloof and unapproachable. He vowed to forge tighter bonds with his team. Some in the room were shocked. They knew personality tests given to key execs had repeatedly shown Dell to be an 'off-the-charts introvert,' and such an admission from him had to have been painful."

Michael Dell continued with his plan to gain the support of his team (Park, 2003). He sent a videotape of his talk to every manager in the company -- several thousand people. Then he adopted desktop props to help them do what didn't come naturally. A plastic bulldozer cautioned him not to ram through ideas without including others, and other props helped him overcome other personality flaws. When it comes down to it, Michael Dell's management of the company has elevated it far above its sell-direct business model. His belief that the status quo is never good enough, even if it means painful changes for the business owner, has resulted in great success.

Dell is currently one of the most successful companies in America (Park, 2003). Since 2000, the company has added market share at a faster pace than at any time in its history -- nearly three percentage points in 2002. A renewed effort to cut costs reduced overhead expenses to just 9.6% of revenue in the most recent quarter and boosted productivity to nearly $1 million in revenue per employee. That's three times the revenue per employee at IBM and nearly twice Hewlett-Packard Co.'s rate.

Conclusion

Dell's track record suggests that the company will meet $60 billion revenue goal by 2006 (Park, 2003). Dell is already involved in the markets for inexpensive servers and data-storage gear. In a period of less than six months, its first handheld computer captured 37% of the U.S. market for such devices. Rollins believes that initial sales of Dell printers are double its internal targets. With the potential growth in PCs and new markets, few analysts doubt that Dell can generate the 15% annual growth needed to reach its goal.

Dell appears to be well on its way to enormous success in the technology world. With Michael Dell's management philosophy of constant improvement, I predict great things for the future of Dell Computer Corp.