Dell Inc. (stylized as DELL) was a multinational computer technology company based in Round Rock, Texas and, along with Dell EMC, is a subsidiary of Dell Technologies, one of the largest technology companies in the world with 138,000 employees. Dell manufactured, sold, repaired, and supported personal computers (PCs), servers, data storage devices, network switches, computer software, computer peripherals, high-definition televisions, cameras, printers, and electronics built by other manufacturers. The company was known for its innovations in supply chain management and e-commerce, particularly its direct-sales model and its "build-to-order" or "configure to order" approach to manufacturingâ€"delivering individual PCs configured to customer specifications.
Dell was eponymously named after its founder, Michael Dell.
With a market share of 15.9%, Dell was the third largest PC vendor in the world in the first quarter of 2017, after Lenovo and HP Inc. (formerly The Hewlett-Packard Company). In the first quarter of 2016, Dell was the largest manufacturer of computer monitors in the world, with a market share of 16.8%.
Dell was the third largest employer and largest private employer in Austin, Texas.
On September 7, 2016 Dell Inc. merged with EMC Corporation (now Dell EMC) and both companies became subsidiaries of Dell Technologies.
Former operations
Products and brands
Dell marketed specific brand names to different market segments.
Its Business/Corporate class brands were focused on long life-cycles, reliability, and serviceability. Such brands include:
- OptiPlex (office desktop computer systems)
- Dimension (home desktop computer systems)
- Vostro (office/small business desktop and notebook systems)
- n Series (desktop and notebook computers shipped with Linux or FreeDOS installed)
- Latitude (business-focused notebooks)
- Precision (workstation systems and high-performance notebooks),
- PowerEdge (business servers)
- PowerVault (direct-attach and network-attached storage)
- Force10 (network switches)
- PowerConnect (network switches)
- Dell Compellent (storage area networks)
- EqualLogic (enterprise class iSCSI SANs)
- Dell Electronic Medical Records Solutions (EMR)
Dell's Home Office/Consumer class brands were focused on value, performance, and expandability. These brands included:
- Inspiron (budget desktop and notebook computers)
- XPS (high-end desktop and notebook computers)
- Alienware (high-performance gaming systems)
- Venue (Tablets Android / Windows)
Dell's Peripherals class included USB keydrives, LCD televisions, and printers; Dell monitors includes LCD televisions, plasma TVs and projectors for HDTV and monitors. Dell UltraSharp is further a high-end brand of monitors.
Discontinued products and brands included Axim (PDA; discontinued April 9, 2007), Dimension (home and small office desktop computers; discontinued July 2007), Dell Digital Jukebox (MP3 player; discontinued August 2006), Dell PowerApp (application-based servers), and Dell Optiplex (desktop and tower computers previously supported to run server and desktop operating systems).
Former facilities
Dell's headquarters were located in Round Rock, Texas. As of 2013 the company employed about 14,000 people in central Texas and was the region's largest private employer, which has 2,100,000 square feet (200,000Â m2) of space. As of 1999 almost half of the general fund of the city of Round Rock originated from sales taxes generated from the Dell headquarters.
Dell facilities in the United States were located in Austin, Texas; Plano, Texas; Nashua, New Hampshire; Nashville, Tennessee; Oklahoma City, Oklahoma; Peoria, Illinois; Hillsboro, Oregon (Portland area); Eden Prairie, Minnesota (Dell Compellent); Bowling Green, Kentucky; Lincoln, Nebraska; and Miami, Florida. Facilities located abroad include Penang, Malaysia; Xiamen, China; Bracknell, UK; Manila, Philippines Chennai, India; Hyderabad, India; Bangalore, India; Gurugram, India; Hortolandia and Porto Alegre, Brazil; Bratislava, Slovakia; Åódź, Poland; Panama City, Panama; Dublin and Limerick, Ireland; and Casablanca, Morocco. Dell Direct, which provides sales and technical support for the Ireland and United Kingdom market is located in Cherrywood, Dublin where it employs 1,079 people.
The US and India were the only countries that have all Dell's business functions and provide support globally: research and development, manufacturing, finance, analysis, and customer care.
Competition
Dell's major competitors included Hewlett-Packard (HP), Acer, Fujitsu, Toshiba, Sony, Asus, Lenovo, IBM, MSI, Panasonic with its Toughbook series, Samsung and Apple. Dell and its subsidiary, Alienware, compete in the enthusiast market against AVADirect, Falcon Northwest, VoodooPC (a subsidiary of HP), and other manufacturers.
Technical support
Dell service and support brands included the Dell Solution Station (extended domestic support services, previously "Dell on Call"), Dell Support Center (extended support services abroad), Dell Business Support (a commercial service-contract that provides an industry-certified technician with a lower call-volume than in normal queues), Dell Everdream Desktop Management ("Software as a Service" remote-desktop management, originally a SaaS company founded by Elon Musk's cousin, Lyndon Rive, which Dell bought in 2007), and Your Tech Team (a support-queue available to home users who purchased their systems either through Dell's website or through Dell phone-centers).
History
In 1984, at the age of 19, with $1,000 in capital from his family, Michael Dell founded PC's Limited, a seller of IBM PC compatible computers, while a student of the University of Texas at Austin and operated the company from his dormitory room. In July 1985, the company produced the first computer of its own design, the 10 megabyte Turbo PC, which sold for $795, undercutting IBM. After a positive article in PC Week, the company was selling 1,000 machines per month. Michael Dell appeared in PC's Limited advertisements in national magazines, asking readers to "give us a chance to show you what [its products] can do". Dell's family went on to lend him $500,000 to fund the growth of the company, but the loans were repaid in 1986. In late 1986, the company began operations from an 82,000 square foot factory in North Austin.
In 1986, Michael Dell hired Lee Walker, a 44-year-old retired investment banker and venture capitalist, as president and chief operating officer, to serve as mentor and to implement Dell's ideas for growing the company. Walker reorganized the management staff, was instrumental in securing the company's first line of credit from a bank of $10 million, and was also instrumental in recruiting members to the board of directors when the company went public in 1988 such as George Kozmetsky and Bobby Ray Inman. Walker retired in 1990 due to ill health, and Michael Dell hired Morton Meyerson, former CEO and president of Electronic Data Systems to transform the company from a fast-growing medium-sized firm into a billion-dollar enterprise.
By early 1987, Dell's factory was producing 7,000 computers per month, each built to customers' specifications. In 1987, the company had $70 million in annual sales and $2.1 million in net income. This represented approximately a market share of 1%, compared to 30% for IBM, 8.2% for Apple Inc., 5.2% for Compaq, 5% for Olivetti, and 4.4% for Zenith Electronics. The company spent $3 million, or 4% of sales, on advertising. Dell also offered journalists from major computer magazines the opportunity to test its products, which gave it further good publicity when positive articles were written in these publications. Dell was known for its excellent customer service, with 90% of complaints resolved in a single phone call. In early 1987, Dell began offering a computer service/repair plan by Honeywell for $35 per year. Dell raised capital in a private placement in 1987.
In 1988, The company changed its name from PC’s Limited to Dell Computer Corporation. In June 1988, Dell raised $30 million of new capital, issuing 3.5 million shares at $8.50 each, becoming a public company via an initial public offering.
In 1989, the company introduced its first laptop computer, the 316LT. In 1990, the company opened a manufacturing facility in Limerick, Ireland to serve clients in Africa, Europe, and the Middle East.
In 1992, Fortune magazine included Dell Computer Corporation in its list of the world's 500 largest companies, making Michael Dell, at 27 years old, the youngest CEO of a Fortune 500 company ever.
By 1993, the company had 5,000 employees.
In the late 1980s and early 1990s, sales of computers at retail stores by competitors increased significantly. To complement its own direct sales channel, Dell signed agreements to have its computers sold at CompUSA and Staples Inc. stores. However, selling via middlemen was not very profitable for Dell. Bain consultant Kevin Rollins persuaded Michael Dell to pull out of these deals. After fourteen consecutive quarters with rising profits, the firm reported that its profits have been slashed to ten million dollars, half of what it had projected. Another problem that Dell faced in the early 1990s which contributed to the poor company performance is the lack of leadership in the organization such as senior management capable of guiding the firm toward maturity. To resolve this issue Michael Dell became aware of this and hired several senior executive from larger firms such as Motorola to handle Dell’s expanding operations. Furthermore, the lack of structure in Dell’s product Development process is another factory that contribute to Dell’s first poor year performance in its first fourteen years. In the mid-90s something happened; “the internet, the World Wide Web, and it absolutely changed the way Dell operate while still keeping their direct sales model. The rise of the website and ordering things online, exactly what Dell needed to take the computer marketplace, and in 1996 they started selling computers directly to customers online through Dell.com, with Dell lower costs and pioneering online order system. Dell became leader in customized personal computers ordered through the internet. This strategy was so successful that by the time 1999, they surpassed Compaq, Packard Bell, Gateway, and everyone else to become the number one manufacturer of computers.
Growth in the 1990s and early 2000s
Originally, Dell did not emphasize the consumer market, due to the higher costs and unacceptably low profit margins in selling to individuals and households; this changed in 1996, when Dell.com reached $1 million in daily sales within 6 months of its launch. While the industry’s average selling price to individuals was going down, Dell's was going up, as second- and third-time computer buyers who wanted powerful computers with multiple features and did not need much technical support were choosing Dell. Dell found an opportunity among PC-savy individuals who liked the convenience of buying direct, customizing their PC to their means, and having it delivered in days. In early 1997, Dell created an internal sales and marketing group dedicated to serving the home market and introduced a product line designed especially for individual users.
Dell originally had its headquarters at 9505 Arboretum Blvd., in the Arboretum complex in northern Austin, Texas. In 1996, the company moved its headquarters to Round Rock, Texas.
From 1997 to 2004, Dell enjoyed steady growth and it gained market share from competitors even during industry slumps. During the same period, rival PC vendors such as Compaq, Gateway, Inc., IBM Aptiva, Packard Bell, and AST Research struggled and eventually left the market or were bought out. The company attained and maintained the #1 rating in PC reliability and customer service/technical support, according to Consumer Reports, year after year, during the mid-to-late 90s through 2001. Dell surpassed Compaq to become the largest PC manufacturer in 1999, with 16% market share. Operating costs made up only 10% of Dell's $35 billion in revenue in 2002, compared with 21% of revenue at Hewlett-Packard, 25% at Gateway, and 46% at Cisco. In 2002, when Compaq merged with Hewlett Packard (the fourth-place PC maker), the newly combined Hewlett Packard took the top spot but struggled and Dell soon regained its lead. Dell grew the fastest in the early 2000s.
In the mid-1990s, Dell expanded beyond desktop computers and laptops by selling servers, starting with low-end servers. The major three providers of servers at the time were IBM, Hewlett Packard, and Compaq, many of which were based on proprietary technology, such as IBM's Power4 microprocessors or various proprietary versions of the Unix operating system. Dell's new PowerEdge servers did not require a major investment in proprietary technologies, as they ran Microsoft Windows NT on Intel chips, and could be built more cheaply than its competitors. Consequently, Dell's enterprise revenues, almost nonexistent in 1994, accounted for 13% of the company's total intake by 1998. Three years later, Dell passed Compaq as the top provider of Intel-based servers, with 31% of the market. Dell's first business acquisition occurred in 1999 with the purchase of ConvergeNet Technologies for $332 million, after Dell had failed to develop an enterprise storage system in-house; ConvergeNet's elegant but complex technology did not fit in with Dell's commodity-producer business model, forcing Dell to write down the entire value of the acquisition.
Dell opened plants in Penang, Malaysia in 1995 and 2002, and in Xiamen, China in 1999. These facilities serve the Asian market and assemble 95% of Dell notebooks. In 1997, the company opened its second manufacturing facility in Texas and shipped its 10 millionth computer.
In May 1999, Dell opened a 260,000 square foot manufacturing facility in Lebanon, Tennessee.
Dell's first European manufacturing facility opened in 1990 in the Raheen Industrial Estate near Limerick, Ireland. The plant was expanded in 1996 and again in 1999 with a $90 million expansion that brought the total workforce there to 5,800 people.
By 2000, the Dell.com website was generating $40 million in sales per day and Dell's sales reached $25 billion per year. Rollins became President and COO in 2001.
In 2000, Dell moved its corporate headquarters and executive offices to the Las Cimas office complex in Travis County, Texas, between Austin and West Lake Hills. The company leased 80,000 square feet (7,400Â m2) there, but in early 2002, the company announced that it would move its headquarters back to Round Rock and would sublease its offices in Las Cimas. The subleases were completed in May 2003.
In 2002, Dell expanded its product line to include televisions, handhelds, digital audio players, and printers. Chairman and CEO Michael Dell had repeatedly blocked President and COO Kevin Rollins's attempt to lessen the company's heavy dependency on PCs, which Rollins wanted to fix by acquiring EMC Corporation. In 2002, Dell started the Dell Direct Store model, opening kiosks in malls and airports in the United States to allow customers to examine products before buying them directly from the company, eventually opening 140 kiosks.
In 2003, the company changed its name from Dell Computer Corporation to Dell Inc. to recognize the company's expansion beyond computers.
In 2003, Dell consolidated its operations at its Castletroy facility, formerly occupied by Wang Laboratories and Flextronics into its Limerick facility and the Castletroy facility now operates as a movie studio.
In 2004, Michael Dell resigned as CEO while retaining the position of Chairman, handing the CEO title to Kevin Rollins, who had been President and COO since 2001. Despite no longer holding the CEO title, Dell essentially acted as a de facto co-CEO with Rollins.
In December 2004, Dell announced that it would build a new 750,000 square foot 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. The facility opened in October 2005 after much controversy due to the government subsidies.
Under Rollins, Dell began to loosen its ties to Microsoft and Intel. In March 2006, Dell acquired Alienware, which introduced several new items to Dell products, including processors by Advanced Micro Devices. To prevent cross-market products, Dell continues to run Alienware as a separate entity, but still a wholly owned subsidiary.
Disappointing growth and Dell 2.0 (2005-2006)
In 2005, Dell came under investigation by the U.S. Securities and Exchange Commission for its revenue recognition practices. Jim Schneider retired as CFO and was replaced by Donald Carty in January 2007.
In 2005, sales growth slowed. At its low point in 2006, the stock price had declined 40% in a year. This led to management changes.
The slowing sales growth was attributed to the maturing PC market, which constituted 66% of Dell's sales, and analysts suggested that Dell needed to make inroads into non-PC businesses segments such as storage, services and servers. Dell's price advantage was tied to its ultra-lean manufacturing for desktop PCs, but this became less important as savings became harder to find inside the company's supply chain, and as competitors such as Hewlett-Packard and Acer made their PC manufacturing operations more efficient to match Dell, weakening Dell's traditional price differentiation.
In 2006, despite expansions into other global regions and product segments, Dell was heavily dependent on U.S. corporate PC market, and desktop PCs sold to both commercial and corporate customers accounted for 32% of its revenue, 85% of its revenue comes from businesses, and 64% of its revenue came from North and South America. U.S. shipments of desktop PCs were shrinking, and the corporate PC market was not buying pending the release of Microsoft's Windows Vista in 2007. Heavily depending on PCs, Dell had to slash prices to boost sales volumes, while demanding deep cuts from suppliers.
Throughout the entire PC industry, declines in prices along with commensurate increases in computer performance meant that Dell had fewer opportunities to engage in upselling. As a result, the company was selling a greater proportion of inexpensive PCs than before, which eroded profit margins. Dell's customer service worsened as it moved call centres offshore and as its growth outstripped its technical support infrastructure. Although, Dell originally was known for high levels of customer service, the decline in computer prices led to the company cutting costs. Rollins responded by shifting Dick Hunter from head of manufacturing to head of customer service. Hunter, who noted that Dell's DNA of cost-cutting "got in the way," aimed to reduce call transfer times and have call center representatives resolve inquiries in one call. By 2006, Dell had spent $100 million in just a few months to improve customer service, and rolled out DellConnect to answer customer inquiries more quickly. In July 2006, the company started its Direct2Dell blog, and then in February 2007, Michael Dell launched IdeaStorm.com, asking customers for advice including selling Linux computers and reducing the promotional "bloatware" on PCs. These initiatives did manage to cut the negative blog posts from 49% to 22%, as well as reduce the "Dell Hell" prominent on Internet search engines.
In 2006, Dell's reputation and earnings suffered when it was discovered that the company sold 12 million of computers between 2003 and 2005 that suffered from bad capacitors and leaked chemicals. In August 2006, a battery recall as a result of a Dell laptop catching fire caused much negative attention for the company although eventually, Sony was found responsible for the faulty batteries.
Dell 2.0 and downsizing
In the fourth quarter of 2006, Dell's shipments declined and it lost its market share lead in the PC-business to Hewlett-Packard, whose Personal Systems Group was invigorated due to a restructuring initiated by CEO Mark Hurd. At the end of 2006 Dell's overall PC market-share was 13.9%, compared to 17.4% for Hewlett Packard.
In 2006, Dell announced a change campaign called "Dell 2.0," reducing the number of employees and diversifying the company's products. While chairman of the board after relinquishing his CEO position, Michael Dell still had significant input in the company during Rollins' years as CEO. With the return of Michael Dell as CEO, the company saw immediate changes in operations, the exodus of many senior vice-presidents and new personnel brought in from outside the company. As part of the "Dell 2.0" initiative, in February 2007, Michael Dell announced several initiatives and plans to improve the company's financial performance. These included elimination of 2006 bonuses for employees with some discretionary awards, reduction in the number of managers reporting directly to Michael Dell from 20 to 12, and reduction of "bureaucracy".
Dell had a reputation as a company that relied upon its supply chain efficiency to sell established products at low prices, instead of being an innovator. By the mid-2000s many analysts were looking to innovating companies as the next source of growth in the technology sector. Dell's relatively low spending on research and development as a percentage of its sales prevented it from developing products in more lucrative segments, such as MP3 players and mobile devices. Increasing spending on R&D would have cut into the operating margins that the company emphasized.
In 2005, Dell established its Performance Analytics Group, originally known as Dell Analytics, in Bangalore, India. This division supports pricing, web analytics and supply chain operations.
In late 2006, Dell opened a manufacturing facility in Chennai, India.
Rollins resigns
On January 31, 2007, After 4 of 5 quarterly earnings reports were below expectations, Rollins resigned as President and CEO, receiving a $5 million severance package, and founder Michael Dell assumed the role of CEO again.
Retail expansion overseas and closures in the United States
Dell had long stuck by its direct sales model, which was now cited as a disadvantage compared to rivals such as HP and Acer that also sold computers via retail stores. The lack of a retail presence stymied Dell's attempts to offer certain electronics items that customers wanted to see before buying. In early 2007, the company moved away from its direct-only sales model and experimented with mall kiosks and quasi-retail stores in Texas and New York.
In April 2007, Dell opened a retail store in Budapest and in October 2007, Dell opened a retail store in Moscow. HMV's flagship Trocadero store sold Dell PCs beginning in December 2007. From January 2008 the UK stores of DSGi have sold Dell products (in particular, through Currys and PC World stores). Beginning in 2008, Tesco sold Dell laptops and desktops in outlets throughout the UK.
In May 2007, Dell announced plans to sell its products via existing retail chains in the United States, such as Walmart. In February 2008, Dell closed its retail locations in the United States, including its 140 kiosks and concentrated its retail presence on stores such as Walmart and Best Buy.
In May 2008, Dell reached an agreement with office supply chain, Officeworks (part of Coles Group), to stock a few modified models in the Inspiron desktop and notebook range. In October 2008, Dell opened its first stores in India. Dell continued its retail push in the Australian market with its partnership with now defunct Harris Technology in October 2009. In addition, Dell expanded its retail distributions in Australia through an agreement with discount electrical retailer, The Good Guys, known for "Slashing Prices". In May 2009, Dell and Dick Smith Electronics (owned by Woolworths Limited) reached an agreement to sell Dell computers within Dick Smith's 400 stores throughout Australia and New Zealand. In April 2010, Dell announced the closure of the Australian/New Zealand Dell kiosk program. In Germany, Dell began selling selected smartphones and notebooks via Media Markt and Saturn, as well as some shopping websites.
In December 2007, Dell launched, "Dell Partner Direct", a formal partner program for value-added resellers.
Plant closures and competition from Asian manufacturers (2007-2008)
Dell originally manufactured computers in house and was a pioneer in the "configure to order" approach to manufacturingâ€"delivering individual PCs configured to customer specifications. In contrast, most PC manufacturers in those times delivered large orders to intermediaries on a quarterly basis. As PCs became more commoditized, Dell's "configure to order" approach of manufacturing was no longer as efficient or competitive with high-volume Asian contract manufacturers.
In 2007, the laptop segment was the fastest-growing segment of the PC market, but Dell's reliance on Internet sales meant that it missed out on growing laptop sales in big box stores. Dell was getting trapped in the commoditization of high volume low margin computers, which prevented it from offering more exciting devices that consumers demanded.
In May 2007, Dell moved desktop and PowerEdge server manufacturing for the South American market from the Eldorado do Sul, Brazil plant opened in 1999, to a new plant in Hortolândia.
In January 2008, the company announced the shutdown of its Edmonton, Alberta office, laying off 900 workers. In total, Dell announced 8,800 layoffs in 2007â€"2008, or 10% of its workforce.
In March 2008, Dell closed its manufacturing facilities in Austin, Texas.
On April 23, 2008, as part of a cost-cutting measure, Dell announced the closure of one of its biggest Canadian call-centers in Ottawa, Ontario, reducing staff by approximately 1,100 employees. The call-center had opened in 2006 after the City of Ottawa won a bid to host it. Less than a year later, Dell planned to double its workforce to nearly 3,000 workers and add a new building. These plans were reversed, due to a high Canadian dollar that made the Ottawa staff relatively expensive, and also as part of Dell's turnaround, which involved moving these call-center jobs offshore to cut costs.
By September 2008, the company desired to outsource manufacturing. In September 2008, Dell approached contract computer manufacturers with offers to sell manufacturing facilities, with the plan of closing the sales within 18 months.
On January 8, 2009, Dell announced that it would move all Dell manufacturing in Limerick to a new plant in Åódź, Poland by January 2010. The European Union gave Dell a €55 million incentive package in conjunction with the move. In December 2009, Dell announced the sale of the facility to Foxconn and outsourced manufacturing, becoming a customer of Foxconn. The closure of its manufacturing plant in Limerick, Ireland resulted in the loss of 1,900 jobs.
In July 2009, Dell closed its manufacturing facility in Lebanon, Tennessee.
In November 2010, Dell ceased operations at its plant in Winston-Salem, North Carolina, which received $280 million in incentives from the state, and Dell's contract with the state required it to repay the incentives for failing to meet the conditions. The facility was sold to Herbalife.
Most of the work that used to take place in Dell's U.S. plants was transferred to contract manufacturers in Asia and Mexico, or some of Dell's factories overseas. The Miami, Florida facility of its Alienware subsidiary remains in operation.
Acquisition and sale of Perot Systems
In 2009, Dell acquired Perot Systems and entered the market for IT services. Perot Systems was sold to NTT Data in 2016 at an $800 million loss.
Competition from tablet computers (2010-2012)
In 2009, Dell entered the smartphone market with the launch of the Mini 3i in Brazil and China.
In April 2010, the release of Apple's iPad tablet computer had a negative impact on Dell and other major PC vendors, as consumers switched away from desktop and laptop PCs. Dell's own mobility division has not managed success with developing smartphones or tablets, whether running Windows or Google Android. The Dell Streak tablet, introduced in 2010, was a failure commercially and critically due to its outdated operating system, numerous software bugs, and low resolution screen. InfoWorld suggested that Dell and other OEMs saw tablets as a short-term, low-investment opportunity running Google Android, an approach that neglected user interface and failed to gain long term market traction with consumers. Dell responded by pushing higher-end PCs, such as the XPS line of notebooks, which do not compete with the Apple iPad and Kindle Fire tablets. Dell also went on an acquisition spree in 2010-2011, acquiring companies in the storage and software markets including Boomi, Exanet, InSite One, KACE, Ocarina Networks, Scalent, Compellent, SecureWorks, RNA Networks, and Force10 Networks.
In 2011, with a shrinking PC industry, Dell continued to lose market share, as it dropped below Lenovo to fall to #3 in market share.
The growing popularity of smartphones and tablet computers instead of PCs drove Dell's consumer segment to a $65 million operating loss in the third quarter of 2012. In December 2012, Dell suffered its first decline in holiday sales in five years, despite the introduction of Windows 8.
In the fourth quarter of 2012, Dell and Hewlett Packard came under pressure from Asian PC manufacturers Lenovo, Asus, and Acer, all of which had lower production costs and willing to accept lower profit margins. In addition, while the Asian PC vendors had been improving their quality and design, Dell's customer service and reputation had been slipping. In the fourth quarter of 2012, Dell remained the second-most profitable PC vendor, as it took 13% of operating profits in the PC industry, behind Apple Inc.'s Macintosh that took 45%, 7% at Hewlett Packard, 6% at Lenovo and Asus, and 1% for Acer.
Dell attempted to offset its declining PC business, which still accounted for half of its revenue and generated steady cash flow in the fourth quarter of 2012, by expanding into the enterprise market with servers, networking, software, and services. It avoided many of the acquisition writedowns and management turnover that plagued its chief rival Hewlett Packard.
Despite spending $13 billion on acquisitions to diversify its portfolio beyond hardware between 2009 and 2012, the company was unable to convince the market that it could thrive in the post-PC world, and the company suffered continued declines in revenue and share price. Dell's market share in the corporate segment was no longer the "moat" against rivals that it was previously.
2013 buyout
On February 5, 2013, Dell announced that Michael Dell and Silver Lake Partners, aided by a $2 billion loan from Microsoft, would take the company private in a $24.4 billion leveraged buyout deal, the largest leveraged buyout backed by private equity since the 2007 financial crisis.
In March 2013, the Blackstone Group and Carl Icahn offered to buy the company; however, in April 2013, Blackstone withdrew its offer, citing deteriorating business conditions. Other private equity firms such as KKR & Co. and TPG Capital declined to submit alternative bids for Dell, citing the uncertain market for personal computers and competitive pressures, and a bidding war never materialized. Michael Dell and Silver Lake later increased their offer to $25 billion and closed the acquisition.
After the buyout, Dell offered a Voluntary Separation Program that was expected to reduce the workforce by up to 7%. The reception to the program so exceeded the expectations that it was speculated that Dell might be forced to hire new staff to make up for the losses.
India website and expansion
In June 2013, Dell India started an e-commerce website, enabling customers to order online.
In 2015, Dell announced plans to expand its capacity to 3 million PCs per year in its Chennai facility.
Partnership with EMC (2001-2011) and 2016 merger with EMC
In 2001, Dell and EMC entered into a partnership whereby both companies jointly design products and Dell provided support for certain EMC products including midrange storage systems, such as fibre channel and iSCSI storage area networks. The relationship also promotes and sells OEM versions of backup, recovery, replication and archiving software.
On December 9, 2008, Dell and EMC announced the multi-year extension, through 2013, of the strategic partnership with EMC. In addition, Dell expanded its product lineup by adding the EMC Celerra NX4 storage system to the portfolio of Dell/EMC family of networked storage systems and partnered on a new line of data deduplication products as part of its TierDisk family of data storage devices.
On October 17, 2011, Dell discontinued reselling all EMC storage products, ending the partnership 2 years early.
On October 12, 2015, Dell announced its intent to acquire EMC for $67 billion, in the "highest-valued tech acquisition in history".
EMC was being pressured by Elliott Management Corporation, a hedge fund holding 2.2% of EMC's stock, to reorganize.
The deal was approved by major investors including Temasek Holdings and Silver Lake Partners.
On September 7, 2016, Dell Inc. completed the acquisition of EMC Corp., the largest technology merger in history and became a subsidiary of Dell Technologies.
Acquisitions and divestitures
Acquisitions
Divestitures
Marketing
Dell advertisements have appeared in several types of media including television, the Internet, magazines, mail-order catalogs, and newspapers. Some of Dell's marketing strategies include lowering prices at all times of the year, free bonus products (such as Dell printers), and free shipping to encourage more sales and stave off competitors.
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 youth 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).
In 2007, Dell switched advertising agencies in the US from BBDO to Working Mother Media. In July 2007, Dell released new advertising created by Working 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". Also in 2007, Dell began using the slogan "Yours is here" to say that it customizes computers to fit customers' requirements.
Beginning in 2011, Dell began hosting a conference in Austin, Texas at the Austin Convention Center titled "Dell World". The event featured new technology and services provided by Dell and Dell's partners. In 2017, the event was moved to Las Vegas.
Dell slogans
- Get more out of now (1984â€"1988)
- Easy as Dell (1989-2001)
- Dell. Purely You (2001â€"2006)
- Be direct (2006-2007)
- Yours is Here (2007â€"2011)
- The power to do more (2011â€"present)
Environmental record
Dell reports its environmental performance in an annual Corporate Social Responsibility (CSR) Report that follows the Global Reporting Initiative (GRI) protocol.
All of Dell's facilities have permanent recycling centers and in 2005, the company had a reuse/recycle rate of 85%. In 2006, Dell launched a free electronics recycling program.
On February 6, 2007, the National Recycling Coalition awarded Dell its "Recycling Works" award for efforts to promote producer responsibility.
On June 5, 2007, Dell set a goal of becoming the greenest technology company.
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. 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.
On October 19, 2007, the company introduced the term "The Re-Generation" during a round table in London commemorating 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 planned to lead in setting an environmental standard for the technology industry.
In 2008, the company achieved carbon neutrality by purchasing renewable energy credits.
In 2008, Dell announced that its Round Rock headquarters would be 100% powered by green energy, with 60% of energy needs powered by wind farms from TXU Energy and 40% of energy needs powered by the Austin Community Landfill gas-to-energy plant operated by Waste Management.
In 2009, the company was recognized as the top brand for environmental technology in the information technology sector.
In 2012, Dell ranked 5th on Greenpeace's ranking of electronics makers, with a score of 4.6/10, with the low score due in part to the non-removal of polyvinyl chloride plastic (PVC) and Brominated flame retardants from Dell's products, as promised.
In March 2010, Greenpeace activists protested at Dell offices in Bangalore, Amsterdam, and Copenhagen calling for Dell’s founder and CEO Michael Dell to ‘drop the toxics’ and claiming that Dell’s aspiration to be ‘the greenest technology company on the planet’ was ‘hypocritical’.
In its 2012 report on progress relating to conflict minerals, the Enough Project rated Dell the 8th highest of 24 consumer electronics companies.
Criticism
Upgrade requirements
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 would have to replace parts with scarce Dell-compatible parts instead of commonly available parts. While motherboard power connections reverted to the industry standard in 2003, Dell continues to remain secretive about their motherboard pin-outs for peripherals (such as MMC readers and power on/off switches and LEDs).
Customer service complaints
In 2005, customer complaints about Dell more than doubled to 1,533, after earnings grew 52% that year. In 2006, Dell acknowledged that it had problems with customer service. Issues included call transfers of more than 45% of calls and long wait times. Later in 2006, the company increased its spending on customer service to $150 million.
Accounting practices
On August 17, 2007, 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 $50â€"150 million, or 2 cents to 7 cents per share. 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. It was alleged that Dell had not disclosed large exclusivity payments received from Intel for agreeing not to buy processors from rival manufacturer Advanced Micro Devices. In 2010, Dell paid $100 million to settle the SEC's charges of fraud. Michael Dell and other executives also paid penalties and suffered other sanctions, without admitting or denying the charges.
Error pricing on Taiwanese website
In July 2009, Dell apologized after drawing the ire of the Taiwanese Consumer Protection Commission for twice refusing to honor a flood of orders against unusually low prices offered on its Taiwanese website, which Dell claims was in error. In the first instance, Dell offered a 19" LCD panel for $15. In the second instance, Dell offered its Latitude E4300 notebook at NT$18,558 (US$580), 70% lower than usual price of NT$60,900 (US$1,900). Concerning the E4300, rather than honor the discount taking a significant loss, the firm withdrew orders and offered a voucher of up to NT$20,000 (US$625) per customer in compensation. The consumer rights authorities in Taiwan fined Dell NT$1 million (US$31,250) for customer rights infringements. Many consumers sued the firm for the unfair compensation. A court in southern Taiwan ordered the firm to deliver 18 laptops and 76 flat-panel monitors to 31 consumers for NT$490,000 (US$15,120), less than a third of the normal price. The court said the event could hardly be regarded as mistakes, as Dell said the company mis-priced its products twice in Taiwanese website within 3 weeks.
Lawsuit by Carl Icahn regarding bid by Michael Dell
After Michael Dell made a $24.4 billion buyout bid in August 2013, activist shareholder Carl Icahn sued the company and its board in an attempt to derail the bid and promote his own forthcoming offer.
Criticism of Dell's claims regarding laptop security
In 2008, Dell received criticism for marketing its laptop computers as the "World's Most Secure Commercial Laptops". At Lenovo's request, the Better Business Bureau evaluated the claim, and reported that Dell did not have enough evidence to support such claim.
Self-signed root certificate
In November 2015 it emerged that several Dell computers had shipped with an identical pre-installed root certificate known as "eDellRoot". This raised such security risks as attackers impersonating HTTPS-protected websites such as Google and Bank of America and malware being signed with the certificate to bypass Microsoft software filtering. Dell apologised and offered a removal tool.
Tracking of customers using Dell Foundation Services
Also in November 2015, a researcher discovered that customers with diagnostic program Dell Foundation Services could be digitally tracked using the unique service tag number assigned to them by the program, even if a customer enabled private browsing and deleted their browser cookies.
See also
- List of computer system manufacturers
- List of Dell ownership activities
- Configurator
- Mass customization
References
Further reading
External links
- Official website (Mobile)
