Company AnalysisDELL INC

History and Background

Dell Inc traces back its origin to 1984 when Michael Dell, a student at University of Texas, Austin started PCs Limited while he was a student. The company used to sell IBM-PC compatible computers built from stock components. PCs Limited sold computers directly to customers. Michael Dell believed that this way they could understand and serve customer needs better. Michael Dell dropped out of college to take care of his growing business when he received $300,000 from his family to expand his business. In 1985, the company designed first PC on its own the "Turbo PC" which sold for US$795. PCs Limited advertised its systems in national computer magazines for sale directly to consumers and custom assembled each ordered unit according to a selection of options. The company grossed more than $73 million in its first year of trading. In 1988 PCs Limited was officially renamed to Dell Computers Corporation and it started expanding globally-first in Ireland. In 1992, Fortune magazine included Dell Computer Corporation in its list of the world's 500 largest companies, making Michael Dell the youngest CEO of a Fortune 500 company ever. Till date, Dell retains its core business concept of selling computers directly to customers. In 2002, Dell started selling its PCs through the website, offering customers an option to create their own custom PC designs. Dell then assembles and ships this PC to the address provided by the customers. Dell has also extended its business, from core computer sales, to various other sectors in information and technology domain. It expanded its product line to televisions, hand-held devices, printers etc.

Market Reach
Dell has market penetration in various sectors. Though its core business is centred on selling various electronics and IT related products through its website, lately Dell has started making its marks on IT consulting sector as well. Dell offers various classes of products and its website classifies these products into various broad categories. This helps to improve customer shopping experience as customer can browse and buy from the category he is interested in.

Broadly, Dells core product segment: Desktop and Notebook PCs are classified into 2 categories, namely: i. Business/Corporate class where Dell emphasizes on long life-cycles, reliability, and serviceability Some of the available series under this category are: Optiplex - office desktop computers
n Series - desktop and notebook series with Linux or FreeDOS Latitude - business focused notebook Precision - workstations and high performance notebook series PowerEdge - Business Servers

ii.

Home/Small Office class where Dell highlights value, performance, and expandability Some of the available series under this category are: Inspiron - budget desktop and laptop series
Studio - mainstream desktop and laptop series with focus on personalization with design XPS high end desktop and laptop series Alienware high end gaming laptop and desktop series Adamo sleek luxury laptop series

Along with these, Dell also offers sales of various other electronics product as HDTV, Printers and accessories, Mobiles, MP3 players, GPS receiver devices etc. Many of these products are from various other manufacturer and Dell serves as a sales portal.

Under IT consulting, the services provided by Dell can be classified into following: Application and Database Infrastructure Business Continuity and Disaster Recovery Communications and Collaboration Data Centre Planning and Management Education and Training High Performance and Cloud Computing Networking Storage IT Strategy and Planning Server Virtualization and Platform Optimization

Market Strategy and Latest Trend

Customer Reach
Dells primary focus always has been on customer satisfaction. Their promotional campaigns also always try to put the emphasis on the customer. Dell uses tagline like Get Yours, Yours is here in its commercials while giving options to customers to design the look of their purchase. This gives a more personalized feel while using the product, as believed and promoted by Dell.

Along with the concept of personalization, Dell also offers price reduction, free bonus products (eg. printers, headphones, bag packs) and also free shipping during select period. The use of Internet and Telephone sales network helps Dell lower its prices to greater extend. Dell has an exclusive forum IdeaStorm: Where Your Idea Reigns, a user led Dell community website, where users are allowed to make suggestions and comment on the Dell products and to suggest any idea that might be implemented by Dell to improve customer experience. This forum helps Dell to understand customer needs and trends and to design product accordingly.

Trends
Lately, Dell has entered the Tablet PC market and has come with a 5 inch Android-based Tablet, Streak, designed to provide people the best on-the-go entertainment, social connection, and navigation experience.

Green Initiative
Dell is also the first company in the IT industry to establish a product-recycling goal (in 2004) and it completed the implementation of its global consumer recycling-program in 2006. 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: Reducing Dell's carbon intensity by 15 percent by 2012 Requiring primary suppliers to report carbon emissions data during quarterly business reviews Partnering with customers to build the "greenest PC on the planet" Expanding the company's carbon-offsetting program, "Plant a Tree for ME".

Acquisition
In 2009, Dell acquired Perot Systems, a technology services and outsourcing company, in a reported $3.9 billion deal. Perot Systems Corporation is a worldwide provider of information technology services and business solutions. Through its flexible and collaborative approach, Perot Systems integrates expertise from across the company to deliver custom solutions that enable clients to accelerate growth, streamline operations and create new levels of customer value. Michael Dell, CEO of Dell Inc, believes Perot Systems to be a premium asset with great people that enhances Dells opportunities for immediate and long-term growth by significantly expanding Dells enterprisesolutions capabilities and making Perot Systems strengths available to even more customers around the world.

Current Scenario
Though it went through some rough times after the resignation of CEO, Michael Dell when its PC sales market share dropped to 13.9% in the end of 2006 from 19% during the second quarter, currently Dell seems to be in better position, after return of Michael Dell as CEO on January, 2007. With its increased focus in customer satisfaction and its better market strategies; Dell has been able to increase its revenue by 22% in second quarter of FY-2010, compared to that during FY-2009. Its net income also rose by 23% during the same period. The following pointers show the growth strategy adopted by Dell: Since launching its $4 billion cost initiatives last fiscal year, about 70 percent of Dells total product volume has been redesigned and optimized to reduce costs. Dell further strengthened its enterprise position in the quarter. Server product shipments were up 12 percent and revenue was up 9 percent sequentially. Revenue from EqualLogic storage systems was up 42 percent year-over-year. Dell continues to build its emerging country presence as combined revenue from the BRIC countriesBrazil, Russia, India and Chinagrew 16 percent sequentially. Sales in BRIC now comprise 10 percent of total company revenue.