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Dell
Dell Inc. (formerly Dell Computer) is an American multinational computer technology
corporation based in Round Rock, Texas, United States, that develops, sells, repairs and supports
computers and related products and services. Bearing the name of its founder, Michael Dell, the
company is one of the largest technological corporations in the world, employing more than
103,300 people worldwide. Dell is listed at number 44 in the Fortune 500 list. It is the third largest
PC vendor in the world after HP and Lenovo.
Dell has grown by both increasing its customer base and through acquisitions since its inception;
notable mergers and acquisitions including Alienware (2006) and Perot Systems (2009). As of
2009, the company sold personal computers, servers, data storage devices, network switches,
software, and computer peripherals. Dell also sells HDTVs, cameras, printers, MP3 players and
other electronics built by other manufacturers. The company is well known for its innovations in
supply chain management and electronic commerce, particularly its direct-sales model and its
"configure to order" approach to manufacturingdelivering individual PCs configured to
customer specifications.
Dell is the sixth largest company in Texas by total revenue, according to Fortune magazine. It is
the second largest non-oil company in Texas behind AT&T and the largest company in the
Greater Austin area.
On February 5, 2013 Dell announced a leveraged buyout by founder Michael Dell and Silver Lake
Partners with additional funding from Microsoft. However Southeastern Asset Management, the
largest shareholder of Dell stock with about 8.5%, is opposed to the deal at the per share price of
$13.50 to $13.75 as they value the company at $23.72 a share. The buyout would save Dell
between $4 and $5 billion in taxes they would otherwise have to pay on repatriated profits
controlled by tax haven subsidiaries.
History
Dell traces its origins to 1984, when Michael Dell created PCs Limited while a student of the
University of Texas at Austin. The dorm-room headquartered company sold IBM PC-compatible
computers built from stock components. Dell dropped out of school 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, which sold for
$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 operation.
The company changed its name to Dell Computer Corporation in 1988 and began expanding
globally. In June 1988, Dell's market capitalization grew by $30 million to $80 million from its
June 22 initial public offering of 3.5 million shares at $8.50 a share. 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.
In 1993, to complement its own direct sales channel, Dell planned to sell PCs at big-box retail
outlets such as Wal-Mart, which would have brought in an additional $125 million in annual
revenue. However, Bain consultant Kevin Rollins persuaded Michael Dell to pull out of these
deals, believing they would be money losers in the long run.
Growth in 1990s and early 2000s
From 1997 to 2004, Dell enjoyed steady growth and it gained market share from competitors even
during industry slumps.
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Dell 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 right before Windows XP was released.
In 1996, Dell began selling computers through its website, and in 2002, it expanded its product
line to include televisions, handhelds, digital audio players, and printers. Dell's first acquisition
occurred in 1999 with the purchase of ConvergeNet Technologies.
Dell surpassed Compaq to become the largest PC manufacturer in 1999. In 2002, when Compaq
merged with Hewlett Packard (the 4th place PC maker), the combined Hewlett Packard took the
top spot but struggled and Dell soon regained its lead. Dell grew the fastest in the early 2000s.
In 2003, the company was rebranded as simply "Dell Inc." to recognize the company's expansion
beyond computers.
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. Under Rollins, Dell
began to loosen its ties to Microsoft and Intel, the two companies responsible for Dell's dominance
in the PC business. During that time, Dell acquired Alienware, which introduced several new
items to Dell products, including AMD microprocessors. To prevent cross-market products, Dell
continues to run Alienware as a separate entity, but still a wholly owned subsidiary.
Missed expectations
However in 2005, while earnings and sales continued to rise, sales growth slowed considerably,
and the company stock lost 25% of its value that year. By June 2006, the stock traded around
$2540% down from July 2005the high watermark of the company in the post-dotcom era.
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The slowing sales growth has been 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, however 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. Throughout the entire PC industry,
declines in prices along with commensurate increases in performance meant that Dell had fewer
opportunities to upsell to their customers (a lucrative strategy of encouraging buyers to upgrade
the processor or memory). As a result the company was selling a greater proportion of inexpensive
PCs than before, which eroded profit margins. The laptop segment had become the fastest growing
of the PC market, but Dell produced low-cost notebooks in China like other PC manufacturers
which eliminated Dell's manufacturing cost advantages.) CNET has suggested that Dell was
getting trapped in the increasing commoditization of high volume low margin computers, which
prevented it from offering more exciting devices that consumers demanded.
There has also been a decline in consumers purchasing PCs through the Web or on the phone, as
increasing numbers were visiting consumer electronics retail stores to try out the devices first. The
lack of a retail presence stymied Dell's attempts to offer consumer electronics such as flat-panel
TVs and MP3 players.
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Dell had a reputation as a company that relied upon supply chain efficiencies to sell established
technologies 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 low
spending on R&D relative to its revenue (compared to IBM, Hewlett Packard, and Apple Inc.)
which worked well in the commoditized PC marketprevented it from making inroads into more
lucrative segments, such as MP3 players. Increasing spending on R&D would have cut into the
operating margins that the company emphasized.
Dell's reputation for poor customer service, since 2002, which was exacerbated as it moved call
centres offshore and as its growth outstripped its technical support infrastructure, came under
increasing scrutiny on the Web. The original Dell model was known for high customer satisfaction
when PCs sold for thousands but by the 2000s, the company could not justify that level of service
when computers in the same lineup sold for hundreds. By 2006, Dell had spent $100 million in
just a few months to improve on this, and rolled out DellConnect to answer customer inquiries
more quickly.
There was also criticism that Dell used faulty components for its PCs. A battery recall in August
2006, as a result of a Dell laptop catching fire caused much negative attention for the company
though later, Sony was found responsible for the faulty batteries.
2006 marked the first year that Dell's growth was slower than the PC industry as a whole. By the
fourth quarter of 2006, Dell lost its title of the largest PC manufacturer to rival Hewlett Packard
whose Personal Systems Group was invigorated thanks to a restructuring initiated by their CEO
Mark Hurd.
After four out of five quarterly earnings reports were below expectations, Rollins resigned on
January 31, 2007 and founder Michael Dell assumed the role of CEO again.
Dell 2.0
Dell announced a change campaign called "Dell 2.0," reducing headcount and diversifying the
company's product offerings. While chairman of the board after relinquishing his CEO position,
Michael Dell still had significant input in the company 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 personnel brought in from outside the company.
Michael 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 Michael Dell from 20 to 12, and 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 than a year later,
Dell planned to double its workforce to nearly 3,000 workers add a new building. However 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.
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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.
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On January 8, 2009 Dell announced the closure of its manufacturing plant in
Limerick, Ireland with the loss of 1,900 jobs and the transfer of production to its plant in Poland.
Acquisitions
For more details on this topic, see List of Dell ownership activities.
In 2006, Dell acquired Alienware, a manufacturer of high-end PCs popular with gamers.
The company acquired EqualLogic on January 28, 2008, to gain a foothold in the iSCSI
storage market. Because Dell already had an efficient manufacturing process, integrating
EqualLogic's products into the company drove manufacturing prices down.
In 2009, Dell acquired Perot Systems, a technology services and outsourcing company, mainly
active in the health-sector, founded by former presidential hopeful H. Ross Perot
In 2009, Dell acquired Perot Systems, based in Plano, Texas, in a reported $3.9 billion
deal, and amalgamated into Dell Services. The acquired business provided Dell with
applications development, systems integration, and strategic consulting services through
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its operations in the U.S. and 10 other countries. In addition, the acquisition of Perot
brought a variety of business process outsourcing services, including claims processing
and call center operations.
On February 10, 2010, the company acquired KACE Networks a leader in Systems
Management Appliances. The terms of the deal were not disclosed.
On August 16, 2010, Dell announced plans to acquire the data storage company 3PAR.
On September 2, Hewlett-Packard offered $33 a share for 3PAR, which Dell declined to
match.
On November 2, 2010, Dell acquired Software-as-a-Service (SaaS) integration leader
Boomi. Terms of the deal were not disclosed.
In February 2011 Dell completed the acquisition of Compellent.
On February 24, 2012 Dell acquired backup and disaster recovery software solution
provider AppAssure Software of Reston, VA. AppAssure delivered 194 percent revenue
growth in 2011 and over 3500% growth in the prior three years. AppAssure supports
physical servers and VMware, Hyper-V and XenServer. The deal represents the first
acquisition since Dell formed its software division under former CA CEO John Swainson.
Dell added that it will keep AppAssures 230 employees and invest in the company.
In March 2012, USA Today said that Dell agreed to buy SonicWall, and the acquisition
was completed 9 May 2012. A company with 130 patents, SonicWall develops security
products, and is a network and data security provider.
On April 2, 2012, Dell announced that it wants to acquire Wyse, global market-leader for
thin client systems
On April 3, 2012, Dell announced that it acquired Clerity Solutions. Clerity, a company
offering services for application (re)hosting, was formed in 1994 and has it headquarters
in Chicago. At the time of the take-over approximately 70 people were working for the
company.
On July 2, 2012, Dell announced that it was buying Quest Software.
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The acquisition
was completed on 28 September 2012
On November 16, 2012, Dell announced it was acquiring Gale Technologies, a provider of
Infrastructure Automation Products. Gale Technologies was founded in 2008 and is
headquartered in Santa Clara, California
On December 18, 2012, Dell announced it was acquiring Credant Technologies, a
provider of storage protection solutions. Credant is the 19th acquisition in four years. Dell
spent $13 billion since 2008 and $5 billion in the past year on acquisitions.
2013 buyout
After several weeks of rumors, which started around January 11, 2013, Dell announced on
February 5, 2013 that it would become private again in a $24.4 billion leveraged buyout and thus
remove itself from the NASDAQ and Hong Kong Stock Exchange, so that its shares are no longer
being traded on a (public) stock exchange. Michael Dell and Silver Lake Partners, aided by a $2
billion loan from Microsoft, will buy the public shares at $13.65 a piece. The $24.4 billion buyout
is the largest leveraged buyout backed by private equity since the 2007 financial crisis. It is also
the largest technology buyout ever, surpassing the 2006 buyout of Freescale Semiconductor for
$17.5 billion. Dell founder Michael Dell said of the buyout "I believe this transaction will open an
exciting new chapter for Dell, our customers and team members". Dell rival Lenovo reacted to the
buyout, saying "the financial actions of some of our traditional competitors will not substantially
change our outlook". Meanwhile HP took a dimmer view of the move and suggested that Dell's
traditional product innovation might suffer. The buyout price represents a small premium over the
current stock price and lower than the stock's previous high, thus receiving opposition from Mason
Hawkins, the largest outside shareholder. Michael Dell owns the largest single share of the
company's stock and was part of negotiations to go private, however he is offering only $750
million of his own money for a deal that will involve almost $16 billion in new debt. T. Rowe
Price, which has the third largest holding, also objected to the low price of the proposal.
The buyout would save Dell between $4 and $5 billion in taxes they would otherwise have to pay
on repatriated profits controlled by tax haven subsidiaries.
Products
Scope and brands
Dell's tagline 'Yours is Here', as seen at their Mall of Asia branch in Pasay City, Philippines
The corporation markets specific brand names to different market segments.
Its Business/Corporate class represent brands where the company advertising emphasizes long
life-cycles, reliability, and serviceability. Such brands include:
OptiPlex (office 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),
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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's Home Office/Consumer class emphasizes value, performance, and expandability. These
brands include:
Inspiron (budget desktop and notebook computers)
Studio (mainstream desktop and laptop computers)
XPS (high-end desktop and notebook computers)
Studio XPS (high-end design-focus of XPS systems and extreme multimedia capability)
Alienware (high-performance gaming systems)
Adamo (high-end luxury laptop)
Dell EMR (electronic medical records)
Dell's Peripherals class includes USB keydrives, LCD televisions, and printers; Dell monitors
includes LCD TVs, plasma TVs and projectors for HDTV and monitors. Dell UltraSharp is further
a high-end brand of monitors.
Dell service and support brands include 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), 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).
Discontinued products and brands include 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
Omniplex (desktop and tower computers previously supported to run server and desktop operating
systems).
Manufacturing
From its early beginnings, Dell operated as a pioneer in the "configure to order" approach to
manufacturingdelivering individual PCs configured to customer specifications. In contrast, most
PC manufacturers in those times delivered large orders to intermediaries on a quarterly basis.
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 modela critical consideration in an industry where components depreciate very
rapidly.
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. However, the company's approach has changed, as cited in the 2006 Annual Report,
which 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.
By the late 2000s, Dell's "configure to order" approach of manufacturingdelivering individual
PCs configured to customer specifications from its US facilities was no longer competitive with
high-volume Asian contract manufacturers.
Assembly of desktop computers for the North American market formerly took place at Dell plants
in Austin, Texas (original location) and Lebanon, Tennessee (opened in 1999), which have been
closed in 2008 and early 2009, respectively. The plant in Winston-Salem, North Carolina received
$280 million USD in incentives from the state and opened in 2005, but ceased operations in
November 2010, and Dell's contract with the state requires them to repay the incentives for failing
to meet the conditions. 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 own factories
overseas. The Miami, Florida facility of its Alienware subsidiary remains in operation, while Dell
continues to produce its servers (its most profitable products in Austin, Texas.
Dell assembled computers for the EMEA market at the Limerick facility in the Republic of
Ireland, and once employed about 4,500 people in that country. Dell began manufacturing in
Limerick in 1991 and went on to become Ireland's largest exporter of goods and its second-largest
company and foreign investor. On January 8, 2009, Dell announced that it would move all Dell
manufacturing in Limerick to Dell's new plant in the Polish city of d by January 2010.
European Union officials said they would investigate a 52.7million aid package the Polish
government used to attract Dell away from Ireland. 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).
Subsidies from the Polish government did keep Dell for a long time. After ending assembly in the
Limerick plant the Cherrywood Technology Campus in Dublin was the largest Dell office in the
republic with over 1200 people in sales (mainly UK & Ireland), support (enterprise support for
EMEA) and research and development for cloud computing, but no more manufacturing except
Dell's Alienware subsidiary, which manufactures PCs in an Athlone, Ireland plant. If this facility
will remain in Ireland is not sure. Construction of EMF4 in d, Poland has started: Dell started
production there in autumn 2007
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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
$60 million in a new manufacturing unit in Chennai, India, to support the sales of its products in
the Indian subcontinent. Indian-made products 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.
Partnership with EMC
The Dell/EMC brand applies solely to products that result from Dell's partnership with EMC
Corporation. In some cases, Dell and EMC jointly design such products. Other cases involve EMC
products that Dell supportsgenerally 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.
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On December 9, 2008, Dell and EMC announced the multi-year extension, through 2013, of their
strategic partnership that began in 2001. In addition, Dell plans to expand its product line-up by
adding the EMC Celerra NX4 storage system to the portfolio of Dell/EMC family of networked
storage systems, as well as partnering on a new line of de-duplication products as part of its
TierDisk family of data-storage devices.
On October 17, 2011, Dell announced officially discontinued reselling all EMC storage products,
this put end to 10 years of partnership.
Michael Dell
Michael Saul Dell (born February 23, 1965) is an American business magnate, philanthropist, and
author. He is known as the founder and CEO of Dell Inc., one of the worlds leading sellers of
personal computers (PCs). He was ranked the 41st richest person in the world on 2012 Forbes
Billionaires list, with a net worth of US$15.9 billion as of March 2012.
In 2011, his 243.35 million shares of Dell stock were worth $3.5 billion, giving him 12%
ownership of the company. His remaining wealth of roughly $10 billion is invested in other
companies and is managed by a firm whose name, MSD Capital, incorporates Dell's initials. On
January 5, 2013 it was announced that Michael Dell had bid to take Dell Inc. private for $24.4
billion in the biggest leveraged buyout since the Great Recession.

FAST FACTS ABOUT DELL

Test your Dell knowledge.
Think you know just about everything there is to know about Dell? There are a few things that
might surprise you they definitely surprise us.

Here are a few fast facts about Dell:
$62.1 billion in 2011 revenues with a $5.1 billion operating income
$10 billion in revenue via Dell.com to customers in 160 countries
$6.5 million in revenue generated via Twitter
5.4 million customer interactions per day
3.5 million connections on the social web (Twitter, LinkedIn, Facebook and internal
Dell sites)
100,000+ team members globally
Ranked the #1 healthcare IT services provider worldwide by Gartner, Inc.
Largest ecommerce website for commercial technology products in the world
Supports more than 50 percent of U.S. hospitals that service 90 million Americans
Integrated in more than 400,000 classrooms across the globe
Serves more than 10 million small and medium businesses (SMBs) worldwide
Conserved over $50 million in energy costs by applying our "Green Efficiency" approach
Sustains active relationships with 99 percent of Fortune 500 companies
Launched IdeaStorm in 2007, implemented over 400 submitted ideas since
At Dell, team members really can contribute to a better environment and a better world. We hold
ourselves accountable to the highest ethical standards, having a zero-tolerance policy for any type
of unethical behavior. We are proud to be recognized as one of the greenest IT companies in the
world, and we definitively believe that communities around the world benefit from the time and
technologies our teams devote to creating a better future for all.