The multinational technology company Dell, Inc. develops, manufactures, sells, and supports personal computers and other computer-related products. Based in Round Rock, Texas, Dell employs more than 88,000 people worldwide.
Dell grew during the 1980s and 1990s to become (for a time) the largest seller of PCs and servers. it held the second spot in computer-sales within the industry behind the Hewlett-Packard Company. The company currently sells personal computers, servers, data storage devices, network switches, software, computer peripherals and televisions.
In 2006, Fortune magazine ranked Dell as the 25th-largest company in the Fortune 500 list, 8th on its annual "Top 20" list of the most-admired companies in the United States. In 2007 Dell ranked 34th and 8th respectively on the equivalent lists for the year. A 2006 publication identified Dell as one of 38 high-performance companies in the S&P 500 which had consistently out-performed the market over the previous 15 years.
In 1985, the company produced the first computer of its own design — the "Turbo PC", sold for US$795 — which contained an Intel 8088-compatible processor running at a speed of 8 MHz. PC's Limited advertised the systems in national computer-magazines for sale directly to consumers, and custom-assembled each ordered unit according to a selection of options. This offered buyers prices lower than those of retail brands, but with greater convenience than assembling the components themselves. Although not the first company to use this model, PC's Limited became one of the first to succeed with it. The company grossed more than $73 million in its first year.
The company changed its name to "Dell Computer Corporation" in 1988. In 1989, Dell Computer set up its first on-site-service programs in order to compensate for the lack of local retailers prepared to act as service centers. Also in 1987, the company set up its first operations in the United Kingdom; eleven more international operations followed within the next four years. In June 1988, Dell's market capitalization grew by $30 million to $80 million from its initial public offering of 3.5 million shares at $8.50 a share. In 1990, Dell Computer Corporation tried selling its products indirectly through warehouse clubs and computer superstores, but met with little success, and the company re-focused on its more successful direct-to-consumer sales model. In 1992, Fortune magazine included Dell Computer Corporation in its list of the world's 500 largest companies.
In 1996, Dell began selling computers via its web site.
In 2002, Dell attempted to expand by tapping into the multimedia and home-entertainment markets with the introduction of televisions, handhelds, and digital audio players. Dell has also produced Dell-brand printers for home and small-office use.
In 2003, at the annual company meeting, the stockholders approved changing the company name to "Dell Inc." to recognize the company's expansion beyond computers.
In 2004, the company announced that it would build a new 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. In July, Michael Dell stepped aside as Chief Executive Officer while retaining his position as Chairman of the Board. Kevin Rollins, who had held a number of executive posts at Dell, became the new CEO.
In 2005, the share of sales coming from international markets increased, as revealed in the company's press releases for the first two quarters of its fiscal 2005 year. In February 2005 Dell appeared in first place in a ranking of the "Most Admired Companies" published by Fortune magazine. In November 2005 BusinessWeek magazine published an article titled "It's Bad to Worse at Dell" about shortfalls in projected earnings and sales, with a worse-than-predicted third-quarter financial performance — a bad omen for a company that had routinely underestimated its earnings. Dell acknowledged that faulty capacitors on the motherboards of the Optiplex GX270 and GX280 had already cost the company $300 million. The CEO, Kevin Rollins, attributed the bad performance partially to Dell's focus on low-end PCs.
In 2006, Dell purchased the computer hardware manufacturer Alienware. Dell Inc.'s plan anticipated Alienware continuing to operate independently under its existing management. Alienware expected to benefit from Dell's efficient manufacturing system.
On January 31, 2007, Kevin B. Rollins, CEO of the company since 2004, resigned as both CEO and as a director, and Michael Dell resumed his former role as CEO. Investors and many shareholders had called for Rollins' resignation because of poor company performance. At the same time, the company announced that, for the fourth time in five quarters, earnings would fail to reach consensus analyst-estimates.
In February 2007 Dell became the subject of formal investigations by the US SEC and the United States Attorney for the Southern District of New York. The company has not formally filed financial reports for either the third or fourth fiscal quarter of 2006, and several class-action lawsuits have arisen in the wake of its recent financial performance. Dell Inc's lack of formal financial disclosure would normally subject the company to de-listing from the NASDAQ, but the exchange has granted Dell a waiver, allowing the stock to trade normally.
On March 1, 2007, the company issued a preliminary quarterly earnings report which showed gross sales of $14.4 billion, down 5% year-over-year, and net income of $687 million (30 cents per share), down 33%. Net earnings would have declined even more if not for the effects of eliminated employee bonuses, which accounted for six cents per share. NASDAQ extended the company's deadline for filing financials to May 4.
When Dell acquired Alienware early in 2006, some Alienware systems had AMD chips. On August 17, 2006, a Dell press-release stated that starting in September 2006, Dell Dimension desktop computers would have AMD processors and that later in the year Dell would release a two-socket, quad-processor server using AMD Opteron chips, moving away from using Dell's traditional Intel processors.
CNet's News.com on August 17, 2006 cited Dell's CEO Kevin Rollins as attributing the move to AMD processors to cost-advantage and to AMD technology. AMD's senior VP in commercial business, Marty Seyer, stated: "Dell's wider embrace of AMD processor-based offerings is a win for Dell, for the industry and most importantly for Dell customers."
On November 1, 2006, Dell's website began offering notebooks with AMD processors (the Inspiron 1501 with a display) with the choice of a single-core MK-36 processor, dual-core Turion X2 chips or Mobile Sempron.
The reason(s) for such a quick reversal remain the subject of debate. Court documents accused Microsoft of coercing OEMs to drop Linux:
Microsoft executive Joachim Kempin described his plan of retaliation and coercion to shut down competition from Linux: "I am thinking of hitting the OEM harder than in the past with anti-Linux actions" and will "further try to restrict source code deliveries where possible and be less gracious when interpreting agreements — again without being obvious about it," continuing "this will be a delicate dance"
While in a 2003 interview Michael Dell denied that Microsoft pressured Dell Inc. into doing an about-face with regard to desktop Linux, citing a lack of sales: "unfortunately the desktop Linux market didn't develop in volume. It's more of a server opportunity" but adding: "We continue to offer Linux on the desktop and there is nothing else to say. However, a 2004 report noted that Dell no longer offered pre-installed desktop Linux:
So what does it mean "factory installed Linux"? If you want Dell to install Linux for you, first add on $119. But here is the annoying part. They won't send you a computer with Linux pre-installed. They sell you the computer and the boxes of software on the side, and then they make an appointment to send you someone who comes to your house or business and installs it there.
On February 26, 2007 Dell announced that it had commenced a program to sell and distribute a range of computers with pre-installed Linux distributions as an alternative to Microsoft Windows. Dell indicated that Novell's SUSE Linux would appear first. However, Dell on February 27, 2007 announced that its previous announcement related to certifying the hardware as ready to work with Novell SUSE Linux and that it (Dell) had no plans to sell systems pre-installed with Linux in the near future. On March 28, 2007, Dell announced that it would begin shipping some desktops and laptops with Linux pre-installed, although it did not specify which distribution of Linux or which hardware would lead. On April 18, 2007 a report appeared suggesting that Michael Dell used Ubuntu on one of his home systems. On May 1, 2007, Dell announced it will ship the Ubuntu Linux distribution. On May 24, 2007, Dell started selling models with Ubuntu Linux 7.04 pre-installed: a laptop, a budget computer, and a high-end PC.
On June 27, 2007, Dell announced on its Direct2Dell blog that it planned to offer more pre-loaded systems (the new Dell Inspiron desktops and laptops). After the IdeaStorm site supported extending the bundles beyond the US market, Dell later announced more international marketing. On August 7, 2007, Dell officially announced that it would offer one notebook and one desktop in the UK, France and Germany with Ubuntu "pre-installed". At LinuxWorld 2007 Dell announced plans to provide Novell's SUSE Linux Enterprise Desktop on selected models in China, "factory-installed". On November 30, 2007 Dell reported shifting 40,000 Ubuntu PCs. On January 24, 2008 Dell in Germany, Spain, UK and France launched a second laptop, a XPS M1330 with Ubuntu 7.10, for 849 euro or GBP 599 upwards. On February 22, 2008 Dell announced plans to sell Ubuntu in Canada and in Latin America
On January 31, 2007 Michael Dell returned to the company as CEO. As chairman of the board, Mr. Dell had significant input into the company's operations 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 blood brought in from outside the company.
Departures announced include:
Additions announced include:
Mr. Dell announced a number of initiatives and plans (part of the "Dell 2.0" initiative) to improve the company's financial performance. These include:
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 then a year later, Dell Inc planned to double its workforce to nearly 3,000 workers and to add a new building. Journalists cited a high Canadian dollar and suggested high pay-rates as among the reasons for the cuts. 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.
Dell also offers Red Hat and SUSE Linux for servers; as well as "bare-bones" computers without pre-installed software (available on n Series by default and by request on XPS and Inspiron systems) at significantly lower prices. Due to Dell's licensing contract with Microsoft, Dell allegedly cannot offer those systems on their website and customers have to request them explicitly. (Dell does offer those systems on their web site at http://www.dell.com/content/products/features.aspx/precn_n?c=us&cs=04&l=en&s=bsd&redirect=1 ). Dell has to ship such systems with a FreeDOS disk included in the box and must issue a so-called "Windows refund" or a merchandise credit after sale of the system at the "regular" retail price.
Dell has a general policy of manufacturing its products close to its customers, implementing just-in-time (JIT) manufacturing. Assembly of desktop computers for the North American market takes place at Dell plants in Lebanon TN, Austin TX, and Winston-Salem NC; with servers built in Austin TX. Dell assembles computers for the EMEA market at Limerick in the Republic of Ireland, and employs about 4,500 people in that country. 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). Construction of EMF4 in Łódź, Poland has started, with production planned to start there in autumn 2007.
Dell's assembly-plants in China and Malaysia assemble 95% of Dell notebooks. Dell Inc has invested an estimated (U.S.) $60 million in a new manufacturing unit in Chennai, India, to support the sales of its products in the Indian subcontinent. Indian-made products will bear the "Made in India" mark on them. In 2007 the Chennai facility has the target of producing 400,000 desktop PCs, and in the later half of 2007 it will start producing notebook PCs and other products.
According to a front-page article in the September 5, 2008 issue of the Wall Street Journal, Dell has factories in the following locations: Austin, Texas; Winston-Salem, North Carolina; Lebanon, Tennessee; Limerick, Ireland; Penang, Malaysia; Xiamen, China; Hortolandia, Brazil; Chennai, India; Lodz, Poland; Miami, Florida; Athlone, Ireland.
Dell's Consumer division offers 24x7 phone based and online troubleshooting rather than only during business hours. Gold Technical support is not offered for customers purchasing through the consumer department, and neither is Same-Day Onsite response.
On February 4, 2008 Dell launched a revamped services-and-support scheme for businesses named "ProSupport", offering customers more options to tailor services to fit their needs. Rather than take a one-size-fits-all approach, Dell has put together packages of options for each category of its customers: small and medium-sized businesses, large businesses, government, education, and health-care- and life-sciences.
Dell now offers separate support options for IT staff and for non-IT professionals. For the latter, the company offers "how-to" support for software applications, such as Microsoft Office. Dell also offers collaborative support with many third-party software vendors. For IT departments, Dell offers "fast-track dispatch" of parts and labor and access to a crisis-center to handle major outages, virus-attacks, or problems caused by natural disasters.
Besides offering response-options for handling problems, Dell has launched "Proactive Maintenance", which offers assessment and recommendations for updating drivers and firmware and for the application of customer-approved patches and system-updates. Dell also offers assessment-services for storage area networks, as well as for Dell's computing hardware.
The new offerings replace Dell's tiered services-structure in which customers could choose from a variety of service levels, such as platinum, gold, or silver. The latest system takes a more customizable approach to support.
Dell associates a Service Tag, a unique alpha-numeric identifier, with most of its products, which resembles a serial number. The Service Tag number, represented in base 36, has a length of five or seven characters. Software can read the Service Tag in a computer's DMI table. Monitors bought as part of a computer system get support via the Service Tag of the computer. Monitors bought separately get support via the Dell Order Number or via the monitor's serial number.
Dell links its Service Tags to Express Service Codes, usually found together with the service tag on a sticker physically attached to a system. Computer-owners can usually find this tag on the bottom of laptops; or on the side or on the back of the computer tower of desktops. The Express Service Code, a purely numerical conversion of the service tag, serves for use in Dell's trunkline for routing a customer to the appropriate phone-technician. Dell's technical support for consumers requires the customer to enter in their Express Service Code into their touch-tone phone and if they do not provide it when prompted customers will experience increased hold-time before reaching a support-representative.
As of 2007 Dell Inc replaced its proprietary remote-access tool with the newer DellConnect 2.0 manufactured by Citrix — a Dell-branded GoToAssist. After reaching the website, customers simply run this software, which can permit a support technician to view and work on their computer from a remote location; including the ability to reboot the computer remotely and continuing the same session, to share clipboards, and to redirect customers to a specific website.
On January 31, 2008 Dell announced that it would close its call center in Edmonton, Alberta effective May 2, 2008, laying off over 900 workers and abandoning the sweetheart-deal it had agreed to with the city of Edmonton. The company planned to close the Ottawa center in July 2008, leaving no support centers in Canada.
A Dell executive writes:
Analysts say : They (Dell) have a negative 45 days CCC, which means that their sales are converted in hard cash 45 days BEFORE the sale.
I say : They have a negative 45 days CCC, which means that their sales are converted in hard cash 45 days BEFORE Dell needs to pay for purchase invoices to vendors.
Dell has also sold at retail, as explained in the "Marketing" section of this article.
A board of directors of nine people runs the company. Michael Dell, the founder of the company, serves on the board. Other board members include Don Carty, William Gray, Judy Lewent, Klaus Luft, Alex Mandl, Michael A. Miles, and Sam Nunn. Shareholders elect the nine board members at meetings, and those board members who do not get a majority of votes must submit a resignation to the board, which will subsequently choose whether or not to accept the resignation. The board of directors usually sets up five committees which have oversight over specific matters. These committees include the Audit Committee, which handles accounting issues, including auditing and reporting; the Compensation Committee, which approves compensation for the CEO and other employees of the company; the Finance Committee, which handles financial matters such as proposed mergers and acquisitions; the Governance and Nominating Committee, which handles various corporate matters (including nomination of the board); and the Antitrust Compliance Committee, which attempts to prevent company practices from violating antitrust laws.
The corporate structure and management of Dell extends beyond the board of directors. The Dell Global Executive Management Committee sets the strategic direction for how the corporation keeps customers at the forefront, from designing and manufacturing computer systems to offering products that meet customers' requirements to providing sufficient service and support. Dell has regional senior vice presidents for countries other than the United States, including David Marmonti for EMEA and Stephen J. Felice for Asia/Japan. As of 2007, other officers included Martin Garvin (senior vice president for worldwide procurement) and Susan E. Sheskey (vice president and chief information officer).
Dell advertisements have appeared in several types of media including television, the Internet, magazines, catalogs and newspapers. Some of Dell Inc's marketing strategies include lowering prices at all times of the year, offering free bonus products (such as Dell printers), and offering free shipping in order to encourage more sales and to stave off competitors. In 2006, Dell cut its prices in an effort to maintain its 19.2% market share. However, this also cut profit-margins by more than half, from 8.7 to 4.3 percent. To maintain its low prices, Dell continues to accept most purchases of its products via the Internet and through the telephone network, and to move its customer-care division to India and El Salvador.
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 kid 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).
A Dell advertising campaign for the XPS line of gaming computers featured in print in the September 2006 issue of Wired Magazine. It used as a tagline the common term in Internet and gamer slang: "FTW", meaning "For The Win". However, Dell Inc. soon dropped the campaign.
In the first-person shooter game F.E.A.R. Extraction Point, several computers visible on desks within the game have recognizable Dell XPS model characteristics, sometimes even including the Dell logo on the monitors.
In 2007 Dell switched advertising agencies in the US from BBDO to Mother. In July 2007, Dell released new advertising created by 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".
According to a National Advertising Division (NAD) report released in late June 2008, Dell did not have enough evidence to support its claim as maker of the "world's most secure laptops" within its marketing campaign. Lenovo filed the complaint to NAD accusing Dell of making unverified claims.
Most of the criticism made by NAD relates to data encryption, both disk-encryption software and disk-encryption hardware, used in Dell's commercial notebooks. Dell uses hardware-based full disk encryption and software-based full disk encryption from third-party vendors such as Seagate Technology.
"Although NAD determined that the advertiser could truthfully advertise its position as the first in the industry to combine these particular third-party components in creating secure systems for large businesses, NAD observed the distinction between the security provided to the individual computers and the security provided to a large network of computers." "Since not all of the components of the FDE Encryption Solution are equally relevant for all sizes of business, NAD recommended the advertiser make this distinction to the extent it intends to make broad security claims." "On the basis of the evidence in the record, NAD determined that advertiser demonstrated that it offered features of computer security that were both unique and meaningful to consumers."
The market expects laptops with full disk encryption to have data-at-rest (DAR) protection, but they remain vulnerable to cold boot attack, a type of side channel attack, which takes advantage of data remanence "However, it also determined that the broad claim "World's Most Secure" was not adequately supported and was appropriately discontinued.
Dell voluntarily discontinued the "world's most secured laptops" advertisement after the announcement of the NAD investigation.
Dell's original claim included:
"The industry-first solution delivers improved performance versus software-based encryption and automated compliance reports so customers are confident that encryption is enabled." "'Dell is at the forefront of laptop security because it ranks as a top concern for customers in an environment where more data is produced by an increasingly mobile work force,' said Margaret Franco, director, Dell Product Group. 'The industry-first solution we’re announcing today adds to our multi-pronged approach to security that delivers an ironclad assurance of protection.'”
Starting in 2002, Dell opened kiosk locations in shopping malls across the United States in order to give personal service to customers who preferred this method of shopping to using the Internet or the telephone-system. Despite the added expense, prices at the kiosks match or beat prices available through other retail channels. Starting in 2005, Dell expanded kiosk locations to include shopping malls across Australia, Canada, Singapore and Hong Kong.
Dell Inc planned to use the Dallas store to house about three times as many products as it displayed in more than 160 kiosks in malls and airports. In addition to showcasing products, the stores also support on-site warranties and non-warranty service ("Dell on Call"). Services offered include repairing computer video-cards and removing spyware from hard drives.
On Valentine's Day, February 14, 2008, Dell closed the Service Center in its Dallas NorthPark store and laid off all the technical staff there.
In late 2007 Dell Inc announced that it planned to expand its program to value-added resellers (VARs), giving it the official name of "Dell Partner Direct" and a new website Dell Inc realized that this program, once a small factor in Dell Inc sales, had become a growing sector of its business and it desired to leverage this growing outlet for its products. It promised VARs who joined this program increased discounts on product and the ability to use the Dell name and logo in their marketing efforts. ConnectU became an early member of the program.
The overall success of this program — as a new development for Dell Inc — remains unclear.
Dell in late 2006 lost its lead in the PC-business to Hewlett-Packard. Both Gartner and IDC estimated that in the third quarter of 2006, HP shipped more units worldwide than did Dell. Dell's 3.6% growth paled in comparison to HP's 15% growth during the same period. The problem got worse in the fourth quarter, when Gartner estimated that Dell PC shipments declined 8.9% (versus HP's 23.9% growth). As a result, at the end of 2006 Dell's overall PC market-share stood at 13.9% (versus HP's 17.4%).
IDC reported that Dell lost more server market share than any of the top four competitors in that arena. IDC's Q4 2006 estimates show Dell's share of the server market at 8.1%, down from 9.5% in the previous year. This represents a 8.8% loss year-over-year, primarily to competitors EMC and IBM.
Dell became the first company in the information technology industry to establish a product-recycling goal (in 2004) and completed the implementation of its global consumer recycling-program in 2006. On February 6 2007, the National Recycling Coalition awarded Dell its "Recycling Works" award for efforts to promote producer responsibility. 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.
The company introduced the term "The Re-Generation" during a round table in London commemorating 2007 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 talked about plans to take the lead in setting an environmental standard for the "technology industry" and maintaining that leadership in the future.
On August 17 2007, the 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 between $50 million and $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.
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 could encounter unforeseen problems. However, company practice in this respect changed in 2003.
Consumer complaints about the quality of customer-service mounted, and 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. Dell's blog detailed the response: "We’re spending more than a $100 million — and a lot of blood, sweat and tears of talented people — to fix this." Later in the year, the company increased its spending on customer-service to $150 million.
In May, 2008 the New York Supreme Court ruled that Dell and Dell Financial Services "engaged in fraud, false advertising, deceptive business practices, and abusive debt collection practices." The relevant lawsuit aimed primarily to highlight and seek restitution for a lack of technical support given to customers by Dell. The court plans to hold further proceedings to determine how much money Dell has to pay out to customers and how much profit Dell made unlawfully in New York.