For more than 28 years, Dell has empowered countries, communities, customers and people everywhere to use technology to realize their dreams. Customers trust us to deliver technology solutions that help them do and achieve more, whether they’re at home, work, school or anywhere in their world. Learn more about our story, purpose and people behind our customer-centric approach.
Company Heritage
From unconventional PC startup to global technology leader, the common thread in Dell’s heritage is an unwavering commitment to the customer. Explore the company timeline below to learn how this guiding principle built Dell and inspired IT solutions and services that give customers the power to do more. At age 19, Michael Dell founded PC's Limited with $1,000 and a game-changing vision for how technology should be designed, manufactured and sold. As a pre-med freshman at the University of Texas at Austin, Michael starts a new computer business under the name of PC's Limited. He left his dorm room at the end of his freshman year to devote all of his time to growing the business.
Dell (formerly Dell Computer Corporation) is an American multinational computer technology company 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 sells personal computers, servers, data storage devices, network switches, software, computer peripherals, HDTVs, cameras, printers, MP3 players and also 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 "build-to-order" or "configure to order" approach to manufacturing—delivering individual PCs configured to customer specifications. Until a few years ago Dell was mainly a pure hardware vendor, but with the acquisition of Perot Systems Dell entered the market for IT services and additional acquisitions in storage and networking systems allow the company to offer complete solutions for enterprise customers compare to their original portfolio of computers only. 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. Dell traces its origins to 1984, when Michael Dell [14] created PC's 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.
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 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.
From 1997 to 2004, Dell enjoyed steady growth and it gained market share from competitors even during industry slumps. 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.
Rollins and disappointments
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 $25 USD which was 40% down from July 2005—the high-water mark of the company in the post-dotcom era. 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. 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 market—prevented it from making inroads into more lucrative segments, such as MP3 players and later mobile devices. 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.