Michael Dell of Dell Computers

Michael Dell of Dell Computers


Dell began his company during his freshman year at the University of
Texas. He invested $1000 in discounted PC parts he bought from a
retailer and used them to upgrade some old PCs. During his first month
of business, Dell made $180,000 in sales. Needless to say, Dell opted
for money over completing his sophomore year, and Dell has been known
to comment that it took his parents two years to accept his decision to
leave school. Since day one, Dell has stuck to a unique set of business
strategies.

First, the company sells direct to the consumer,
sidestepping the usual markups implemented by the retailer. Second,
each PC is made-to-order, and the company only keeps eight to 12 days
worth of inventory on hand at any time, often purchasing components
when the prices are low. Corporate customers (which make up the
majority of its business) save time and money since Dell configures the
computers and loads all the software right in the factory. Among home
users, Dell established itself as the sophisticated buyer’s brand –
offering high performance computers at reasonable (but realistic)
prices. Dell sweetens the deal with top-ranked customer service and
free, unlimited technical support.

Michael Dell, though he’s quite often the
youngest person in the room at most of his meetings, is not the
arrogant Gen-X computer geek one might expect. He’s a brilliant
businessman, seemingly unfazed by the pressures of his position at the
helm of his multibillion-dollar business. Not only was he smart enough
to identify the need for a company like Dell, he was humble enough to
bring in help when it was needed. After rocky times in the early 1990s
– a failed attempt to sell through retail stores; an messy first
attempt at the laptop computer, and perennial customer support issues –
Dell was wise enough to look for strong management to get things in
order.

He brought in Mort Topfer as COO and Tom Meridith as CFO, and
they quickly got things in order. Today, Dell ranks third among the
world’s computer makers (behind IBM and Compaq), and controls 7 percent
of the PC market. Dell and Gateway are the only two major PC makers
that are profitable at the moment, and Dell is the darling of Wall
Street. Industry observers say the company’s stock is likely to be
named the decade’s best performing stock on the S&P 500.

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