Dell: From a Low-Cost PC

Maker to an Innovative
Company

Presented By:
Aditya Sharma
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●
Alka Priyadarshini
●
Babita Sharma
●
Prashant Chauhan
●
Sundeep
●
 Outline
Company Profile
Company Profile
Timelin
Timeline
e
Strategic Analysis
Strategic Analysis
Direct Business
Direct Business Model
Model
Sources
Sources of of Revenue
Revenue
US PCIndustry
US PC Industry in 2006
in 2006
Dell Facing
Dell Facing Challenges
Challenges
Dell Turnaround
Dell Turnaround Strategy
Strategy
Dell Turnaround
Dell Turnaround Strategy:
Strategy: Will itWill it do wonder?
do wonder?
Conclusion
Conclusion
Company Profile
Michael Dell is the chairman of the Board of
Directors of Dell, the company he founded in 1984
for $1,000.
With an unprecedented idea---build relationships
directly with consumers
Operational regions : Americas, Europe, Middle East
and Africa (EMEA); Asia-Pacific and Japan (APJ)
Today the number one supplier of computer systems
in the United States and second worldwide
Timeline
1984: Michael Dell founds Dell Computer Corporation
1987: International expansion begins with opening of
subsidiary in United Kingdom
1988: Dell conducts initial public offering of company stock (3.5
million shares at $8.5 each)
1989: Company issued an IPO
1992: Dell Inc. was included in Fortune 500 companies
1993: Enters into Asia-Pacific region with subsidiaries in
Australia and Japan
1996: Company begins major push into the server market
1999: Dell Inc. overtook Compaq and became the largest PC
seller in US
Timeline Cont…
2000: Company sales via Internet reach $50
million per day
2001: For the first time, Dell ranks No. 1 in
global market share
2003: Company extended its product portfolio
to the consumer electronics market by
launching flat panel TVs, Dell digital juke
box, USB key drivers
2004:Technology partnership with Fuji, Xerox,
Kodak and Samsung followed by strategic
partnership with Microsoft Corp. and Oracle
Inc.
Strategy
Uses the direct business model (reliant on very
efficient manufacturing and supply chain management)
Helps turnover inventory every four days
Collaboration with strategic partners
Adding a significant layer of innovation
 Direct Business Model
Indirect Distribution Channel of the PC Industry

Dell’s Direct Distribution Channel

Strategic Analysis

Core Competencies
Low Innovation

Competitive Advantage
Sources of Revenue
Dell designs, develops, manufactures, markets, sells,
and supports the follow products:

• Servers ● Notebook
• Storage Computers
• Workstati ● Desktop

ons Computers
• Networki ● Printing and
ng Imaging
● Software &
Dell also offers a variety of services from development and
support to professional and fully managedPeripherals
solutions.
US PC Industry in 2006
According to survey conducted by U.S consumer
electronics association in 2005:
90% have one pc
36% have two pc
52% prospective buyers
PC sales was around 190 million in 2005
Dell Facing Challenges
IBM sold it’s PC business to Lenovo in 2004
Gateway merged with eMachines
Biggest merger between HP and Compaq in 2002
Fall short of both its expected revenue & earnings
Dell spend less than 1% in R&D as compared to HP
and IBM spent 6%
Company such as Apple was emerging with
innovative products
Dell Facing
Challenges(Cont.)
Dell did not had the core competence in branding &
innovation
Dell was managing cost instead of managing service
& quality therefore customers remained unhappy.
Dell customer satisfaction rating fell by 6.3%
Dell servers were not fit handle internet traffic so
customer shifted to its competitors HP and IBM
based on AMD opteron chips
Dell business model was not effective in China
Lithium battery controversy
Dell Turnaround Strategy
In 2003, it introduced Flat Panel TVs, DJ music
players, digital music player & projectors
In 2006, it launched XPS high-end media PC
segment
Dell produced every single machine for a specific
order which reduced its inventory & cost
Dell gained 20% market share in printer market
Launched product according to industry trends
Dell Turnaround Strategy
(Cont.)
Started to use AMD processors
Introduced Annual Maintenance Contract at different
prices
Company introduced 57 kiosks in 9 US states
It introduced Premier Page Web site for its corporate
customers
Turnaround Strategy: Will
it do Wonders?
Media Center PC failed to capture market
Dell didn't have any retail store on the other hand
Market leader Lenovo had 4,800 retail stores in
China
Emphasis on selling low end PCs
Achieving success in the PC Market and doing the
same in the printer business were two different thing
Past performance is no guarantee of future result.
Conclusion
R&D investment is lower than competitors which might hurt
Dell in the long-run.
DELL should focus on new product market and reliance
on corporate clients.
DELL has many opportunities such as potential growth in
overseas markets, the industry is in a matured phase
and the entering  to the new product markets.
Thank You

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