Case Study“You have come a long way baby”In 1984, 18 year old Michael Dell, a student of the University of Texas, Austin, set upPCs Limited, a part time business in his dorm room to sell IBM compatiblecomputers built from stock components. Dell started formatting hard discs forpersonal computers, added additional memory, disc drives and modems with IBMclones and sold them at 40% cheaper than that of the IBM machines. In 1985, thecompany moved up the value chain and started to assemble Dell branded PCs(“Turbo PC”) instead of upgrading the machines of other manufacturers. Within oneyear of its operation, the company posted revenue of US $ 6 mn. Inspired by thesuccess of the company, Michael Dell dropped out of college in 1986, to run thebusiness full time. During this time, he renamed the company Dell ComputerCorporation.Dell presumed that customization, fast delivery and low price would give hiscompany a higher profit margin over IBM and HP. Contrary to existing trends ofdisplaying the products in retail outlets or selling them through middlemen, thecompany delivered its products directly to the consumers. Dell sourced thecomponents directly from the manufacturers, assembled them according to customerspecifications and delivered them free of cost. Initially, it took orders over telephone,followed by advertisements in magazines and dailies and later from its e-commerceplatform .In 1989, the company issued its first IPO. In 1992, Fortune 500 included DellComputers in the league of the world’s best 500 companies and Michael Dellfeatured as the youngest CEO. The company forayed into the U.K, followed byAustralia and Japan in 1993. It set up its own manufacturing facilities in Limerick,Ireland to serve European, Middle-east and African markets., Penang, Malaysia,Xiamen, China, Eldorado, do Sul, Brazil and Texas and Tennessee, US. In 1999, DellComputers overtook Compaq and became the largest PC seller in the US.Along with setting up manufacturing facilities in different markets, the company triedto improve its products according to industry trends and consumer preferences. In1989, it launched the notebook computer, followed by the network server (1996),workstation systems (1997), network switches (2001) and projectors and printers(2002). In 2003, the company extended its product portfolio to the consumerelectronics market by launching flat panel TVs, Dell digital Jukebox, USB key drivesand Windows mobile powered PDAs. In the same year, in recognition of its efforts atproduct extension, the company’s name was changed to ‘Dell Inc.’ The companymarketed its products under different brand names to different consumer segments.While OptiPlex, Latitude and Precision were targeted at medium size and largeconsumers, students and small offices were identified as the target audience forDimension, Insprion and the XPS Brand.
In January 2004, Dell entered into a technology partnership with Fuji, Xerox, Kodakand Samsung, followed by a strategic partnership with Microsoft and Oracle Inc. It