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Here's a great short historical profile of Dell from the WSJ..enjoy...
Dell Computer doesn't have cows -- that's for rival Gateway -- but
it does have clout. The computer maker now records sales of
more than $14 million a day through its Web site alone. By
improving its product process and refocusing the company on the
computer-savvy consumers and corporations that are its core
customers, Dell has thrived in the brutally competitive
personal-computer marketplace and emerge as one of its most
profitable players -- and the top dog in direct sales.
It's quite a ride for a company started in 1983
in a University of Texas dorm room. Michael
Dell, then just 19, was unimpressed by the
quality of machines and customer service at computer stores,
and figured he could do it better himself. He started buying
excess inventory from computer dealers (an out-the-back-door
enterprise, as IBM had a strict policy against reselling), beefed
the machines up with graphics cards and more hard-drive space,
and then resold them. Soon, Mr. Dell and a small group of
engineers were designing their own machines; by the time he
was 21, Mr. Dell's company, then called pc's Ltd., had $60 million
in sales.
Mr. Dell's big break came in 1986 when Austin, Texas, venture
capitalist E. Lee Walker came on board for a five-year stint as
president and chief of operations. Mr. Walker provided the
managerial and financial experience that Mr. Dell lacked. The
company's sales skyrocketed, zooming to $546 million in 1991
and $2 billion in 1993.
Dell has long been a darling on Wall Street. It's had seven stock
splits in seven years, and -- except for a series of missteps amid
hyperactive growth in the early 90s -- has been widely considered
the Rolls Royce of mail-order houses.
And while many high-tech whiz kids have been tripped up when
their companies outgrew their management skills, Mr. Dell has
never been afraid to seek help or to rely on mentors, such as Mr.
Walker; Morton H. Meyerson, chairman of Perot Systems; and
Morton L. Topfer, a senior Motorola executive.
Mr. Dell has figured out, sometimes
painfully, what Dell shouldn't do. The
company foundered in the late 1980s
with a project called Olympic designed
to deliver a Dell-built workstation.
Olympic was a failure that sapped the
company's resources, leading to delays
in the introduction of other products.
The early 1990s saw a series of other
missteps. Dell registered big losses in
foreign-currency futures and interest-rate
derivatives as it tried to generate profits
with high-risk investments. Worrisome
talk of technical glitches and delays in
delivery hurt the company's reputation.
An overly aggressive advertising
campaign forced it to pay rival Compaq
Computer to end litigation. In 1993, a
notebook line had to be scrapped, and
Dell posted its first ever quarterly loss. It
rushed to put its products into retail
stores such as Wal-Mart and
CompUSA, only to find that its
made-to-order manufacturing scheme
was too expensive for such low-margin
channels.
Some whispered that Mr. Dell had lost
his magic touch; at one point, the
company was down to $20 million in
cash.
But Mr. Dell found inspiration in the rapid
turnaround at Compaq. He overhauled
management and adopted formal
planning and budgeting processes.
Instead of growth at all costs, the
company stressed earnings and
liquidity. And it learned the value of focus
-- as Mr. Dell once remarked, "It's easy
to say what you're going to do. The hard
thing is figuring out what you're not going
to do."
What Dell does is build computers,
deliver them quickly and keep its
customers happy -- whether those
customers are home users or large
companies. (Like Compaq and IBM,
Dell has added sales and engineering
teams dedicated solely to certain large
corporate clients.)
The company has set standards in the
industry for slim inventory -- and racked
up revenue and stock-price gains that
are the envy of the industry. It has always
built computers only when ordered,
preventing a backlog of outdated machines from building up. But
in recent years, it has gone even further to trim its inventory,
taking delivery of some components just minutes before they are
needed. A Dell PC can be built, fitted with software, tested and
packed up for shipping in just eight hours.
Now, Dell is trying to convert the rest of the world to its
direct-marketing model. The company trails Compaq by a
considerable sales margin in Latin America, the Asia-Pacific
region and in Europe -- regions where buying direct is a fairly
new idea. Catching up with its rival will require a big effort from
Dell, analysts say, but that effort could unlock a huge market.
Can the company deliver? Well, for the period ended Feb. 1,
1998, Dell sales in Japan and other Asia-Pacific countries
jumped 79% and sales in Europe grew 61%, compared with 51%
growth in North America. It was the first time in years that sales
grew faster internationally than at Dell's huge North American unit
-- and a clear indication that the company's strategy is
succeeding. Since then, that stunning growth has continued, as
have a series of dizzyingly successful quarters that have left
investors walking on air -- and competitors running scared.
--Bill
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