To: Mick Mørmøny who wrote (204 ) 11/24/1998 4:58:00 PM From: jbn3 Read Replies (2) | Respond to
Interview with Mort TopferDELL model still proving its worth, Topfer says Austin American-Statesman , Monday, October 26, page D1Vice chairman voices abiding faith in direct sales and growing markets Q: What is your role as vice chairman? Dell's office of the Chief Executive is made up of Michael Dell, Kevin Rollins and myself. Michael's focus is mostly on strategy, product development, the analyst community and our customers. He is really future-looking. Kevin and I divide up the operations responsibilities for the company. My focus geographically is on Europe and Asia and his is the United States and Japan. I have most of the functions like legal, human resources and finance. He focuses on marketing. The three of us are in very close communication on a daily basis.Q: Can you compare your experience at Motorola with your experience at Dell? They are different worlds. Motorola was a great company and I enjoyed 23 years there, but I felt it was time to go do something different. The opportunity to join a young entrepreneurial company was very attractive. It's exceeded all my expectations. I am very glad that I am not at Motorola right now. I think they are going through some very difficult times for them which are not a lot of fun. The last three years I spent at Motorola, I was doing downsizing. The business I ran kept spinning out all the growth businesses and keeping all the cost structure. I took the operation I ran from 29,000 people to 19,000 people in three years. That is not an enjoyable business experience.Q: What will be the impact of high-speed Internet access technologies on computer makers like Dell? We think it's a very important technology. We have made some partnership announcements with three Bell operating companies to deliver ADSL-capable computers to their customers. Since we build every computer to order, we are the ideal partner for these companies. We can actually install the modem that will work in any part of the country as part of the manufacturing process and deliver a preconfigured machine to the customer. We are also talking to cable companies who are moving into that position also. You will see Dell participating in all areas (of broadband Internet access) on both sides of the street. And whichever technology wins, Dell will be there.Q: Has Dell considered using less expensive alternatives such as those made by AMD Inc. for its systems sold in emerging markets? We continue to look at that alternative. We have historically rejected alternatives to Intel because we have not found the real advantage that they would provide us with. Our relationship with Intel I think has been a very wise one. For the first time in history, these other companies (including AMD and National Semiconductor) are finally executing. They are supplying chips. If we had ever gone that way before we would have made a real fundamental mistake. If Intel were to miss a product transition in an area we wanted to participate in, we would use an alternative chip.Q: How does Dell's direct model work in a country like China? Before we announced the new plant… we sold about $5 million a quarter through distributors. We will continue to use distributors in a lot of the remote areas of the country so we will have coverage of the whole country. People question whether the direct model will work in every country that we go into. We usually hear that it will never work there and then we look back tow or three years later and it's the fastest growing business and gaining market share. In the United States, they said that direct would never be more than 5 percent of the market. Now it's crossed 30% and is continuing to grow. We announced that we had the first 8090 telephone numbers for sales in China. We have a Web site in the Chinese language that went up the same day as the announcement. Dell does the same thing it does everywhere in the world. We don't modify our model. We just keep driving the advantages of our model and, over time, we continue to gain share and grow.Q: How many Dell employees have stock options? We have heard that number is about 2,500. Twenty-five hundred is the size of our traditional options employee group. It's higher than that because we just increased our work force by 50 percent. But we recently gave every employee in the United States options for 200 shares. We will be rolling that out around the world. We also have a plan to give every new employee 100 shares in options when they join the company. That plan is for the next 10 quarters. So every employee is a stockholder. If you wander through a Dell plant, everybody is excited about what is going on in the stock market.Q: Some analysts are forecasting that PC sales will level off in about 2002 because of new intelligent products like personal digital assistants, smart telephones and digital TV set-top boxes. What is your view? How many times over the past five years have the analysts said that?> Some people said network computers would pass the PC industry in growth in the year 2000. I think they sold 180,000 network computers last year. PDA devices have a market of about 1 million units a year. We've looked at being in those businesses. There is no profit in most of those technologies and we don't go into markets that don't have any profit associated with them. We have a saying at Dell: "First to volume, not first to market." The most recent example of that is our workstation business, which we entered on the order of a year after Compaq because we were focused on the server business and getting that running. In 12 months we became number two in the world in workstations and number one in the U.S. because of superior product execution and the Dell model. In 12 months we passed everybody else and I think we can do that with any other product area that we want to go into.Q: So Dell will stick with its existing product mix for the time being? We won't change until there is another market opportunity. We are expanding the sever business with storage. That's an important opportunity for us. Basically we are focused on those areas which have large growth opportunities and profit pools associated with them. And we really aren't at the extreme ends of most profit areas-the high-end and the very low-end.
