This just in- 'Direct from Dell'-One on One With Dell (Interview)
Drew:
Just saw this in case you missed it.BTW I got my copy the other day,just finished a few chapters,fascinating very fascinating,though I wonder sometimes why Michael wants to give away his secrets to 5fer, unless of course MD thinks 5fer is to dumb too get any of it.<vbg>
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Dell: 'It just became an obvious thing to do'
'Direct from Dell: Strategies that Revolutionized an Industry'
By Michael Dell with Catherine Fredman
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By Jerry Mahoney
American-Statesman Staff
Published: Feb. 22, 1999
Michael Dell, the manufacturing and marketing innovator, billionaire and philanthropist who turns 34 on Tuesday, adds another category to his resume with the March 4 publication of his book, ''Direct from Dell: Strategies That Revolutionized an Industry.''
The founder, chief executive and chairman of Dell Computer Corp. will announce the book in New York on Wednesday.
Friday, the company will have a reception at the University of Texas, where he started the business in 1984.
In March, Dell will travel to Los Angeles, San Francisco, Washington, D.C., Chicago, Boston, Dallas and Houston on a media tour to promote the book.
''It's mostly TV broadcast media in major city centers,'' he said, adding with a laugh, ''We won't be appearing at the local bookstores.''
Dell talked with Austin American-Statesman tech writer Jerry Mahoney recently at Dell's headquarters in Round Rock. This is an edited transcript of that interview:
Q: I haven't sensed from you any eagerness to position yourself as a giant in the industry. But this book is going to (Dell laughs) . . . You know, all those airport bookstands: Your picture is going to be all over the place. How do you feel about that?
A: It's a little bit hard to hide at this point. (Laughs) I mean, I have some reluctance about it just because I don't tend to like to shine the spotlight on myself. I do think that if you read the book, you'll find it's highly oriented toward the company and the company's business as opposed to, you know, let me tell you all the wonderful things I did, or something like that.
Q: Well, there were instances during my reading of the book that I wished there had been more personal glimpses.
I found myself saying, what was it like, what were you feeling? You know, when you're 28 years old, a $2 billion company and you hit the wall? Who is the book aimed at?
A: I think the book is really aimed at a very broad audience, and -- I'm not sure I'd be too excited here -- I think it's going to be a broadly accepted business text on a new way of doing business.
Q: Is that a gut feeling or have there been surveys?
A: It's more of an intuitive feel based on interest that there seems to be. I previewed the book with a couple of people -- many of whom have provided quotes, like Idei-son (Idei Nobuyuki), who is the CEO of Sony. And, you know, Dell in Japan is sort of thought of as a whole new way of doing business. There seems to be enough indication that would suggest it's going to be fairly popular.
Q: It will be published in Japanese?
A: We're working on several foreign-language translations. Japanese and Chinese are pretty high on the list.
Q: Is your remuneration for the book tied to sales?
A: All the compensation for the book goes to the Dell Foundation, which benefits probably more Austinites than it does people around the world.
Q: What was the origin of the project?
A: Well, I had a number of people, publishers, who were coming to me for, you know, really years, saying, ''You've got to do a book, gotta do a book, gotta do a book.'' And I thought, ''I don't want to do a book, leave me alone, go away.'' (Laughs)
Eventually, it just became an obvious thing to do. I guess you could partially say that I did the book because I wanted to tell the story in my own words and not have somebody else write a book and tell it as an outsider's view.
It also -- not trying to be too commercial here -- is a great explanation of the strategies and competitive advantage that Dell derives, which I think will be a boost to our brand and to the company's success. I didn't really write the book for this reason, but a number of people inside the company have told me that they think it is almost a handbook for employees.
Q: And a lot of young businesses will be looking at it.
A: Yeah, I also think that there's a role that I end up playing, which is as an example for other people that want to start businesses. And that's an important role for me to play. So this gives the next guy who wants to go start a business some inspiration to think about things differently.
Q: Early in the book, you say you recognized that you needed to grow in employees and management staff and so on, because you saw a need for a ''healthy balance'' in your life between work and family. Have you got that?
A: I think so, yeah. Sometimes after a long trip, you know, I feel kind of tired (laughs). But I think I have a reasonably healthy balance.
Q: You've probably got some insights there that some people would like to hear, in terms of managing your time.
A: Well, you kind of have to schedule, just like anything else. But, you know, most people in the business world could occupy well more than 100 percent of the available hours and even the unavailable hours of the day with things. What I've realized is there is a diminishing return to my effectiveness beyond a certain number of hours, and you're not very happy if you don't have the other sides of your life. Whether it's with your family, and with your kids, with exercise, with sleep, and all the things that keep us happy and healthy.
Q: You were a little bit harder dealing with IBM than Compaq in the book. You talk about IBM's effort to put essentially a proprietary system out there to regain market share. And you saw that wasn't going to work.
A: If you go back to 1987, when IBM introduced the PS/2. This was basically the biggest legal transfer of wealth in the PC industry that ever occurred. (Laughs) They basically gave the market to Dell and Compaq, because they abandoned the (system) that every customer was buying.
Now, some customers went along with them, but most customers said, ''Forget that. We're staying with the industry standard.'' And the ball got handed off to Dell and Compaq. And of course, Intel was very happy to work with us. Microsoft was very happy to work with us. The OS/2 thing was under the guise of this is going to be better, it's going to have all these advantages, but it really didn't deliver for customers.
Q: When I saw the recent news of Microsoft's restructuring by customer segments, I wondered, did any of that seem familiar to you?
A: What a lot of technology companies are realizing is that customer behavior is different, whether you're a consumer, or small business, a large or mid-sized company, K-12, higher education or a global company. It's not enough to have groups that are building products for those customers. You really have to understand how the customers behave, which affects not only the products they want, but the way they buy, the way they need support.
And certainly segmentation, as I think I describe pretty fully in the book, has been a wonderful strategy for us. It's been a strategy that's very hard for our competitors to copy, because they tend to sell through the indirect channel.
Trying to get CompUSA to sell to K-12 or to higher education, and know the specifics about those markets. . . . Not only do they not have the margin to do it, they don't really have any way of gaining a body of knowledge, where Dell has very large buildings full of people who just serve very particular markets.
Q: In the book, you talk about the early '90s and you were thinking about expanding in Britain. You're in the office of British Petroleum, and it's expensive real estate and they have almost a whole floor dedicated to configuring their PCs. You said Dell could do that for them.
A: Right. We were selling them the box, and they would put the network card in and put the software on and put the asset tag on.
It started with us loading basic software images and then migrated to things like network cards, which seem pretty simple today. But at the time, it was quite revolutionary. The customer said, ''Oh, you can put the network card in for us? That's incredible. How do you do that?'' (Laughs)
Some early customers sort of pushed us into this direction, and we were learning from them. And we would talk about our best customers as the ones who taught us new things. They would kind of help us learn what we needed to do to be an even better partner for them.
Q: How much later did you get to DellPlus?
(Note: DellPlus is the name of Dell's innovative factory process that installs a customer's proprietary software and other customization to thousands of computers before they are shipped.)
A: Well, it was very gradual. I mean, I think we started this with two or three customers and then 10 or 20, and then 30 or 40. Then it became more of a standardized business, but it occurred over really a couple of years.
Q: Does Dell's experience apply to other companies and industries?
A: That's a very good question. I think there are lessons from our experience in the past 15 years that apply across any business. Let's say you have five companies that all compete in a given industry, like cars, for example. And nobody has broken out of the mold doing things differently. Well, they could actually exist in that state for a long time, unless somebody or until somebody sort of says, ''Hey, you know, we've got engines over here, we've got frames over here. We could sell the cars this way. We don't need to use this old business model.'' Then the guys who have been in the business for a long time are kind of left to react.
Q: There are voices out there in the industry that say the PC as we know it may not be around all that much longer: The Internet's going to change things, people don't need processing speed, they need bandwidth, etc. But your argument has been that worldwide penetration of some computing devices is so low that there is going to be a market.
A: I also believe that as you have more ''information devices,'' whether they're telephones or televisions or cars that have information processing of some type, that will only expand the universe of the whole overall market, with the PC growing as well. I don't think a telephone that provides Internet access will replace a PC.
It may cause people to use their PC more, because now they kind of get this phone and go, ''Hey, now I get Internet access, but I can't quite see everything on the phone, so I'll go back to my desk and work.'' Or they may get introduced to the Internet with a telephone or with a television, but the next purchase -- not to make the telephone or television go away -- the next purchase they make as consumers might be a PC.
Q: Have you given any thought to, five years down the road, what might be the sequel to ''Direct from Dell?"
A: (Laughs) I've been thinking more about what happens in the next two or three years, than necessarily writing another book.
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