Dell, Inc.

Dell Computer (NASDAQ: DELL) is one of the world’s lead-ing manufacturers and sellers of desktop and laptop com-puters (see personal computer). By 2008 Dell had more than 88,000 employees worldwide.

The company was founded by Michael Dell, a student at the University of Texas at Austin whose first company was PC’s Limited, founded in 1984. Even at this early stage Dell successfully employed several practices that would come to typify the Dell strategy: Sell directly to customers (not through stores), build each machine to suit the customer’s preferences, and be aggressive in competing on price.

In 1988 the growing company changed its name to Dell Computer Corporation. In the early 1990s Dell tried an alternative business model, selling through warehouse clubs and computer superstores. When that met with little success, Dell returned to the original formula. In 1999 Dell overtook Compaq to become the biggest computer retailer in America.

Generally, the Dell product line has aimed at two basic segments: business-oriented (OptiPlex desktops and Lati-tude laptops) and home/consumer (XPS desktops and Inspiron laptops, and in 2007, Inspiron desktops).

Challenges and Diversification

Around 2002, Dell, perhaps facing the growing commod-ity pricing of basic PCs, began to expand into computer peripherals (such as printers) and even home entertainment products (TVs and audio players). In 2003 the company changed its name to Dell, Inc. (dropping “Computer”). Dell also experienced an increase in international sales in 2005, while achieving a first place ranking in Fortune magazine as “most admired company.” However, the company also made some missteps, losing $300 million because of faulty capacitors on some motherboards. Earnings continued to fall short of analysts’ expectations, and in January 2007 Michael Dell returned as CEO after the resignation of Kevin B. Rollins, who had held the post since 2004.

Meanwhile, Dell has made further attempts at diversify-ing the product line. In 2006 the company began, for the first time, to introduce AMD (instead of Intel) processors in certain products, and in 2007 Dell responded to cus-tomer suggestions by announcing that some models could be ordered with Linux rather than Microsoft Windows installed. Also in 2007, Dell acquired Alienware, maker of high-performance gaming machines.

Dell has struggled to boost its sagging revenue as it lost ground to competitors, notably HP. Known primarily as a mail-order and online company, Dell has announced that it will also sell PCs through “big box” retailers such as Wal-Mart.

Dell continues to receive praise and criticism from vari-ous quarters. On the positive side, the company has been praised for its computer-recycling program by the National Recycling Coalition. Dell products also tend to score at or near the top in performance reviews by publications such as PC Magazine.

On the other hand, there have been complaints about Dell’s technical support operation. Technicians apparently follow “scripts” very closely, making customers take sys-tems apart and follow troubleshooting directions regardless of what the customer might already know or have done. The increasing “offshoring” of support has also led to com-plaints about language and communication problems.