dell
TRANSCRIPT
Dell: From a Low-Cost PC Maker to an Innovative Company
Presented By: Aditya Sharma Alka Priyadarshini Babita Sharma Prashant Chauhan Sundeep
OutlineCompany Profile
Timeline
Strategic Analysis
Direct Business Model
Sources of Revenue
US PC Industry in 2006
Dell Facing Challenges
Dell Turnaround Strategy
Dell Turnaround Strategy: Will it do wonder?
Conclusion
Company Profile• Michael Dell is the chairman of the Board of Directors of Dell,
the company he founded in 1984 for $1,000.• With an unprecedented idea---build relationships directly with
consumers• Operational regions : Americas, Europe, Middle East and Africa
(EMEA); Asia-Pacific and Japan (APJ) • Today the number one supplier of computer systems in the
United States and second worldwide
Timeline• 1984: Michael Dell founds Dell Computer Corporation • 1987: International expansion begins with opening of
subsidiary in United Kingdom • 1988: Dell conducts initial public offering of company stock
(3.5 million shares at $8.5 each)• 1989: Company issued an IPO• 1992: Dell Inc. was included in Fortune 500 companies• 1993: Enters into Asia-Pacific region with subsidiaries in
Australia and Japan • 1996: Company begins major push into the server market• 1999: Dell Inc. overtook Compaq and became the largest PC
seller in US
Timeline Cont…• 2000: Company sales via Internet reach $50 million per day • 2001: For the first time, Dell ranks No. 1 in global market
share• 2003: Company extended its product portfolio to the
consumer electronics market by launching flat panel TVs, Dell digital juke box, USB key drivers
• 2004:Technology partnership with Fuji, Xerox, Kodak and Samsung followed by strategic partnership with Microsoft Corp. and Oracle Inc.
• 2005: Company entered into a contract with bombardier recreational products to supply technology products and services throughout the global IT market.
• 2006: Fall short of both its expected revenue and earning.
Strategy• Uses the direct business model (reliant on very efficient
manufacturing and supply chain management)• Helps turnover inventory every four days
• Collaboration with strategic partners• Adding a significant layer of innovation
Suppliers Dell Final Customers
Direct Business Model
Suppliers PC Maker Distribution Retailers Final Customers
Indirect Distribution Channel of the PC Industry
Dell’s Direct Distribution Channel
Strategic Analysis
• Unique Business Model• Brand
Core Competencies
• Price/Cost• Mass Customization
Competitive Advantage
Low Innovation
Sources of Revenue• Dell designs, develops, manufactures, markets, sells, and
supports the follow products:
• Dell also offers a variety of services from development and support to professional and fully managed solutions.
• Notebook Computers• Desktop Computers• Printing and Imaging• Software & Peripherals
• Servers• Storage• Workstations• Networking
US PC Industry in 2006• According to survey conducted by U.S consumer electronics
association in 2005:• 90% have one pc• 36% have two pc• 52% prospective buyers
• PC sales was around 190 million in 2005
Dell Facing Challenges• IBM sold it’s PC business to Lenovo in 2004• Gateway merged with eMachines• Biggest merger between HP and Compaq in 2002• Fall short of both its expected revenue & earnings• Dell spend less than 1% in R&D as compared to HP and IBM
spent 6%• Company such as Apple was emerging with innovative
products
Dell Facing Challenges(Cont.)• Dell did not had the core competence in branding &
innovation• Dell was managing cost instead of managing service & quality
therefore customers remained unhappy.• Dell customer satisfaction rating fell by 6.3%• Dell servers were not fit handle internet traffic so customer
shifted to its competitors HP and IBM based on AMD opteron chips
• Dell business model was not effective in China• Lithium battery controversy
Dell Turnaround Strategy • In 2003, it introduced Flat Panel TVs, DJ music players, digital
music player & projectors• In 2006, it launched XPS high-end media PC segment• Dell produced every single machine for a specific order which
reduced its inventory & cost• Dell gained 20% market share in printer market • Launched product according to industry trends
Dell Turnaround Strategy (Cont.)• Started to use AMD processors• Introduced Annual Maintenance Contract at different prices • Company introduced 57 kiosks in 9 US states• It introduced Premier Page Web site for its corporate
customers
Turnaround Strategy: Will it do Wonders?• Media Center PC failed to capture market• Dell didn't have any retail store on the other hand Market
leader Lenovo had 4,800 retail stores in China• Emphasis on selling low end PCs• Achieving success in the PC Market and doing the same in the
printer business were two different thing• Past performance is no guarantee of future result.
Conclusion• R&D investment is lower than competitors which might hurt
Dell in the long-run.• DELL should focus on new product market and reliance
on corporate clients.• DELL has many opportunities such as potential growth in
overseas markets, the industry is in a matured phase and the entering to the new product markets.
Thank You