Dell

Dell, Inc.

is a multinational technology corporation that develops, manufactures, sells, and supports personal computers and other computer-related products. Based in Round Rock, Texas, Dell employs more than 82,700 people worldwide.[2]

Dell grew during the 1980s and 1990s to become (for a time) the largest seller of PCs and servers. As of 2008[update] it held the second spot in computer-sales within the industry behind the Hewlett-Packard Company. The company currently sells personal computers, servers, data storage devices, network switches, software, and computer peripherals. Dell also sells HDTVs that are manufactured by other brands.

In 2006, Fortune magazine ranked Dell as the 25th-largest company in the Fortune 500 list, 8th on its annual "Top 20" list of the most-admired companies in the United States.[3] In 2007 Dell ranked 34th and 8th respectively on the equivalent lists for the year. A 2006 publication identified Dell as one of 38 high-performance companies in the S&P 500 which had consistently out-performed the market over the previous 15 years.[4]

History
Background and origins

While a student at the University of Texas at Austin in 1984, Michael Dell founded the company as PC's Limited with capital of $1000.[5] Operating from Michael Dell's off-campus dorm-room at Dobie Center [1], the startup aimed to sell IBM PC-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer-systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs.[citation needed] Michael Dell dropped out of school in order to focus full-time on his fledgling business, after getting about $300,000 in expansion-capital from his family.

In 1985, the company produced the first computer of its own design — the "Turbo PC", sold for US$795[6] — which contained an Intel 8088-compatible processor running at a speed of 8 MHz. PC's Limited advertised the systems in national computer-magazines for sale directly to consumers, and custom-assembled each ordered unit according to a selection of options. This offered buyers prices lower than those of retail brands, but with greater convenience than assembling the components themselves. Although not the first company to use this model, PC's Limited became one of the first to succeed with it. The company grossed more than $73 million in its first year of trading.

The company changed its name to "Dell Computer Corporation" in 1988. In 1989, Dell Computer set up its first on-site-service programs in order to compensate for the lack of local retailers prepared to act as service centers. Also in 1987, the company set up its first operations in the Ireland; eleven more international operations followed within the next four years. In June 1988, Dell's market capitalization grew by $30 million to $80 million from its June 22 initial public offering of 3.5 million shares at $8.50 a share[7]. In 1990, Dell Computer Corporation tried selling its products indirectly through warehouse clubs and computer superstores, but met with little success, and the company re-focused on its more successful direct-to-consumer sales model. In 1992, Fortune magazine included Dell Computer Corporation in its list of the world's 500 largest companies.

In 1996, Dell began selling computers via its web site.

In 1999, Dell overtook Compaq to become the largest seller of personal computers in the United States of America with $25 billion in revenue reported in January 2000.

In 2002, Dell attempted to expand by tapping into the multimedia and home-entertainment markets with the introduction of televisions, handhelds, and digital audio players. Dell has also produced Dell-brand printers for home and small-office use.

In 2003, at the annual company meeting, the stockholders approved changing the company name to "Dell Inc." to recognize the company's expansion beyond computers.

In 2004, the company announced that it would build a new assembly-plant near Winston-Salem, North Carolina; the city and county provided Dell with $37.2 million in incentive packages; the state provided approximately $250 million in incentives and tax breaks. In July, Michael Dell stepped aside as Chief Executive Officer while retaining his position as Chairman of the Board. Kevin Rollins, who had held a number of executive posts at Dell, became the new CEO.

In 2005, the share of sales coming from international markets increased, as revealed in the company's press releases for the first two quarters of its fiscal 2005 year. In February 2005 Dell appeared in first place in a ranking of the "Most Admired Companies" published by Fortune magazine. In November 2005 BusinessWeek magazine published an article titled "It's Bad to Worse at Dell" about shortfalls in projected earnings and sales, with a worse-than-predicted third-quarter financial performance — a bad omen for a company that had routinely underestimated its earnings. Dell acknowledged that faulty capacitors on the motherboards of the Optiplex GX270 and GX280 had already cost the company $300 million. The CEO, Kevin Rollins, attributed the bad performance partially to Dell's focus on low-end PCs.

In 2006, Dell purchased the computer hardware manufacturer Alienware. Dell Inc.'s plan anticipated Alienware continuing to operate independently under its existing management. Alienware expected to benefit from Dell's efficient manufacturing system.[8]

On January 31, 2007, Kevin B. Rollins, CEO of the company since 2004, resigned as both CEO and as a director, and Michael Dell resumed his former role as CEO. Investors and many shareholders had called for Rollins' resignation because of poor company performance. At the same time, the company announced that, for the fourth time in five quarters, earnings would fail to reach consensus analyst-estimates.

In February 2007 Dell became the subject of formal investigations by the US SEC[9] and the United States Attorney for the Southern District of New York.[10] The company has not formally filed financial reports for either the third or fourth fiscal quarter of 2006, and several class-action lawsuits[11] have arisen in the wake of its recent[update] financial performance. Dell Inc's lack of formal financial disclosure would normally subject the company to de-listing from the NASDAQ,[12] but the exchange has granted Dell a waiver, allowing the stock to trade normally.[13]

On March 1, 2007, the company issued a preliminary quarterly earnings report which showed gross sales of $14.4 billion, down 5% year-over-year, and net income of $687 million (30 cents per share), down 33%. Net earnings would have declined even more if not for the effects of eliminated employee bonuses, which accounted for six cents per share. NASDAQ extended the company's deadline for filing financials to May 4.[14]

Dell and AMD

When Dell acquired Alienware early in 2006, some Alienware systems had AMD chips. On August 17, 2006, a Dell press-release stated that starting in September [15], Dell Dimension desktop computers would have AMD processors and that later in the year Dell would release a two-socket, quad-processor server using AMD Opteron chips, moving away from Dell's tradition of only offering Intel processors in their PCs.

CNet's News.com on August 17, 2006 cited Dell's CEO Kevin Rollins as attributing the move to AMD processors to cost-advantage and to AMD technology[16]. AMD's senior VP in commercial business, Marty Seyer, stated: "Dell's wider embrace of AMD processor-based offerings is a win for Dell, for the industry and most importantly for Dell customers."

On October 23, 2006, Dell announced new AMD-based servers — the PowerEdge 6950 and the PowerEdge SC1435.

On November 1, 2006, Dell's website began offering notebooks with AMD processors (the Inspiron 1501 with a 15.4-inch (390 mm) display) with the choice of a single-core MK-36 processor[17], dual-core Turion X2 chips or Mobile Sempron.

Dell and desktop Linux
First attempt (2000)

In 1998 Ralph Nader asked Dell (and five other major OEMs) to offer alternate operating systems to Microsoft Windows, specifically including Linux, for which "there is clearly a growing interest"[18][19] Possibly coincidentally, Dell started offering Linux notebook systems which "cost no more than their Windows 98 counterparts" in 2000,[20] and soon expanded, with Dell becoming "the first major manufacturer to offer Linux across its full product line"[21] However, by early 2001 Dell had "disbanded its Linux business unit."[22]

The reason(s) for such a quick reversal remain the subject of debate. Court documents accused Microsoft of coercing OEMs to drop Linux:

Microsoft executive Joachim Kempin described his plan of retaliation and coercion to shut down competition from Linux: "I am thinking of hitting the OEM harder than in the past with anti-Linux actions" and will "further try to restrict source code deliveries where possible and be less gracious when interpreting agreements — again without being obvious about it," continuing "this will be a delicate dance"[23]

While in a 2003 interview Michael Dell denied that Microsoft pressured Dell Inc. into doing an about-face with regard to desktop Linux, citing a lack of sales: "unfortunately the desktop Linux market didn't develop in volume. It's more of a server opportunity" but adding: "We continue to offer Linux on the desktop and there is nothing else to say."[24] However, a 2004 report noted that Dell no longer offered pre-installed desktop Linux:

So what does it mean "factory installed Linux"? If you want Dell to install Linux for you, first add on $119. But here is the annoying part. They won't send you a computer with Linux pre-installed. They sell you the computer and the boxes of software on the side, and then they make an appointment to send you someone who comes to your house or business and installs it there.

Ubuntu on Dell systems

On February 26, 2007 Dell announced that it had commenced a program to sell and distribute a range of computers with pre-installed Linux distributions as an alternative to Microsoft Windows. Dell indicated that Novell's SUSE Linux would appear first.[26] However, Dell on February 27, 2007 announced that its previous announcement related to certifying the hardware as ready to work with Novell SUSE Linux and that it (Dell) had no plans to sell systems pre-installed with Linux in the near future.[27] On March 28, 2007, Dell announced that it would begin shipping some desktops and laptops with Linux pre-installed, although it did not specify which distribution of Linux or which hardware would lead.[28] On April 18, 2007 a report appeared suggesting that Michael Dell used Ubuntu on one of his home systems.[29] On May 1, 2007, Dell announced it would ship the Ubuntu Linux distribution.[30] On May 24, 2007, Dell started selling models with Ubuntu Linux 7.04 pre-installed: a laptop, a budget computer, and a high-end PC.[31]

On June 27, 2007, Dell announced on its Direct2Dell blog that it planned to offer more pre-loaded systems (the new Dell Inspiron desktops and laptops). After the IdeaStorm site supported extending the bundles beyond the US market, Dell later announced more international marketing.[32] On August 7, 2007, Dell officially announced that it would offer one notebook and one desktop in the UK, France and Germany with Ubuntu "pre-installed". At LinuxWorld 2007 Dell announced plans to provide Novell's SUSE Linux Enterprise Desktop on selected models in China, "factory-installed".[33] On November 30, 2007 Dell reported shipping 40,000 Ubuntu PCs.[34] On January 24, 2008 Dell in Germany, Spain, UK and France launched a second laptop, a XPS M1330 with Ubuntu 7.10, for 849 euro or GBP 599 upwards.[35] On February 22, 2008 Dell announced plans to sell Ubuntu in Canada and in Latin America[36] From September 16, 2008, Dell has shipped both Dell Ubuntu Netbook Remix and Windows XP Home versions of the Inspiron Mini 9 and the Inspiron Mini 12. At the present time, the Inspiron Mini 9 and the Inspiron Mini 12 laptops are being shipped with ubuntu 8.04 version. It is expected in the future that Dell will offer ubuntu 8.10 on the mini 9 and mini 12.

Personnel

On January 31, 2007 Michael Dell returned to the company as CEO. As chairman of the board, Mr. Dell had significant input into the company's operations during Rollins' years as CEO. However with the return of Michael Dell as CEO, the company saw immediate changes in operations, the exodus of many senior vice-presidents and new personnel brought in from outside the company.

Departures announced include:

* Kevin Rollins, CEO[37]
* James Schneider, CFO[37]
* John Medica, senior vice president, consumer products[38]
* Joe Marengi, senior vice president, Americas[38]
* John Hamlin, senior vice president, worldwide online operations[39]
* Paul McKinnon, senior vice president, human resources[38]
* Rosenda Parra, senior vice president/general manager, home and small business group[40]
* Glenn E. Neland, senior vice president, procurement[41]

Additions announced include:

* Michael Dell, CEO and co-Chairman of the Board (previously Chairman of the Board)
* Don Carty, CFO and co-Chairman of the Board (previously Board member)
* Michael R. Cannon, former CEO of Solectron, as President, Global Operations[42]
* Ron Garriques, who formerly headed Motorola's mobile phone unit, as President, Global Consumer Group[43]
* Stephen F. Schuckenbrock, Senior Vice President, Global Services[41]

Mr. Dell announced a number of initiatives and plans (part of the "Dell 2.0" initiative) to improve the company's financial performance. These include:

* elimination of 2006 bonuses for employees with some discretionary awards
* reduction in the number of managers reporting directly to Mr. Dell from 20 to 12
* in a noted departure from previous years, "build, partner, and buy" to increase services capabilities
* reduction of "bureaucracy"

On April 23, 2008, Dell announced the closure of one of its biggest Canadian call-centers in Kanata, Ontario — terminating approximately 1100 employees, with 500 of those redundancies effective on the spot, and with the official closure of the center scheduled for the summer. The call-center had opened in 2006 after the city of Ottawa won a bid to host it. Less then a year later, Dell Inc planned to double its workforce to nearly 3,000 workers and to add a new building. Journalists cited a high Canadian dollar and suggested high pay-rates as among the reasons for the cuts. [44] The company had also announced the shutdown of its Edmonton, Alberta office, losing 900 jobs. In total, Dell announced the ending of about 8,800 jobs in 2007-2008 — 10% of its workforce.[45] On January 8 2009 Dell announced the closure of its manafacturing plant in Limerick, Ireland with the loss of 1,900 jobs and the tranfer of production to its plant in Poland.

Products Scope and brands

The corporation markets specific brand names to different market segments:

* Business/Corporate Class: including OptiPlex, Latitude, and Precision, where the company's advertising emphasizes long life-cycles, reliability and serviceability:

* OptiPlex - office desktop computer systems
* Vostro - office/small business desktop and notebook systems
* n Series - desktop and notebook computers shipped with Linux or FreeDOS installed
* Latitude - commercially-focused notebooks
* Precision - workstation systems and high-performance notebooks. (Some of them including Linux pre-installed.[46])
* PowerEdge - business servers
* PowerVault - direct-attach and some network-attached storage (NAS)
* PowerConnect - network switches
* Dell EMC - storage area networks (SANs)
* EqualLogic - enterprise class iSCSI SANs

* Home Office/Consumer Class: including Inspiron and XPS brands, emphasizing value, performance and expandability:

* Inspiron - consumer desktop and notebook systems
* Studio - medium-end consumer slim hybrid desktop and laptop systems
* XPS - enthusiast and high-performance desktop and notebook systems
* Alienware (XPS Extreme) - high-performance gaming systems
* Adamo - high-end laptop brand to compete with the Macbook Air

* Peripherals: Dell has also diversified its product line to include peripheral products such as USB keydrives, LCD televisions, and printers.

* Dell monitors LCD TVs, plasma TVs and projectors for HDTV and monitors

* Services and support:

* Dell On Call - extended support services (mainly for the removal of spyware and computer viruses)
* Dell Support Center - extended support services (similar to "Dell On Call") for customers in the EMEA. The Solution Centers also support hardware for customers outside of warranty.
* Dell Business Support - a commercial service-contract that provides an industry-certified technician with a lower call-volume than in normal queues; it covers hardware- and some software-support.
* Your Tech Team - a new[update] support-queue available to home users who purchased their systems through either Dell's website or Dell phone-centers. These customers gain access to a specialized queue currently[update] located in Tampa, Florida. Customers can request a technician with whom they have worked previously, and the technicians can troubleshoot a wider range of problems — including some that would fall under the "Dell on Call" category. Data backup and virus removal remain out-of-scope for this queue.

Dell also offers Red Hat and SUSE Linux for servers; as well as "bare-bones" computers without pre-installed software (available on n Series by default and by request on XPS and Inspiron systems) at significantly lower prices. Due to Dell's licensing contract with Microsoft, Dell allegedly[citation needed] cannot offer those systems on their website and customers have to request them explicitly. (Dell does offer those systems on their web site at http://www.dell.com/content/products/features.aspx/precn_n?c=us&cs=04&l=en&s=bsd&redirect=1 ). Dell has to ship such systems with a FreeDOS disk included in the box and must issue a so-called "Windows refund" or a merchandise credit after sale of the system at the "regular" retail price.

* Discontinued products/brands:

* Axim - PDAs using Microsoft's Windows Mobile (discontinued on April 9, 2007[47])
* Dimension - home and "small office, home office" desktop computers (discontinued July 2007; replaced by Inspiron desktops)
* Dell Digital Jukebox - MP3 players (discontinued August 2006)
* Dell PowerApp - application-based severs
* Dell Omniplex - 486- and Pentium-based desktop and tower computers previously supported to run server and desktop operating systems.


Manufacturing

In the 1980s Dell became a pioneer in the “configure to order” approach to manufacturing – delivering individual PCs configured to customer specifications. In contrast, most PC manufacturers in those times delivered large orders to intermediaries on a quarterly basis.[48]

To minimize the delay between purchase and delivery, Dell has a general policy of manufacturing its products close to its customers. This also allows for implementing a just-in-time (JIT) manufacturing approach, which minimizes inventory costs. Low inventory is another signature of the Dell business model – a critical consideration in an industry where components depreciate very rapidly.[49]

Dell’s manufacturing process covers assembly, software installation, functional testing (including "burn-in"), and quality control. Throughout most of the company’s history, Dell manufactured desktop machines in-house and contracted out manufacturing of base notebooks for configuration in-house.[50] However, the company's approach appears to have started to change. The 2006 Annual Report states “we are continuing to expand our use of original design manufacturing partnerships and manufacturing outsourcing relationships.” The Wall Street Journal reported in September, 2008 that “Dell has approached contract computer manufacturers with offers to sell" their plants.[51]

Assembly of desktop computers for the North American market takes place at Dell plants in Austin TX (original location), Lebanon TN and Nashville, Tennessee (opened in 1999), Winston-Salem NC (opened in 2005) and at the Miami, Florida facility of its Alienware subsidiary. Dell servers come from Austin TX.

Dell assembles computers for the EMEA market at Limerick in the Republic of Ireland, and employs about 4,500 people in that country. Production at the Limerick facility will cease in 2009 and will be relocated to facilities in Poland and Asia. European Manufacturing Facility 1 (EMF1, opened in 1990) and EMF3 form part of the Raheen Industrial Estate near Limerick. EMF2 (previously a Wang facility, later occupied by Flextronics, situated in Castletroy) closed in 2002,[citation needed] and Dell Inc has consolidated production into EMF3 (EMF1 now contains only offices[52]). Dell’s Alienware subsidiary also manufactures PCs in an Athlone, Ireland plant. Construction of EMF4 in Łódź, Poland has started[update]: Dell started production there in autumn 2007.[53]

Dell opened plants in Penang, Malaysia in 1995, and in Xiamen, China in 1999. These facilities serve the Asian market and assemble 95% of Dell notebooks. Dell Inc has invested an estimated (U.S.) $60 million in a new manufacturing unit in Chennai, India, to support the sales of its products in the Indian subcontinent. Indian-made products will bear the "Made in India" mark. In 2007 the Chennai facility had the target of producing 400,000 desktop PCs, and plans envisaged it starting to produce notebook PCs and other products in the second half of 2007.[citation needed]

Dell moved desktop and PowerEdge server manufacturing for the South American market from the Eldorado do Sul plant opened in 1999, to a new plant in Hortolandia, Brazil in 2007.[54]

Dell began manufacturing in Limerick in 1991 and went on to become Ireland's largest exporter of goods and second largest company and foreign investor. On the 8th of January 2009, Dell announced that they will withdraw all manufacturing from Limerick and move it to its new plant in the Polish city of Lodz by January 2010.[55] European Union officials said they would investigate a €52.7million aid package the Polish Government used to attract Dell away from Ireland.[56]