Michael Dell

Founder, chairman, and CEO of Dell

• Born: February 23, 1965
• Place of Birth: Houston, Texas

Introduction

Michael Dell is one of the most successful entrepreneurs of his time, revolutionizing the manufacture and creation of the personal computer (PC) during the 1980s. While computers had previously been marketed and sold in an impersonal and distant manner, Dell made the decision to remove the middleman from the process. As a result, his company, Dell Inc., served as the manufacturer and seller of the PCs it made and was able to customize products to better meet consumers' needs. This approach was highly successful, and Dell PCs became popular with corporate and higher-education users in addition to consumers. As Dell has grown, it has added product lines and services, including servers, data-storage systems, and information technology support services. Dell remains one of the top sellers of PCs in the United States.

Early Life

Michael Saul Dell was born on February 23, 1965, in Houston, Texas, the son of an orthodontist and a stockbroker. He attended Gary L. Herod Elementary School in Houston, where he was a top student and even dreamed of being an entrepreneur. At the age of eight, Dell attempted to register for the General Educational Development (GED) test, which if passed would confer the equivalent of a high school diploma, so that he could leave school and start his own business.

Dell had a variety of part-time jobs even as a child, which enabled him to purchase his first calculator at the age of seven. While enrolled in junior high school, he came across a teletype machine for the first time and spent countless after-school hours programming it. At the age of fifteen, after seeing computers in a local RadioShack store, Dell became determined to own his own computer. Shortly thereafter, he purchased his first computer, an Apple II, which he took apart so that he could determine how it worked.

Dell attended Memorial High School in Hedwig Village, Texas. Memorial High School drew its students from a variety of wealthy neighborhoods in Houston and offered a number of competitive classes, including ones in computer science and economics. While in high school, Dell obtained a summer job, where he was responsible for selling subscriptions to the Houston Post, a local newspaper, by telephone. After noticing that newly married couples and those who had recently purchased a home were most likely to purchase a subscription, he targeted these groups, obtaining the names of people who had recently received a marriage license or filled out a mortgage application. As a result, he was able to earn more than $18,000 per year, better than the salary a beginning teacher would make at his high school.

Upon graduation from high school, Dell enrolled at the University of Texas at Austin, where he intended to be a premedical student. While a freshman living in the private Dobie Center residential complex, he began a business assembling computers from kits and selling upgrade equipment to people who already owned a PC. Dell also was able to obtain a vendor license that allowed him to bid on contracts with the state of Texas, which he was successful in doing because he was not burdened by the overhead of most of his rivals.

Life's Work

By January 1984, Dell was so confident that a manufacturer selling PCs directly to the consumer could be successful that he began his own computer company, initially known as PCs Limited. Beginning with $1,000 in initial capital, he operated his company out of a rented condominium and quickly became successful in selling IBM-compatible PCs built from stock parts. As a result of this success, Dell's family provided him with $300,000 in expansion capital, and he dropped out of the University of Texas to devote all his efforts to his company, which he later renamed Dell Computer Corporation. Having outgrown the condominium, Dell moved operations to a business center located in nearby North Austin, where he was joined by a telephone sales staff and three people who served as his manufacturing group.

In 1985, Dell produced the first computer the company had designed itself, the Turbo PC. The Turbo PC was built using an Intel 8088 microprocessor, the same as the original IBM PC. It had a price tag of $795 and was offered for sale directly to consumers, who were made aware of the machine through advertisements Dell placed in national computer magazines. Consumers who saw the ads would call Dell and select the configuration they wanted from a variety of options. Dell would then assemble the computer and ship the completed machine directly to the consumer. This arrangement not only allowed Dell to offer lower prices than available in retail stores but also permitted the customers a degree of customization that was rare in the industry. In its first year in operation, Dell sold more than sixty thousand computers and grossed more than $70 million in sales.

Dell quickly began to expand his company to take advantage of the many opportunities available during the technology boom of the 1980s. In 1987, the company established its first overseas presence, in Ireland, which would soon be followed by eleven more international locations. In June 1988, Dell made its initial public offering (IPO) of stock and saw the value of its shares double during its first month on the market. In an effort to allay the concerns of customers about the lack of brick-and-mortar stores to act as service centers, Dell established its on-site service program, in which Dell would dispatch a technician to the office or home of a customer whose computer was malfunctioning.

In 1990, the company experimented with altering its sales model. Dell entered into agreements with a variety of warehouse club and computer superstores that permitted its computers to be sold in store, much as its rivals did. Although this venture attracted a great deal of attention at the time, it was ultimately unsuccessful, and Dell refocused on its direct-to-consumer model of sales. Dell's traditional telephone ordering system was augmented in 1996, when it allowed consumers to purchase its machines over the Internet for the first time.

Michael Dell served as chief executive officer (CEO) of the company from its inception until 2004, when he resigned from the position while remaining chairman of the board of directors. From 1997 through 2004, the company enjoyed a tremendous growth in sales, surpassing Compaq Computer Corporation in 1999 to become the world's largest maker of PCs. There were multiple reasons for this success. According to national magazines such as Consumer Reports and PC Magazine, Dell had the reputation for the best customer service, reliability, and technical support of any PC maker. Dell also was able to make inroads in selling its products to corporate users, which gave it a reliable sales base while influencing home-purchase decisions of workers who were familiar with Dell machines from their place of employment. In 2003, Dell Computer Corporation changed its name to Dell Inc. to reflect its growing product line.

However, Dell's reputation for quality had already started to decline after 2002, when it began moving its call centers overseas, which displeased many customers. Simultaneously, the company's rapid growth caused its on-site service program to become inadequate. Finally, a problem with faulty components resulted in negative publicity stemming from well-publicized reports of Dell laptops catching fire. As a result of these problems, Dell's sales slowed considerably in 2005, and the value of its stock price declined by 25 percent. By 2006, for the first time, Dell Inc.'s growth was slower than that of the industry as a whole.

Michael Dell returned as CEO in 2007, replacing Kevin Rollins, who had succeeded him three years earlier. After returning to the helm of the company he had founded, Dell oversaw its expansion into several new markets. In 2008, Dell purchased EqualLogic to gain a share of the Internet small computer system interface (iSCSI) market, a means of linking storage systems. In 2009, the company purchased Perot Systems, renaming it Dell Services, a provider of information technology services. As a CEO, Dell was criticized by some, who noted that he used outsourcing (thus eliminating staff jobs) and generous government tax breaks to enrich his company and himself. Dell's stock price improved, however, after he returned as CEO.

The introduction of Apple's iPhone in 2007 and its iPad in 2010, as well as similar tablet computers and e-readers, took a toll on the market share of many traditional PC vendors, including Dell. Meanwhile, Asian vendors such as Acer and Lenovo began to take over greater shares of the PC market. In 2009, Dell dropped below the number-two spot in global market share for the first time since 1998, edged out by Acer and then, two years later, Lenovo.

In response to this decline, in 2013, Michael Dell bought out Dell Inc.'s public shares at a total cost of $24.4 billion, aided by loans from Microsoft Corporation and a private equity firm, in order to delist the company from the stock market and make it private once again. The transaction, which gave Dell a 75 percent stake in his company, was intended to enable him to overhaul Dell Inc.'s business model without interference from shareholders.

In 2016, Dell Inc. acquired the computer-storage corporation EMC. Following the merger, a parent company called Dell Technologies was formed; Dell was named the CEO. In 2023, Dell’s cloud software section, VMware—which had spun off from the main company two years earlier—was sold to microchip manufacturer Broadcom for $69 billion. Dell’s personal net worth topped the $100 billion mark in 2024.

Personal Life

Dell married Susan Lynn Lieberman in 1989. The couple lived in Austin, Texas, with their four children. Their 33,000-square-foot house was reported to be the most expensive domestic building ever erected in Texas. They also own other homes, including one in Hawaii, a vacation home in the Caribbean, and the 6D Ranch, located outside Austin, where Dell raises Arabian horses.

In 1999, the Dells founded the Michael and Susan Dell Foundation, which supports various causes that aid poor children living in urban communities in India and South Africa as well as the United States. Since its inception, the foundation has distributed more than $800 million in grants and other charitable activities.

Dell has also provided the University of Texas with a new computer science building and helped fund the Dell Children's Medical Center, the Dell Pediatric Research Institute, and the Michael and Susan Dell Center for the Advancement of Healthy Living, all located on or near the university's campus. In recognition of this philanthropy, hereceived an honorary doctorate from Ireland's University of Limerick in 2002.

Bibliography

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