Dell Inc.

• Date Founded: 1984
• Industry: Computer equipment and services
• Corporate Headquarters: Round Rock, Texas
• Type: Private

Overview

Dell is among the world's leading computer manufacturers. It was founded in 1984 as PC’s Limited by nineteen-year-old Michael Dell, a college freshman. Bolstered by $30 million in capitalization after the company went public in 1988, the company grew over the decades into a major firm in the personal computer (PC)-compatible industry. Headquartered in Round Rock, Texas, it also helped facilitate the rise of high-technology companies centered in Austin, Texas. In 2013, Michael Dell bought back his company to make it privately held; however, in 2018, Dell became a publicly traded company once again.

Built initially on the appeal of low prices, customized products, quick delivery, and dedicated customer service, the company rose quickly. By 2001, it was the world’s largest maker of PCs. Michael Dell resigned from his position as CEO in 2004, though he remained chairman of his namesake company. The company faltered in the 2000s, partly as a result of poor quality in its machines. Michael Dell returned to full-time control of the company in 2007.

Over time, Dell’s strategy changed. The company began marketing to businesses in the 1990s, expanded operations overseas, and created a computer services division, offering businesses complete hardware and software solutions, including efforts to get a foothold in cloud computing. Growth was hampered, though, by lagging customer service and a quality issue on laptops. Still, by the mid-2010s, Dell had more than thirty years of operation experience and was established as a major player in the computer and computer services market. In 2016, Dell acquired the enterprise software and storage company EMC Corporation, creating a new company, Dell Technologies, of which Dell and the new Dell EMC became subsidiaries.

History

A budding entrepreneur in his mid-teens, Michael Dell became interested in the then-new tool of PCs. He bought an early Apple machine, disassembling it to understand its workings. In college, using $1,000 of his own money, he began buying parts and customizing and then reselling IBM PCs. After his first year, he quit school and devoted himself to his computer business.

At the time, the IBM PC was a few years old and was only sold in standard configurations. But IBM could not meet demand, and both the operating system—owned by Microsoft—and processing chips—made by Intel—were controlled by other companies. These factors opened the market to compatible machines like Dell’s. He put together a team to build new models from components, rather than upgrading IBM machines, and began selling them in 1985. He advertised in computer magazines, took phone orders over a toll-free number, and sold machines priced far cheaper than IBM’s offerings.

Sales boomed. In 1988, the company was renamed Dell Computer Corp. and became publicly held. Shares sold for $8.50. The following year, Dell began selling its first laptop, foreseeing that the portable market would be critical to continued growth. By 1992, sales pushed it onto the Fortune 500 list. Dell, only twenty-seven years old, was the youngest CEO on the list. Four years later, Dell found a new way to reach customers directly, launching the Dell.com website, where sales quickly reached a volume of $1 million per day. Also in 1996, the company began selling computer servers to businesses.

In 2000, Dell’s stock passed $53 per share, though the collapse of the dot-com bubble hurt that price. Still, Dell’s rise continued steadily into the early 2000s, when it became the largest manufacturer of PCs. In 2003, it began selling its own printers and later added televisions and other high-technology devices to its product lines.

After Michael Dell stepped down as CEO in 2004, the company faced several crises. Complaints over poor customer service and shipping delays hurt its reputation and sales. In 2006, a faulty Sony-made battery caused some Dell laptops to catch fire, forcing it to recall 4.2 million machines.

Michael Dell returned as CEO in 2007. Soon, the company began shipping its machines to major retailers and selling them online. In 2009, however, the company’s stock plunged to $8.53 a share. More trouble arrived in 2010, however, when Dell paid a $100 million settlement over charges by the US Securities and Exchange Commission that it had falsely stated earnings for several years.

Despite these setbacks, the company aggressively expanded. In 2009, it purchased Perot Systems, Ross Perot’s computer systems company, for nearly $4 billion. In the following years, Dell made other acquisitions to expand its enterprise services business. It also moved aggressively into cloud computing and new product lines, such as tablets and smartphones.

By 2013, Michael Dell decided he wanted more personal control of the company. Teaming with the private equity firm Silver Lakes and with Microsoft, Dell bought back the company for $24.4 billion. Just two years later, citing continued weak demand in the PC market, Dell announced a huge move into the data storage market by purchasing EMC Corporation for $67 billion, the largest technology merger in history. Finalized in 2016, the deal created Dell Technologies, a multinational computer technology company offering end-to-end solutions in computer hardware, security, and IT infrastructure. In 2018, Dell once again became a publicly traded company.

As demand for computers increased in 2021 due to the COVID-19 pandemic, Dell's revenue and sales surged. According to the 2022 annual report, the company experienced a record revenue of $101.2 billion, with growth across all business units. The same year, the company ranked thirty-first on the Fortune 500 list. In March 2024, the company's stock reached an all-time high following a very positive earnings report. By 2024, Michael Dell owned about 16.9 million shares after selling a reported $1.2 billion worth of shares that year. However, later in the year, the company announced layoffs of its sales team as part of its restructuring plan to increase focus on artificial intelligence and Dell servers.

Impact

A manufacturer of millions of computers used by consumers and businesses, Dell contributed significantly to the computer revolution. Its lower-cost machines help millions of people gain access to machines they might not otherwise have been able to afford. As a pioneer in direct marketing of high-technology products, including online sales, Dell also helped establish a model that other companies could follow. As a major actor in information technology solutions and cloud computing, it has become a significant force in the business world.

Dell also has had a huge impact on Austin, Texas, which became home to more than one thousand high-tech companies, many of which were offshoots of Dell founded by former employees or the result of a growing workforce attracted to the area by Dell’s growth. The company is a leader in environmentally friendly business practices both by offering what it calls carbon-neutral computers and by promoting mobile working among its staff to reduce the corporate carbon footprint.

Computer sales lagged in the 2000s, forcing Dell into new businesses such as enterprise solutions, services, and cloud storage. While Dell had succeeded initially as a low-cost alternative to the computer behemoth IBM, it faced the new task of competing in these areas with larger businesses, including the Internet behemoth Google. The creation of Dell Technologies was expected to usher in the next chapter of the company's growth. In 2023, it acquired Cloudify, a Cloud management and orchestration software as a service, and Moogsoft, and AI powered DevOps and ITOps platform that uses machine learning to analyze and correlate alerts from various monitoring tools. These acquisitions would further enhance Dell's ability to accelerate advanced cloud-based capabilities as part of its approach to embed AI functionality in its product portfolio.

Bibliography

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Furrier, John. "One Year Birthday of $67 Billion Mega Merger with Dell EMC; Exclusive with Michael Dell." Forbes, 8 Sept. 2017, www.forbes.com/sites/siliconangle/2017/09/08/one-year-birthday-of-67-billion-mega-merger-with-dell-emc-exclusive-with-michael-dell. Accessed 30 Apr. 2023.

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Tee, Michael. "Dell Technologies Acquires Moogsoft." Moogsoft, 19 Oct. 2023, www.moogsoft.com/dell-technologies-acquires-moogsoft/#:~:text=The%20acquisition%20will%20further%20enhance,component%20of%20its%20%E2%80%9Cmulticloud%20by. Accessed 31 Dec. 2024.

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