History of Dell Computers - Senior Project Reseach Paper


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History of Dell Computers - Senior Project Reseach Paper

  1. 1. Meiners 1Lindsay MeinersNovember 17, 2011CorbettAP Literature Senior Project Research Paper: History of Dell Computers The technology of the personal computer has been around since the mid 1900’s, evolvingconsiderably with every decade, and making small advancements by the minute. Starting primarilywith IBM in the 1950s, the computer industry has since exploded into the massive and lucrativeindustry that it is today (Polsson). Many brave entrepreneurs have managed to get their foot in the doorof the personal computer industry and make a large profit off of their hard work. One such fortunateentrepreneur was Michael Dell, creator of the Dell Computers industry. Dell is one of the mostsuccessful entrepreneurs to date whose progress began and skyrocketed at a very young age. In 1992,Michael Dell became the youngest CEO of a Fortune 500 company when his industry was first madean addition to the list (Farfan). At this time, Dell was estimated at a net worth of 14 billion dollars, alsoearning him his status as one of the richest people on the world. In 1984, a pre-med student named Michael S. Dell began selling IBM-compatible computers hebuilt by assembling computer parts bought from wholesale dealers from his University of Texas dorm.He sold these models he built to potential PC users for highly competitive prices that were much lowerthan the standard IBM pricing. Dell soon realized “that the $80,000 per month he brought in couldeasily be transformed into a full-fledged business” ("Dell Computer Corp"). With that, Michael Dellleft school in April of that year to found Dell computers. His elimination of a “middleman” retailer inhis manufacturing process allowed to Dell to almost entirely dissipate his competition in the PCindustry, making the companys custom-built machines a tough game to compete with. Dells success,
  2. 2. Meiners 2though, was not always such an easy path. “Ironically, the incredible financial success achieved soearly in the time-line of the Dell computer company history actually served as one the biggestobstacles. The biggest challenges the company faced were keeping up with the increasing demandfor Dell computers, laptops and accessories, while keeping overhead low” (Shea). Dell Computersinitially struggled with keeping up with their finances and meeting demand, but the companys effortspaid off as the company continued to grow and profit. Dell Computers also gained its advantage in the industry by several different innovations itmade to the functioning of the PC manufacturers of the time. One such innovation was how highlycustomizable the company made their products. Each order was unique to the customer to variousdegrees at affordable and relatively low prices compared to competition. While this in and of itself wasremarkable for the PC business, it was not the true highlight of Michael Dells new ideas introduced tothe world of manufacturing of the personal computer. “One of the most innovative ventures undertakenearly in the Dell computer company history was the creation of a national customer support center thatoffered maintenance, trouble shooting, servicing and repair for all Dell products” (Shea). Overall, theemployment of these innovative strategies is a great part of what made Michael Dells company reallytake off. Dell was always held strongly to his high standards for his business. When the industrysmarketing team began to focus too strongly on advertising and pushing the company toward becominga big business, Dell saw that that his company was straying much too far from its initial purpose and hewas not going to tolerate it. Near to the end of 1987, the majority of this marketing team was fired orhad just simply left. After the fact in 1988, Dell began to renew this team with a renovated vision forthe industrys expansion and growth. During this same year, the company released a total of three newmachine models complete with leasing options in order to expand their client targets beyond privatehomes and small businesses to large industries, educational and government facilities, andcorporations.
  3. 3. Meiners 3 While Michael Dell had almost instantaneous success at a very young age, his entire career hasnot been a straight, endless line of success. Dell Computer Corporation has suffered its fair share offlaws and mistakes as any new business or entrepreneurship does. Such downfalls with any business inthe manufacturing of a product can exceed the general difficulties of any beginning enterprise. Generalproblems include initial funding, finding facilities, partners, employees, investors, and customers. Fromthe get-go, Michael Dell never experience significant problems with any of these generic areas, havingmade a large profit with an always-generous supply of customers in his beginning stages. But for thepast century, with every new technological innovation comes faults and malfunctions. In mid-2006,Dell Computers had been previously making several attempts to improve its company’s image andoverall customer satisfaction after being reviewed and harshly criticized on various websites and blogsover its recent budget cuts in their customer service call reception centers. An ensuing incident wouldput Dell Computers under very close scrutiny by blogs and papers on a global scale and bring negativeattention the company did not need. At a conference being held in Osaka, Japan in June of 2006, a Dellnotebook had spontaneously burst into flames, further damaging Dell’s already sensitive decliningpublic image. The company had recovered the remains of the obviously defective laptop in order topursue further investigation of the incident and get to the root of the problem. Dell Computers claimedthat its “engineers examined and tested what remained of the flaming notebook computer for severaldays to find the source of the problem. They concluded that the fire was caused by a faulty lithium ionbattery cell” (Darlin). It was a matter of coincidence that this incident has followed a previous recall byanother computer industry of lithium batteries as the team of engineers deemed the fault unrelated.Fortunately for Dell, this mishap did not damage the company’s overall financial status with stockvalues and customer flow remaining relatively constant. As a result, though, Dell ended up spending$100 million toward a program to improve the overall customer experience within the company. DellComputer Corporation also reimbursed the man of the laptop that had spontaneously combusted at the
  4. 4. Meiners 42006 Osaka conference. One short year after the combusting notebook incident in Japan, more criticism and even legalaction came down on Dell Computer Corporation in 2007. The company was accused of consciouslyselling PC’s with faulty components to its customers with no warning or recall action taken. In anattempt to keep productivity at what it was and not to deter customers, legal documents indicate that thespokespersons for company were instructed to take no action against the issue or breathe a word tocustomers and just completely downplay the issue. “The problems stemmed from bad capacitors onmotherboards, which would inevitably cause systems to fail…Capacitors have no moving parts, buttake quite a beating because of their function, which makes for fairly common failures in electricalsystems, including PC’s” (Patrizio). In the legal light it was stated that, in Dell’s defense, many PCmanufacturers suffer from equipment failures and malfunctions. It was claimed that Dell ComputerCorporation was not trying to dishonestly conceal the problems from their consumers as much as theywere frantically searching for a solution to the situation at hand. Dell suffered no affects of a lawsuitand was able to handle its problems and disgruntled customers and get back on its feet as one of theworld’s leading computer manufacturers. Just like with any other company in the technological industry, Dell Computers had to do itsbest to keep up with competition as well as customer demand and expectations in a rapidly advancinggeneration of electronics. In 2010, later than a decade after the company’s takeoff in 1984, Dell beganhaving to make modernizations to keep up with the booming computers industry. With their stockvalues beginning to decline, Dell had to design a way to keep their company updated. Instead of aimingjust to keep up, though, Dell Computers Corporation set out to far surpass their competition to keepthemselves afloat on top of other leading computer manufacturers. According to company executives,in order to deal with rising competition and slowly declining value, Dell Computers was “aiming toincrease operating income with better execution and supply chain management, and cost efficiencies”
  5. 5. Meiners 5(Madway). By this, Dell Computer Corporation made its intentions clear that they were to useresponsible hands to increase how much it spent on its operations in hope of improvement. Theseoperations included retailing and supply as well as becoming more cost-efficient so these changescould be made possible. Since Dell has also strived to strongly modernize its products offerings also inhopes of lowering the strength of competition and once again heightening its flow of productconsumers. Despite all of its trials and tribulations, Dell Computer Corporation is still held up as one of theleaders of the computer industry to this very day. Michael Dell’s success is almost completely unrivaledby any other entrepreneur that has braved the PC manufacturing frontier. The company currently has atotal of 103,300 employees and also “provides a range of consulting services to enhance the energyefficiency of data centers such as capacity planning, data center optimization assessments,virtualization and energy efficiency research for maximizing the value” (“Dell Inc”). On the otherhand, the inside of the company appears to have more cons than pros. According to reviews of beingemployed by the company, current and previous employees made claims that “Dell does almost nothingand I do mean nothing, in the U.S. anymore” and “management skills of many of the people inleadership roles are very poor” (“Dell Reviews”). In contrast, consumer reviews of their performanceseem to be almost the exact opposite with claims such as “[Dell has an] amazing selection, and evenbetter customer service. Ive been very happy with the products I received; the customer service is alsotop notch. They made a mistake, quickly corrected it, and offered me numerous upgrades” (“DellBusiness Online”). Overall though, the versatile nature of the company has greatly contributed to itswildly successful nature that had begun in 1984 in the very innovative mind of nineteen-year-oldMichael Dell. Customers remain satisfied and the leadership of the company has certainly provided aninnovative take on the PC manufacturing industry and those involved.