This document provides an overview of Dell and Cisco, including: 1. Timelines of each company from their founding to present day, showing growth in sales, employees, and market capitalization. 2. Comparisons of key metrics like revenue, growth rates, market share, and employees between the two companies and their major competitors. 3. Descriptions of each company's direct sales model and strong information management practices, which are identified as contributing to their success.

1. Case Study: DELL & Cisco Team 6 04/25/05 Arsalan A. Lodhi Pankaj Luthra Daniel M. Li

2. DELL Inc – Company Profile 52wk range: 32.71 – 42.57 Historical Perspective: established - 1984 Total Employees: 55,200 Splits:10-Apr-92 [3:2], 30-Oct-95 [2:1], 09-Dec-96 [2:1], 28-Jul-97 [2:1], 09-Mar-98 [2:1], 08-Sep-98 [2:1], 08-Mar-99 [2:1] 12.00 – 33.50 1990-1991 77.37 – 61.88 (2:1 stock split on 10/95) 1995-1996 44.06 – 28.50 2000-2001 35.50 – 39.16 2004-2005 Stock Price Range Year

3. DELL Inc - TIMELINE 1983-- Michael Dell starts business of pre-formatting IBM PC HD’s on weekends 1985-- $6 million sales, upgrading IBM compatibles for local businesses 1986-- $70 million sales; focus on assembling own line of PC’s 1990-- $500 million sales; with an extensive line of products 1996-- Dell goes online; $1 million per day in online sales; $5.3B in annual sales 1997-- Dell online sales at $3 million per day; 50% growth rate for 3 rd consecutive year, $7.8B in total annual sales. 2005-- $49.2B in sales

4. DELL Inc – Company Comparison 341 32,600 329,001 151,000 55,200 Employees: 6.20% -2.20% 8.00% 9.40% 18.70% Rev. Growth (ttm): 116.36M 11.20B 96.95B 81.85B 49.21B Revenue (ttm): -153.00K 645.00M 8.25B 3.50B 3.04B Net Income (ttm): 23.94% 40.88% 37.42% 23.87% 18.32% Gross Margins (ttm): 112.93M 11.79B 121.16B 60.17B 89.29B Market Cap: Industry SUNW IBM HPQ DELL DIRECT COMPETITOR COMPARISON Above Data shows DELL is a perfect example of a Lean Machine Enterprise System: servers, workstations, storage, network products Client Systems: notebooks, PC, printing, imaging systems, software and peripherals Dell Financial Services (DFS) – joint venture with Citi group

5. DELL Inc – The Success Secret Internet coupled with Direct Business Model - sell directly to end customers instead of intermediate distributors, resellers. Virtual Integration - using sophisticated CRM, SCM systems at respective ends as well their integration - already integrated with 38 procurement and ERP systems across all its clients - vendors – Ariba, SAP, PeopleSoft, J.D. Edwards – Dell integrated with their ERP ( Source: Rob Rosenthal, Dell’s B2B web site strategy, October 2003, IDC #30202 ) Selling Points - Internet, B2B (Premier Pages), Phone-calls, Mass catalog mailings Do not Just sell Products – sell Values - client asked to put tags on their computers - proactive in solving clients pain points – preloaded software Dell was much less mature compare to IBM and HP at time when Internet took off – required much less effort to adapt its systems to Internet technologies. IBM and HP’s core competency was product innovation and development, Dell’s expertise was in assembling and catering to business needs.

6. Dell Inc – The Success Secret Web Penetration rate - What percentage of users contacted Dell based on information on given pages Web failure rate - What percentage of users contacted Dell because users failed to find their information on web pages Outstanding Question: what will matter most to customers moving forward ? In IDC opinion: Introduce solution packages that focus on overall business goals instead of individual products Introduce configurators for high-end server and storage products Source: Rob Rosenthal, Dell’s B2B web site strategy, October 2003, IDC #30202

7. DELL INC – Same Business Model applicable to other Industries? Other Industries for example IT Services – is not yet mature enough to provide this kind of capabilities – i.e. built-to-order by direct customer IBM OnDemand initiative is a step towards that kind of mentality – build-to-Order - rest of IT Services industry would take few years to provide this capability - IBM is the only one in position of providing such built-to-order services

8. Dell Inc – Key Questions Is the Direct Business Model a new model ? No, its not ! – all the primitive businesses used to trade like this – today hotdog stands all over Manhattan is an example of that model on small scale What new emerging technologies will push this further ? - SOA will help refine and innovate these and perhaps new similar kind of business models by reducing operational and transaction cost. - Web Services will remove human interaction further – reducing cost for example: - SLA will be negotiated by software agents - Vendors selection based on their expertise will be automated - Long life Lithium ion batteries increased sales - RFID tags can further streamline the supply chain, inventory and shipment tracking process

9. Dell Inc – Boundaries of Direct Business Model ? Have other manufacturers been able to do this? Why or why not? Is this model bounded in the PC industry? Presently HP is using the Direct Model. Supposedly Compaq’s strong direct sales model helped HP after the merger. Prices are in comparison to Dell. Source - www.ecommercetimes.com/story/19385.html Compaq emulated the model before merger with HP. Dell had better profitability management. Source - http://www.findarticles.com/p/articles/mi_m0DTI/is_12_31/ai_111163644 Local computer vendors B2B markets – common meeting point for manufacturers and institutional consumers. Classical example – Farmer’s market

10. DELL Inc – Information Orientation Strong commitment to IT Practices Pre-installing software for Eastman Chemical, maintaining a corporate asset database for innovational support. Integrating supply chain vendors with more precise demand forecast for business process support. Premier Pages – customize, buy and track systems, resolve tech issues for operations support. Strong Information Management practices Restructuring delegates information resources management Central source of information for sales force, tech support and executive management Promoting Information Behavior and Values Internal evangelism campaign – promote and increase awareness of Dell online Educating the sales force

11. Cisco Systems, Inc – Company Profile 52wk range: 17.22 – 24.20 Historical Perspective: established - 1984 Total Employees: 34,000 Splits:18-Mar-91 [2:1], 23-Mar-92 [2:1], 22-Mar-93 [2:1], 21-Mar-94 [2:1], 20-Feb-96 [2:1], 17-Dec-97 [3:2], 16-Sep-98 [3:2], 22-Jun-99 [2:1], 23-Mar-00 [2:1] 23.75 – 68.00 1990-1991 63.63 – 92.87 1997-1998 109.94 – 18.45 2000-2001 24.36 – 17.50 2004-2005 Stock Price Range Year

12. Cisco Systems, Inc - Timeline 1984-- Founded by Len Bosack & Sandy Lerner (computer scientists from Stanford) 1989-- $27M sales with only 3 products and 111 employees 1990-- $69M sales; goes public with market cap of $224M 1994-- $1.13B sales; Cisco goes online with its Cisco Connection Online and becomes the first major supplier of Multiprotocol internetworking products to be awarded ISO 9001 certification 1997-- Cisco reorganizes/aligns products and solutions into 3 customer segments: enterprise, small/medium business, and service provider. 1998-- Cisco becomes the first company in history to achieve a market capitalization of $100B in 14 years. $8.5B in total annual sales. 2000-- $18.9B in sales 2001-- $22.3B in sales 2005-- $23.6B in sales

13. Cisco Systems, Inc

14. Cisco Systems, Inc – Company Comparison 248 35,160 2,948 1,925 34,000 Employees: 12.90% -3.60% 90.50% -25.10% 16.80% Rev. Growth (ttm): 61.74M 10.48B 1.56B 657.95M 23.58B Revenue (ttm): -690.00K 305.00M 177.64M -156.22M 5.39B Net Income (ttm): 39.69% 41.30% 69.27% 37.70% 67.82% Gross Margins (ttm): 101.10M 11.44B 12.30B 1.20B 112.67B Market Cap: Industry NT JNPR COMS CSCO DIRECT COMPETITOR COMPARISON Cisco is the Undisputed Market Leader Master of Network Infrastructure The company on which Internet runs Supplies network equipment to wide-range of industries 85% market share in the Internet switching market

15. Cisco Systems, Inc – Success? Growth Strategy Outsource majority of production Strategic acquisitions and investments in other companies “ Cisco uses the web more effectively than any other big company in the world ” Internet sales (1995) Cisco Connection Online – configure, price, & order Customer support ($600M in savings) Cisco Manufacturing Connection Online (B2B supply chain extranet) Cisco Employee Connection Supply Chain Management Remediation Misled by the system? (2001)

16. Cisco Systems, Inc – Information Orientation “ The Digital Firm” Extensive Internet integration Close supply chain integration with suppliers Precise sales forecast system Strong Information Management practices Reorganization along technology groups Centralized engineering and marketing Future Strategies Growth through hot startup acquisitions New markets Expanded offerings in consulting and software