Dell Computer Corporation was founded in 1983 by Michael Dell to sell customized IBM-compatible computers directly to customers. Dell grew rapidly using a direct sales model that eliminated middlemen. In the early 1990s, Dell entered the portable computer market but faced early setbacks including quality issues and the discontinuation of a laptop line. Dell reorganized its portable division and debated whether to use newer lithium-ion battery technology or stick with older nickel-hydride batteries for its products. By 1993, increased competition in the PC industry led Dell to report its first quarterly loss in years.

1. PRODUCT
DEVELOPMENT
AT DELL
COMPUTER
CORPORATION
GROUP 7

2. About DELL computer corporation
Background
Michael Dell founded Dell in 1983 by updating IBM-compatible computers with cutting-edge peripheral and CPU
technology at a reasonable cost. Mr. Dell dropped out of school at the conclusion of the year to pursue his local
company. He sold $180,000 in personal computers in the first month.High growth rates and excellent margins fueled
internal expansion, allowing the company to handle orders of up to a hundred computers at a time.In 1985, he achieved
$6 million in sales and established his own brand of personal computers.
Business Model
Getting rid of middlemen - offering personalised products to clients directly through mailDirect marketing employs both
home-based and field-based telephone agents.Extensive pre-testing-customized configuration details demanded by
clients are ensured, and quality checks are performed at multiple lines during the assembly line production process.A 24-
hour telephone tech support service capable of diagnosing and resolving 90% of customer problems.Maintains a
month's supply of components to assure timely delivery.

3. Personal Computer Industry
● Charles Babbage created the first digital computer in the 1830s.
● The microcomputer revolution began in the 1970s, resulting in smaller computers.An electronic magazine
advertised a printed circuit board in July 1974.
● Following the introduction of computers such as the Mark 8 Computer, the market for smaller computers
developed.
● Apple Computer, a California-based company, successfully popularised an intuitively simple-to-use interface in
the late 1970s and early 1980s.
● Apple's engineers set the technological pace by packing as much new technology as possible into their
devices.
● Only a few major companies, including as Texas Instruments and Zenith, first joined the commercial portion of
the microcomputer industry.

4. Portable Computer Industry
In 1981, Osborne released the first portable computer. The majority of them weighed more than 20
pounds and were referred to as luggables
Gross margins: 3% to 5% higher than desktops because of their mobility.
Many firms started entering the market indicating that growth was expected
Portable computer development was based on a number of technological advances, including: flat
liquid crystal display screens developed in Japan that required significantly less space than
conventional cathode ray tubes, energy-efficient compact hard drive discs, and improved battery
technology that allowed for more than an hour of operation before requiring recharging.
Portables required less hardware customization than desktops. Laptops, on the other hand,
frequently had more feature differentiation than desktops
In 1993, portables were classified as laptops if they weighed between 4.5 and 8 pounds, sub-
notebooks if they weighed under 4 pounds.

5. Product development at Dell
● Planning phase: thorough business case for the product.
● Profile phase: two to three page product features guide where product and market definition are given. It
assures that the product developer paid adequate attention to commercial concerns.
● Product development planned, produced, and tested working prototypes of the proposed product throughout
the implementation phase.
● The prototypes are delivered to key clients for input throughout the qualification phase.
● Launch Phase: At the end of this phase, production is scaled up and early customer shipments are made.
● Acceptance phase: Gathering user input on the product for up to three months following its release.

6. Early Setback
● Dell released their first portable computer series in 1991.
● When portables accounted for 17% of Dell's sales in 1992, reports arose concerning quality issues ranging from
defective battery packs to unreliable displays to frequent power outages to broken hinges.
● Dell discontinued a new line of laptops under development in early 1993, in what was shaping up to be the
company's annus horribilis, since they were regarded too sluggish and pricey.
● Following a write-off of $20 million in associated charges, the portables division was reorganised.According to
one Dell insider, the company's portable division suffered from "severe underinvestment" and a "shrunken
desktop attitude.“
● Meanwhile, competitors reported excellent portable sales. Dell went on to report a second-quarter loss of $75.7
million.

7. • Maintain a tried-and-true battery technology (NiHi).
Use the latest battery technology (LiOn)Postpone your commitment to either
battery technology.
The team "overdesigned" the battery compartment and the remainder of the
device.Adopt a "dual path" strategy in which two distinct products are produced
independently.
Which Battery?

8. The October Meeting
Suggestions for discussion:
If you can't afford the risk of delivering one bad product after another, stick with NiHi.
LiOn is required to provide value to the full line.
Need for new technology to increase market share -> Include LiOnWorst case scenario, if LiOn
does not function, we will revert to NiHi and lose some internal space -> Postpone the
decision.Dell has a strong commitment culture, and postponing decisions will not help.
LiOn is a cool technology -> Choose LiOn.
Solution:
The LiOn should be used by the firm.
Reason: The PC market is fast-paced;
if we make a mistake, it would be difficult to recover.
More in favour of LiOn
If the first attempt fails, there is an option.

9. Dell Computer Stumbles
● Dell's success spawned imitators such as Gateway 2000 and CompuAdd in 1990, which
benefited from minimal overhead through mail order sales.
● IBM and Compaq both announced intentions to join the direct mail order sector. Compaq
triggered a pricing war by proposing a 30% price increase.
● As competition increased, Dell attempted to enter the retail industry in order to gain small
consumers.
● Dell was caught off guard by the quick speed.In 1993, after 14 straight quarters of growing
profitability.

10. Thankyou !