”Dude!” exclaimed last week’s Fortune magazine cover, ”Dell’s No 1”. The PC manufacturer named after its 40-year-old founder, Michael Dell, has become America’s most admired company, ahead of General Electric, Starbucks and Wal-Mart.
It’s a remarkable story. Dell started building PCs while in college, dropped out, and built a world-beating corporation from nothing.
At the time, way back in 1984, IBM and Hewlett-Packard were America’s most admired companies: they were first and third, according to Fortune. The personal computer industry’s giants were IBM, Apple and Tandy, while Commodore and Atari dominated the home market.
As we know, Dell was a huge success. At 27, he was the youngest chief executive to take a company into the Fortune 500, and today, Dell has 33,1% of the US PC market, ahead of HP (19,5%), Gateway (5,3%) and IBM (4,7%). This is remarkable when you consider the consolidation of top five players — HP now includes Compaq, while Gateway includes eMachines — and that IBM has sold its loss-making PC business to China’s Lenovo.
What’s even more remarkable is that Dell builds most of its PCs in the US, rather than using contract manufacturers in Taiwan or China. Indeed, Dell has started building another new factory in the US, in Winston-Salem, North Carolina — an area hit by the decline in RJ Reynolds’ cigarette business.
And Dell feels the company still has a long way to go. It sells one in three PCs in the US but only one in six of the PCs sold worldwide, so there is room for expansion. Most Dell PCs are sold to businesses, with less than 10% going to consumers, so that’s another opportunity. Dell is also expanding into new areas.
Until recently, Dell was mainly a desktop PC manufacturer, but is now doing well in notebooks, and it can build you a supercomputer. It has also added servers and storage systems, services, printers, handheld computers, MP3 players and flat screen TV sets, among other things. As Dell’s chief executive Kevin Rollins told Fortune, Dell is the underdog in all these areas and this keeps everyone motivated: ”Gotta struggle, gotta change, gotta do things for the customer.”
This is bad news for many companies, and especially for HP, which dominates the printer market and, thanks to Compaq’s ProLiant range, leads in server volumes. But Dell is growing its PC server business, and claims it already has about 20% of the US ink-jet printer market. That probably puts it ahead of Lexmark, Epson and Canon in this area.
Dell doesn’t make its own printers — most are rebadged from Lexmark, an old IBM spin-off company — and it also outsources the manufacturing of other products, or buys in known brands. As a result, Dell is changing. It has been an amazing manufacturer, but now it needs to become an amazing retailer with excellent ordering, fulfilment and support.
If you thought of Dell as just a PC manufacturer with a website, try thinking of it as being more like an Amazon with super-efficient factories. – Guardian Unlimited Â