Other Free Encyclopedias » Online Encyclopedia » Encyclopedia - Featured Articles » Contributed Topics from A-E

Dell, Michael - Overview, Personal Life, Career Details, Social and Economic Impact, Chronology: Michael Dell

computer company business million

(1965-)
Dell Computer Corporation

Overview

Michael Dell started his company, Dell Computer Corporation, when he was a college freshman in 1984. By the early 1990s, the company had exceeded $500 million in annual revenues, and Dell had become the youngest CEO of a Fortune 500 corporation. Although he experienced troubled times in 1993, he developed new corporate strategies, and by 1997 he was predicting that his company would lead the personal computer industry by the year 2000.

Personal Life

Dell was born in Houston, Texas, in February 1965, the son of Dr. Alexander Dell, an orthodontist, and his wife Lorraine, a stockbroker. In October 1989, Dell married Susan Lieberman, a commercial leasing agent. The couple have two children. At one point, Dell would often tell his employees that his daughter’s first words were a plea to beat the competition: “Daddy, kill Compaq. Daddy, kill IBM.”

When Michael Dell was only eight years old, he sent off for information on a high-school equivalency diploma, hoping he could avoid putting in a full 12 years in school. His parents, however kept him in school and later sent him to the University of Texas at Austin, hoping he might become a doctor. With his fledgling computer company (which he operated from his dorm room) making $80,000 a month, however, he had other plans. After his freshman year, he told them he wanted to spend the summer working in his business, and if things did not work out with his venture, he would return to school. He never went back.

If there is such a thing as a born entrepreneur, Dell surely is one. When he was only 12, he made $2,000 through a stamp and baseball card trading enterprise that he operated through the mail. In high school, as a newspaper delivery boy for the Houston Post, he aggressively sought out new subscribers by obtaining mailing lists of newlyweds, then sending them a trial offer of two weeks’ free service, which he then followed up with phone calls. The extremely enterprising young man made over $18,000 this way, which he used to pay cash for a fully loaded BMW—even though he was not yet able to drive.

This period in his life is also when Michael Dell discovered computers and found that he enjoyed taking them apart and putting them back together. He soon realized that he could make money by adding components to units and selling them for a profit. Soon he started doing business through magazines, as he had earlier operated his stamp and card trading business. In college, he operated his business out of his dorm room, which irritated his roommates so much that they barricaded his door with piles of his computer equipment.

Career Details

Soon after he left the University of Texas in the summer of 1984, Dell incorporated his company, PCs Unlimited, and began operating out of a storefront. The company marketed equipment made by such computer companies as IBM and Compaq, to which they added various features. By early 1985 it had 30 employees, and in July 1985 introduced its own model, the Turbo PC. He borrowed money from his family, but soon repaid it as his company grew to annual sales of $30 million. In 1987, PCs Unlimited became Dell Computer and in 1988, Dell began selling stock. Its sales that year reached $159 million, and by 1993, the figure was $2 billion. Then came a period of challenge and a slump in stock prices, prompting Dell to change his strategy. In 1994, the new Dell Latitude XP laptop model was launched and confidence in the company soared. From 1990 to 1997 Dell’s stock has increased by 20,000 percent, from $0.39 to $80.00 a share.

Michael Dell has played a great deal on his image as a “whiz kid,” but the 1993 downturn showed the Dell Computer leadership that it was time to adopt a new corporate attitude to replace the brash image that had attended the company’s beginnings. Dell was a billion-dollar company, and it had grown big and unwieldy. Before Dell suffered the fate of other pioneers who have lost control of their own companies, he brought in a number of older executives with proven records, reorganized operations, and put his CEO Mort Topfer in charge of running Dell on a day-to-day basis. Dell recognized that his own strengths lay in maintaining an eye on the company’s overall vision, rather than specific details.

Among the most successful strategies employed by the Dell Computer Corporation is the direct-sales model, which provides a made-to-order personal computer that is shipped within 36 hours. Customers can place orders by calling a toll-free number or by logging on to the company’s web site, where models can be customized on-screen, priced, and ordered with a credit card. To ensure timely shipping, Dell maintains close relationships with suppliers, some of whom have built new facilities near Dell headquarters outside of Austin, Texas. According to an April 1998 article in InternetWeek, “The combination of direct sales and the Internet have made Dell Computer a fierce competitor that has kept heavyweights like Compaq and IBM scurrying to keep up.”

Dell’s sales strategy has been to market to large corporations and computer enthusiasts rather than to first-time buyers, reasoning that a consumer is a first-time buyer only once. Among its largest customers are Shell Oil, Boeing, and Toyota. Another aspect of the company’s business success stems from the fact it only manufactures units it has already sold. Therefore, it maintains no inventory and is free of storage and other overhead costs associated with maintaining a large warehouse stock.

Social and Economic Impact

In 1991 Michael Dell said that he hoped to make his company a billion-dollar-a-year enterprise, a goal he has surpassed significantly. In September 1997 Andrew E. Serwer asserted in Fortune that “Dell Computer has become the driving force in the PC business.” By fiscal 1998 Dell’s revenues topped $12 billion, according to InternetWeek, which also reported the company’s income at $944 million for the same period. Dell has also announced that he hopes to remain CEO for the next 60 years, and his 1993 reorganization helped to ensure that he would maintain power. Describing the position of Dell Computer in the year 2000, Dell told an InternetWeek interviewer, “We don’t want to be all things to all people. We only have six percent of the PC market share. Some analysts have said that by growing at 40 percent a year for five years, we’ll have 12 percent share. That would be a good position to be in.” He has said that he is not afraid of dire predictions that the personal computer market will be saturated, since his focus is on repeat rather than first-time buyers.

Chronology: Michael Dell

1965: Born.

1984: Founded Dell Computer.

1988: Took Dell Computer public.

1990: Named “Entrepreneur of the Year” by Inc. magazine.

1992: Became the youngest CEO ever to make the Fortune 500.

1993: CEO of the Year, Financial World magazine.

The success of Dell Computer has brought numerous awards and distinctions to founder Michael Dell, including an Entrepreneur of the Year citation from Inc. magazine in 1990. In addition, he was named “Man of the Year” by PC magazine in 1992 and “CEO of the Year” by Financial World in 1993. Dell is also the richest man in Texas with earnings of up to $10 million a day. Comparing his own success with that of Dell, whose company is an important Microsoft customer, Bill Gates noted in Fortune, “We have both stuck with our convictions, and learned from our mistakes Michael has the same passion for the industry I do.”

Deloney, Thomas (156?–1600) - BIOGRAPHY, MAJOR WORKS AND THEMES, CRITICAL RECEPTION [next] [back] Dell - History

User Comments

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or

Vote down Vote up

over 4 years ago

can not find what i am looking for

Vote down Vote up

about 1 month ago

This is interesting but I can't find the information I am looking for. How does Michael Dell influence others?