Dell: Triumphs and Challenges

 
 
By eweek  |  Posted 2002-10-21 Email Print this article Print
 
 
 
 
 
 
 

DEll's customers may need the company's guidance to exploit the next generation of computing.

Its becoming routine: while the majority of it hardware vendors announce losses, mask weak sales, merge or get out of the business, Dell announces strong sales growth. The company did that two weeks ago when it announced that revenues would be up 22 percent over the same quarter a year ago.

Since its founding a little more than 18 years ago, the company that now ranks 53rd on the Fortune 500 has sought to sell standards-based equipment of high quality at a low price. When Chairman and CEO Michael Dell addressed the recent Gartner Symposium in Orlando, Fla., he said that approach was part of the companys "DNA." If Dell has succeeded where others have failed, its because it has remained true to its DNA—it has never tried to be something it is not, despite the recurrent prodding of kibitzers in the analyst community.

Now, however, Dell is embarking on new initiatives that look on the surface to be fundamentally different from "Dell DNA" sorts of things: embracing Linux, preparing to make handhelds, entering the printer market, selling "white boxes" through the channel, building a services business and not toeing the Intel line when it comes to processor direction on Itanium.

But Michael Dell assures us theres no deviation from the corporate genome. All these initiatives are in response to customer demand, Dell told us in an interview (see Cover Story, Page 19). Indeed, Dell has been responding to customer demand since he began taking orders for PCs that he assembled in his dormitory room at the University of Texas two decades ago. And were sure the companys close monitoring of its customers wishes has led to its new business directions.

So whats not to like? Sometimes, companies can get into trouble solely following customer dictates; sometimes, customers dont really know what they want; sometimes, they need guidance and leadership from their vendors. This involves risk—a risk that Dell has largely avoided so far.

Even if now is not the time, there will come a time when Dells customers will need Dell to lead them to the next generation of computing. For Dell, the challenge will be in responding to that need, just as it has so far responded magnificently to their needs for high quality, good service and low price.

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