Dell Has Plenty to Celebrate

 
 
By Eric Lundquist  |  Posted 2004-05-10
 
 
 

As it happened, I was in Round Rock, Texas, last week on the day Dell celebrated its 20th anniversary. While the company went for a subdued cake-and-conversation event rather than, say, a Tyco-style event with its infamous ice sculpture of Michelangelos "David" pouring (ahem) Stolichnaya vodka into crystal glasses, Dells birthday marked a milestone other companies can only envy. Not only is the companys namesake founder still around and deeply involved in the business, but in its 20 years of existence, the company has changed for the better the way technology is bought and sold.

This was my third trip to Texas in four weeks. The travel was not because I like the Austin area so much (Interstate 35 is one long strip mall, as far as I can tell) or because Ive found a good Scandinavian restaurant in Texas. The trips were part of the development for this weeks Dell package, which includes an interview with Michael Dell and a company profile.

Whats been the biggest surprise for Michael in his journey from a 19-year-old cobbling together Intel 286-based boxes running DOS 3.0, hoping publications such as PC Week (which also started in 1984) might review his product, to the 39-year-old listed by Fortune magazine as the richest person in the United States under 40 years old? "Actually, the whole thing is pretty surprising," Dell said.

Id have to agree. Perhaps what is most surprising has been the predictability of the companys advance. Unlike Google—which is secretive to the point of paranoia about its computer architecture or its next move into the Internet application space—Dell is straightforward. When the marketplace hits an inflection point characterized by a combination of standards adoption and customer demand, the company applies its direct model of distribution combined with its manufacturing muscle. The result is a marketplace that gets "Delled," a term that has come to describe a vendor getting caught between a customer base expecting lower and lower prices and a vendor cost structure that has no breathing room.

In a series of interviews at the companys Round Rock headquarters, it was clear that the number of market segments being teed up for a Delling is increasing. At the high end, agreements with SAP and Oracle raise the possibility of the Dell effect reaching into application areas that were traditionally the home of well-paid consultants charging much but offering little. At the low end, Dell is determined to give the printer and consumables business a work-over in the most profitable area for Dell competitor Hewlett-Packard.

Recently, I wrote a column calling Dell to task for not taking on more of a leadership role in the industry. I said the company should be more forthcoming about product directions and make sure it takes care of customers while pursuing new ones. That column seemed to get them a bit riled in Round Rock, but to its credit, Dell—since its inception, when Michael started the company with just $1,000—has tended to take complaints as opportunities.

Dell contends its scalable enterprise strategy is the only one in the world of utility and on-demand computing that actually has real products attached to the concept. The scalable enterprise strategy, in my understanding, works something like this: You buy Dell server hardware, and when you run out of capacity, you buy more hardware that is already configured and works with the stuff you previously bought. Compared with descriptions of utility computing and the adaptable enterprise, the scalable definition is easy to understand, can be delivered and works. That is indeed a breakthrough.

The company feels it has a closer relationship with its customers than any other vendor. When (and if) the demand for Linux on the desktop or AMD processors hits that magic spot on the companys S-curve chart, where market hype meets customer demand, Dell will be there.

AMD CEO Hector de Ruiz thinks Dell will ultimately support AMDs 64-bit processors. Click here to read the story.

My grumbles aside, going from $1,000 to more than $41 billion in 20 years is a remarkable achievement in the technology industry—or in any other industry, for that matter. I would have even been willing to have some of that birthday cake if I didnt have to head down I-35 one more time to make the flight back to Boston.

Editor in Chief Eric Lundquist can be contacted at eric_lundquist@ziffdavis.com.

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