DELL – DIGITAL FIRM

SUBMITTED BY :
REHAN KHAN
SANA BASHIR SHAH
SHAMAEL.Z.KHAN
SHOAIB SHAMIM
SULAIMAN SHAKIL TAJ
 DELL Inc - TIMELINE
1983-- Michael Dell starts business of pre-formatting IBM PC HD’s on weekends

1985-- $6 million sales, upgrading IBM compatibles for local businesses

1986-- $70 million sales; focus on assembling own line of PC’s

1990-- $500 million sales; with an extensive line of products

1996-- Dell goes online; $1 million per day in online sales; $5.3B in annual sales
1997-- Dell online sales at $3 million per day; 50% growth rate for 3 rd consecutive year, $7.8B

in total annual sales.

2005-- $49.2B in sales

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 DELL Inc – Company Profile
• 52wk range: 32.71 – 42.57
• Historical Perspective: established - 1984

Year Stock Price Range

1990-1991 12.00 – 33.50

1995-1996 77.37 – 61.88 (2:1 stock split on 10/95)

2000-2001 44.06 – 28.50

2004-2005 35.50 – 39.16

• Total Employees: 55,200

Splits:10-Apr-92 [3:2], 30-Oct-95 [2:1], 09-Dec-96 [2:1],

28-Jul-97 [2:1], 09-Mar-98 [2:1], 08-Sep-98 [2:1], 08-Mar-
99 [2:1]

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 DELL Inc – Company Comparison
DIRECT COMPETITOR COMPARISON

DELL HPQ IBM SUNW Industry

Market Cap: 89.29B 60.17B 121.16B 11.79B 112.93M
Employees: 55,200 151,000 329,001 32,600 341
Rev. Growth (ttm): 18.70% 9.40% 8.00% -2.20% 6.20%
Revenue (ttm): 49.21B 81.85B 96.95B 11.20B 116.36M
Gross Margins (ttm): 18.32% 23.87% 37.42% 40.88% 23.94%
Net Income (ttm): 3.04B 3.50B 8.25B 645.00M -153.00K

Above Data shows DELL is a perfect example of a Lean Machine

 Enterprise System: servers, workstations, storage, network products
 Client Systems: notebooks, PC, printing, imaging systems, software and peripherals
 Dell Financial Services (DFS) – joint venture with Citi group

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 DELL Inc – The Success Secret
• Internet coupled with Direct Business Model
- sell directly to end customers instead of intermediate distributors, resellers.
• Virtual Integration
- using sophisticated CRM, SCM systems at respective ends as well their integration
- already integrated with 38 procurement and ERP systems across all its clients
- vendors – Ariba, SAP, PeopleSoft, J.D. Edwards – Dell integrated with their ERP
(Source: Rob Rosenthal, Dell’s B2B web site strategy, October 2003, IDC #30202)

• Selling Points
- Internet, B2B (Premier Pages), Phone-calls, Mass catalog mailings
• Do not Just sell Products – sell Values
- client asked to put tags on their computers
- proactive in solving clients pain points – preloaded software
• Dell was much less mature compare to IBM and HP at time when Internet took off –
required much less effort to adapt its systems to Internet technologies.
• IBM and HP’s core competency was product innovation and development, Dell’s
expertise was in assembling and catering to business needs.

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 Dell Inc – The Success Secret
• Web Penetration rate
- What percentage of users contacted Dell based on information on given pages

• Web failure rate

- What percentage of users contacted Dell because users failed to find their information on
web pages

• Outstanding Question: what will matter most to customers moving forward ?

In IDC opinion:
Introduce solution packages that focus on overall business goals instead of individual products
Introduce configurators for high-end server and storage products

Source: Rob Rosenthal, Dell’s B2B web site strategy, October 2003, IDC #30202

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 Dell business strategy
•Dell’s vision is to “strive to provide the best possible customer experience by offering
superior value; high-quality, relevant technology; customized systems; superior service
and support; and differentiated products and services that are easy to buy and use”.

•The core elements of the strategy which are evident in Dell’s marketing
communications are:
• “We simplify information technology for customers. Making quality personal
computers, servers, storage, and services affordable is Dell’s legacy. We are focused on
making information technology affordable for millions of customers around the world.
As a result of our direct relationships with customers, or “customer intimacy,” we are
best positioned to simplify how customers implement and maintain information
technology and deliver hardware, services, and software solutions tailored for their
businesses and homes.

•We offer customers choice. Customers can purchase systems and services from Dell via
telephone, kiosks, and our website, www.dell.com, where they may review, configure,
and price systems within our entire product line; order systems online; and track orders
from manufacturing through shipping.
• We have recently launched a retail initiative and plan to expand that initiative
by adding new distribution channels to reach additional consumers and small
businesses through retail partners and value-added resellers globally.
• Customers can purchase custom-built products and custom-tailored services.
Historically our flexible, build-to-order manufacturing process enabled us to
turn over inventory every five days on average, thereby reducing inventory
levels, and rapidly bring the latest technology to our customers. The market
and our competition has evolved, and we are now exploring the utilization of
original design manufacturers and new distribution strategies to better meet
customer needs and reduce product cycle times. Our goal is to introduce the
latest relevant technology more quickly and to rapidly pass on component
cost savings to a broader set of our customers worldwide.
• We are committed to being environmentally responsible in all areas of our
business. We have built environmental consideration into every stage of the
Dell product life cycle — from developing and designing energy-efficient
products, to reducing the footprint of our manufacturing and operations, to
customer use and product recovery.
 Internet
customer
Retailers

Traditional
supplier Distributors customer
Retailers (small)

Traditional
Retailers (big box) customer

customer
 Dell Market Structure
Changes Over Time

High Technology Marketing Scott Smith

 OPERATIONS
• All the orders are placed through internet.
• Customization is also done through internet.
• All parts are assembled at one place eg.
Bengaluru in india and then shipped
 Dell Market Coups
• 12 Mhz 80286 Computer doubles • Low and Medium Size Server Market
IBM’s 6 Mhz speed. Analysis 1: Servers have higher margins
Analysis: Technology enthusiast market Analysis 2: Competitors were treating
wanted speed most of all. servers as a cash cow for feeding the PC
• Laptops:Lithium Ion doubles battery life market. Dell entered market at about
Analysis: Laptop owners want long life 20% lower price and told customers
batteries. Dell Tied up whole channel “even if you don’t buy from Dell, ask
by contracting SONY to manufacture. your vendor to match Dell’s price.”
Dell Introduced, chartered plane for Server Dropped 17 percent in one year
reporters and analysts, gave them a and reduced the size of the cash cow
laptop and flew to Los Angles… 4 1/2 for competitors.
yours later, they still had power. Great
PR

High Technology Marketing Scott Smith

 Enter the Web
• Increases Speed to Market
• Speeds Information Flow
• Enables Superior Customer Service.
• Provides a High Quality Product
• Gives Customers Direct Access to Custom Made
Systems for High Performance
• Provides the Latest Technology relevant to that
customer.

High Technology Marketing Scott Smith

 Enter the Web
• Dell Premier Pages:
Technical Support
Diagnostic databases
On-Line Ordering
Special Pricing
• Key: Shrink time and required resources to meet
customer needs.

High Technology Marketing Scott Smith

 Dell flexible computing solution
• Dell’s client computing vision for the enterprise — Flexible Computing — is delivering client computing solutions
that augment our traditional PC offerings and enable IT to navigate their increasingly complex environment. Dell
Flexible Computing Solutions take advantage of advances in network bandwidth, virtualization technologies and
network-based computing to deliver architectures customized to meet the needs of both IT and end users.

• Shifting the Focus

  In today’s IT environment, users tend to be defined by their computing devices and much of IT operations are
focused on managing, securing and ensuring the compliance of these devices. But what if IT could shift its focus
from specific devices to the individuals using the devices?
• Achieving True IT Simplicity
• Dell Flexible Computing solutions are built on our belief that achieving true IT simplicity requires a paradigm shift
from managing an ever-growing number of devices toward managing the end user’s digital identity — the data,
preferences, applications, operating system and associated IT policies that uniquely define the individual. This
shift in focus is a key step toward delivering IT services more flexibly to a variety of client devices. This approach
represents an evolutionary progression toward a ubiquitous computing model in which users can access their
specific corporate resources from anywhere using a variety of devices.
• Balancing Control and Flexibility
• To realize this objective, Dell’s Flexible Computing solutions are designed to provide IT with centralized control of
end-user data and images (or digital identity), while still enabling end-user flexibility to work from anywhere and
eventually on any device.
 CLIENT VIRTUALIZATION
• With virtualization technology firmly established in the data center, there is growing interest in extending
its benefits to client devices. In the data center, virtualization enables server consolidation and is a key
component of emerging dynamic workload balancing and failover solutions. The advantages on the
desktop are equally significant and revolutionary. Client virtualization can help tighten security, increase
control over the client computing environment and expand flexibility.
• Client virtualization partitions familiar hardware assets — such as desktop and laptop computers — into
multiple isolated virtual environments, referred to as virtual machines. As with server virtualization, one
of the many benefits of partitioning can be found in how client devices can run more than one operating
system, isolate applications from one another, and take advantage of new and more flexible computing
models.

There are significant gains in security, control and flexibility in client virtualization that can help
organizations remain ahead of the curve. These gains can substantially increase the value and extend the
life of existing client-side computing investments.
• Separation Brings Security

• Partitioning Increases Control Over Information Access

• Doing More With Less Increases IT Flexibility

 Value Bubble
 ATTRACTION
Dell uses many different areas to attract people to
there site.
• Dell uses television adds and magazines to get the word
out on how easy it is to customize your own computer
on the dell website.
• Uses B2B customers to attract B2C customers and vice
versa.
• Customers are also attracted to the site via the
numerous links that get you there from different places
on the web.
 Value Bubble
• Engaging
– Having many different tabs seamlessly integrated in the
main Dell page allows for customers to not only access the
information they are seeking but to do so easily and in
most cases under two clicks of the mouse.
• Dell Blog
– Used to gather information from the customers directly
• Customers can post pretty much anything they want at the Dell
site using the build in Blog.
• Other areas that engage the customer.
– Search options.
– “My Account”.
 Value Bubble
• Retaining
– Dell targets people that are searching for customization,
which they offer at a level that is not rivaled by there
competition.
– “My Account”
• Allows customers to further customize there shopping experience.
– “My Cart”
• Allows customers to view and modify the items that they are going
to be purchasing.
– The “Track Order”
• Allows customers to track the orders that they have made to
determine the exact delivery date.
 Value Bubble
• Learn
– This is a very important phase for dell because they are
constantly changing based on customer wants and needs
and if they did not gather the proper information from
there customers they would fail.
– They are very good at this phase due to the direct sales
model, which gives them direct access to there customers.
• Information is constantly gathered from the site.
– account information
– Click streams
– Blog information
– Suggestion forms
– Customer service representatives.
 Value Bubble
• Relating
– Dell puts the information that they collect from
various sources into use.
• My Account
– Allows customers to totally customize there shopping
experience and give Dell the chance to show the customer
things they might be interested in.
• Usability information is constantly being checked and
updates are constantly being added to the site.
– With the only presence being an online one the attention paid
to the actual site is crucial.
 Conclusion
• Dell started as a market leader and still retains
that trait in some areas. With there slipping
sales in the U.S. they are being forced to look
at alternative ways of brining revenue to the
company, which is a process that they are
used to. I think that they will continue to gain
market share and continue to be a large player
in the personal computer industry for years to
come.
THANK YOU