How Direct to Customer Approach was Instrumental in Dell’s Success?

Among the many success stories of the 20th Century, one story which stands out belongs to Dell Computer. It was started in 1984 by a college student Michael Dell. This computer company went on to become one of the computer giants in the 21st Century. Dell could have been just another tech giant like many others. To understand why it stands out today is because of Dell’s mission statement and the history of its founder and entrepreneur, Michel Dell.  

How was the Dell brand founded?

Born to a Jewish family, Michael Dell always wanted to be a businessman as both his parents were business owners. He started pretty early pursuing the same. He tried to fast-track his business by applying for high school exams when he was only eight years. He did not pass, but by the age of 15, he had already bought an Apple II computer. He opened up the computer just a few days after buying it to see how it works. When Michael Dell was in high school, he already started a small business.

As a University of Texas student, he started making software and computer upgrades in his dormitory room. 

He aimed to use stock components and make computers that were IBM PC compatible. He then got a contract with the Texas Government outbidding established competitors, which was huge at that time. Dell did not complete his college education to focus full-time in business after getting seed capital of $1000 from his family. This was the year 1984. 

Dell started selling personal computer systems directly to customers, including people he knew in college. His firm, PC’s Limited, focused on understanding customer’s needs and provided effective computing solutions to them. In the first year of business in 1984, Dell achieved $6 million in sales. Dell then created a 12-Megahertz 286 processor, which was the fastest PC in 1986. This product competed favorably in terms of price and performance with IBM and became a massive success in the market. By 2000, Dell was already operating in 34 countries with an employee base of 35000+. In 2001 it became the largest PC maker surpassing Compaq Computer. The company’s direct-to-customer business model has been the key to its consistent growth and success. 

History and growth of Dell Inc.

The firm PC’s Limited changed its name to Dell Computer Corporation in 1987, and the very next year, it went public. Dell shares were sold for $8.50, and the company raised $30 million in the IPO. Michael Dell was the youngest CEO at the age of 27 in 1992 and was named in the Fortune 500 Company. In the year 2004, Michael stepped down from the role of CEO of the company he started two decades ago.

After his departure, Dell Inc went through a series of challenges and setbacks, losing out to rival and the world’s largest PC manufacturer at that time, Hewlett and Packard. Michael Dell was recalled as CEO in2007. He started his second innings overhauling the business model and diversifying into other products such as computer storage devices, servers, networking equipment, etc.

In 2013. Michael Dell bought out the company from the investors and made it a private company. Later in 2015, Dell acquired EMC Corp for $67 billion, making it the largest acquisition of a technology company. The very next year, he merged Dell, EMC, and VMware into a new unified company known as Dell Technologies.  

Dell Technologies went back to the public and listed itself on the New York Stock Exchange in 2018. Today, the market capitalization of Dell is $75 Billion, and Michael Dell’s net worth is $45 billion. 

Dell computers global reach and online marketing strategies 

Dell Technologies has reported $92.20 billion in revenue in 2020 and a net income of $5.50 billion. Presently, it employs around 1,65,000 people across 326 office locations in 70 countries. It is headquartered in Texas.  

Dell products are sold online and retail outlets like Staples, Wal-Mart, and its own e-commerce site Dell.com. Dell is a pioneer in e-Commerce, having started an online platform in 1996. In 1997 it sold $ 1 million worth of equipment daily, which set the bar high for coming years. In 2007, Dell was the fourth largest e-commerce site in the US, notching up $ 4.20 billion in sales. By 2017, Dell had the third-largest market share in e-commerce, shipping $ 40.70 million worth of Dell products. 

Dell had already started focusing on its e-Commerce business a decade ago. Its online marketing strategy meant reaching out to loyal and potential customers. The digital marketing effort clicked with mobile phone campaigns and Twitter marketing for sales and discounts. The Twitter campaign alone earned the company $1 million in revenue. 

The success of Dell was Technology was attributed mainly to delivering the best customer experience. By doing so, Dell met customer’s expectations through the highest product quality, leading technology, competitive pricing, and excellent after-sales customer service. 

Dell investments and Philanthropic work

Michael Dell founded MSD Capital in 1999, a private investment firm that manages his family’s wealth. As an investor, he also made investments in other businesses, including Domino’s Pizza, CalvinKlein, Applebee’s, etc., through the MSD capital. 

In 1999, Michael Dell founded Michael & Susan Dell Foundation with his wife 1999. The philanthropic organization works towards healthcare, children’s education, and economic stability. The foundation has committed $1.20 billion since its inception. In 2020, it gave $ 100 million towards corona relief aid to small businesses. 

Awards and Recognition 

• Michael Dell got the entrepreneur of the year awards in 1989 at the age of 24
• In 2002, Michael Dell received an honorary doctorate in economic science from the University of Limerick for his generous donations towards educational initiatives in Ireland.
• Named as CEO of the year in 2001. Youngest to receive the award along with Bill Gates. 
• Worked on many advisory boards such as the U.S. President’s Council of Advisors on Science and Technology, International Business Council, Indian School of Business in Hyderabad, India, and the U.S. Business Council.
• He is ranked as the 30th richest person globally on the Forbes list.

Michael Dells Success History 

Conclusion 

In the first 20 years of its operation, Dell’s successful business story was attributed mainly to avoiding intermediaries and cost reduction in advertisements. Plenty of resources were saved, which added to the profitability. In those days, a competitor like IBM, Compaq, sold computers through distributors and retailers. Dell sold directly to its customers. The modus operandi surprised successful businesslike and Wal-Mart.