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Dell Inc. is an American privately owned multinational computer technology
company based in Round Rock, Texas, United States, that develops, sells, repairs
and supports computers and related products and services. Bearing the name of
its founder, Michael Dell, the company is one of the largest technological
corporations in the world, employing more than 103,300 people worldwide.3
Dell sells personal computers, servers, data storage devices, network switches,
software, computer peripherals, HDTVs, cameras, printers, MP3 players and also
electronics built by other manufacturers. The company is well known for its
innovations in supply chain management and electronic commerce, particularly its
direct-sales model and its "build-to-order" or "configure to order" approach to
manufacturing¡ªdelivering individual PCs configured to customer specifications.45
Dell was a pure hardware vendor for much of its existence, but a few years ago
with the acquisition of Perot Systems, Dell entered the market for IT services.
The company has since made additional acquisitions in storage and networking
systems, with the aim of expanding their portfolio from offering computers only
to delivering complete solutions for enterprise customers.67
Dell is listed
at number 51 in the Fortune 500 list.8 In 2012 it was the third largest PC
vendor in the world after HP and Lenovo.9 Dell is currently the #1 shipper of PC
monitors in the world.10 Dell is the sixth largest company in Texas by total
revenue, according to Fortune magazine.11 It is the second largest non-oil
company in Texas ¨C behind AT&T ¨C and the largest company in the Greater Austin
area.12 It was a publicly traded company (NASDAQ: DELL), as well as a component
of the NASDAQ-100 and S&P 500, until it was taken private in a leveraged buyout
which closed on October 30, 2013.
Dell had a reputation as a company that
relied upon supply chain efficiencies to sell established technologies at low
prices, instead of being an innovator.25253637 By the mid-2000s many analysts
were looking to innovating companies as the next source of growth in the
technology sector. Dell's low spending on R&D relative to its revenue (compared
to IBM, Hewlett Packard, and Apple Inc.)¡ªwhich worked well in the commoditized
PC market¡ªprevented it from making inroads into more lucrative segments, such as
MP3 players and later mobile devices.29 Increasing spending on R&D would have
cut into the operating margins that the company emphasized.4 Dell had done well
with a horizontal organization that focused on PCs when the computing industry
moved to horizontal mix-and-match layers in the 1980s, however by the mid-2000
the industry shifted to vertically integrated stacks to deliver complete IT
solutions and Dell lagged far behind competitors like Hewlett Packard and
Oracle. 33
Dell's reputation for poor customer service, since 2002, which was
exacerbated as it moved call centres offshore and as its growth outstripped its
technical support infrastructure, came under increasing scrutiny on the Web. The
original Dell model was known for high customer satisfaction when PCs sold for
thousands but by the 2000s, the company could not justify that level of service
when computers in the same lineup sold for hundreds.38 Rollins responded by
shifting Dick Hunter from head of manufacturing to head of customer service.
Hunter, who noted that Dell's DNA of cost-cutting "got in the way," aimed to
reduce call transfer times and have call center representatives resolve
inquiries in one call. By 2006, Dell had spent $100 million in just a few months
to improve on this, and rolled out DellConnect to answer customer inquiries more
quickly. In July 2006, the company started its Direct2Dell blog, and then in
February 2007, Michael Dell launched IdeaStorm.com, asking customers for advice
including selling Linux computers and reducing the promotional "bloatware" on
PCs. These initiatives did manage to cut the negative blog posts from 49% to
22%, as well as reduce the "Dell Hell" prominent on Internet search engines.
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