Dell Evolution Dell Strategy Past to Present

1. Dell EvolutionDellStrategy Past to Present

2. Agenda • Strategy • Dell Direct Model • Dell.com • Dell Embracing the Chanel • Creating Global Business Units • The New Dell

3. What is Strategy? “The determination of the basic long-term goals and the objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals." Chandler, 1962, Strategy and Structures: Chapters in the History of the Industrial Enterprise, MIT Press, Cambridge, Mass) However, “You learn the most when you make mistakes. There is no such thing as a perfect plan. Talk about what is not working and move quickly to fix it as soon as you find it,” Michael Dell Source for Michael Dell quote: http://onedellway.us.dell.com/blogs/gcn/archive/2011/11/11/michael-dell-opens-e-amp-y-strategic-growth-forum-2011-a-conversation-with-charlie-rose-on-nov-9-2011-palm-springs-calif.aspx

4. Strategy to Execution Vision Mission Values ELT Strategy Objective Change Initiatives Planning Sales Front Office Manufacturing Customer Support Back Office Demand Supply IT Finance Marketing & Product Development HR Information & Communication Flow

5. Dell Direct

6. Dell Direct Model

7. Build to Order Cost Benefits Components Purchase Cost Product Assembly Cost to Competitors Customer Places Order Shipment to Distributor Manufacturer’sInventory Shipment to Reseller Cost advantage Dell Procures Components, Assemblesand Ships Channel Inventory Dell Cost 8 Weeks Ago 6 Weeks Ago 4 Weeks Ago 3 Weeks Ago Today Time Customer Benefits ConsistentSupplyGlobally Immediate Response to Customer Needs LowestCost Consistently

8. Dell.com

9. 2008 Dell.com - A Brief History • 1994: Launched as internal tech support site • 1996: Became commercial site with limited product set • 1997: Reached $1M/day in revenue • 1999: 1st Content Publishing capability • 1999: Accounted for 50% of Dell Revenue • 2000: Re-platform to VB and J++ • 2001: Online technical staff moved into IT • 2002-3: New content publishing system • 2003: Code re-written to .Net, consolidation onto global code base • 2005:Widespread AJAX implementation • 2009: Completed widespread globalization • 2010+: Radically improve Customer Experience 2001 1996 2003 2007 2006 2011 1999

10. Dell Online Today Online: Dell.com + Premier + Global Portal + B2B + Channel Portal + eSupport + Community 725K B2Btransactionsper year 34 supported languages Googled 1M timesper day 170M visitsto community properties 150M online resolutionsvia eSupport per day 1Bvisits per year to Dell.com 58Kchannelpartnersonline 13Bpage viewsin FY’09 An online orderis placedevery2 seconds 190KPremierPages

11. Dell Embracing the Channel

12. Direct vs. Indirect Model • High costs of demand generation (marketing, sales force, after sale support etc.) • Higher transportation costs • Supply chain management and cost • Customer has to wait for product • Too complex for non expert customers • No ability to see or touch product if selling via net or phone • Direct contact with customers • Ability to provide customized products (build-to-order) • No need to share margin Indirect Model Direct Model • External sales force, marketing • Easier coverage of new / minor markets (sales force, customer preferences, market restrictions etc.) • No need to have too diverse product portfolio • Ability to provide a solution or consultancy • Customer can see or touch product • Lack of contact with end user • Supply chain management • Risk that reseller will not know the product portfolio well • Risk that reseller will prefer to sell competitor’s products (on shelf placement etc. • Need to share margin

13. Dell Approach • 1984-2006 • Pioneered direct model • Extreme growth, 2003 No.1 in PC market • Indirect business not addressed specifically • Changes on IT market in 2005/6 • June 2007 • 2008 - Now • “Direct model has been a revolution but it is not a religion” Michael Dell • Expansion into Indirect (Channel) business • Global Commercial Channel • Consumer Retail • New Dell : E-Dell, BVS, Client Reinvention

14. Dell Approach – Global Commercial Channel Premier Partners Registered Partners Preferred Partners • Entry program for most partners • Grants access to Dell’s partner portal and customer support • Access to trainings and certifications • Assigned account manager • Better return and payment conditions • Requires Dell certifications and minimal revenue threshold • Highest level of support from Dell • Requires two or more Dell certifications and higher revenue threshold than Preferred Level of Cooperation

15. Creating Global Business Units

16. Dell Organization Based on the Customer Consumer SMB Large Enterprise Public End User Computing Solutions Enterprise Solutions Overlay solution groups to drive strategy Services Corporate/Shared (Supporting Functions) Dell strategic business units (SBU’s) aligned to customer segments

17. Regional Structure to Global SBU’s “We have laid the foundation for the transition from a global business that's run regionally to businesses that are really globally organized.” Michael Dell After • Global business structure • Lower complexity • Simplified hierarchy Before • Regional business structure • High reporting complexity • Complex Internal Tree Source of quote: http://www.itexaminer.com/dell-implements-restructuring-plan.aspx

18. The New Dell

19. Major IT Trends Enterprise Consumer • Ubiquitous computing • Always On connectivity • Anywhere Anytime mobility • Mobility • Increasing IT Complexity • Cloud Computing • Large Data Analytics Rapidly increasing storage requirements, services instead of in-house solutions Rise of Smartphones, Tablets, Ultrabooks and Cloud Services Total Industry Trends BRIC country IT market growth, Consumerization of IT – change of traditional work/life patterns

20. Dell’s Growth Strategy Solutions that drive efficiency and flexibility for the virtual era Efficient IT Solutions End-User Computing Enterprise • Next Gen Computing Solutions & Intelligent Data Management • Virtualization • vStart • AIM Systems Management • Modular Data Centers • Networking Fluid Data Architecture • SAN & Scale-out NAS • Deduplication • Services, Security • & Cloud • Multi-vendor support • BPO & applications • IT infrastructure outsourcing • Security & cloud • ITaaS, SaaS, PaaS • End-User Computing • Flexible & optimized value chain • Mobility solutions • Tablets & smartphones • Desktop Virtualization 20

21. Dell’s Leadership in the Virtual Era Key designtenets Open Create Manage Capable Affordable Services, Security, Cloud End-user computing Next generation computing solutions and intelligent data management Deliver 21

22. Dell Customer Perception Evolving… • Technology • Enterprise Services • Data center Followers • Efficient • Reliable Low quality Bad service Crap • Meets my needs • Customers PC provider customization • Mobility Laptops • Thought leader • Solutions Good Computers Dude Innovation • Best customer service Reliable Desktops • High quality • Innovative • Virtualization Poor quality Service • Outcomes Affordable OK Old Services Quality Good • Cloud • Services Followers Great Home • Infrastructure Inexpensive Value • IT leader Manufacturer • Smartphones • Trustworthy • PCs Cheap • Tablets Present Future

23. Key Takeaways • Dell has adapted its strategy to better serve customers several times throughout its history • Examples presented in this session include: • the Direct Model on which the company was founded • Leadership and pioneering in E-Commerce (Dell.com) • Embracing the channel – revisiting the direct model • Creation of global SBU’s aligned to customer segments • The strategic shift happening now is the transformation of Dell into an end-to-end solutions provider.