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DELL

DELL. Michael Dell the Henry Ford of the Information Age. Group B 13 Masato Shirai Andrea Tellarini Vasilis Kykrilis Gabrielle Ng Matthias Kuhn. Dell’s history. 1984 - Michael Dell founds Dell Computer Corporation

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DELL

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  1. DELL Michael Dell the Henry Ford of the Information Age Group B 13 Masato Shirai Andrea Tellarini Vasilis Kykrilis Gabrielle Ng Matthias Kuhn

  2. Dell’s history 1984 - Michael Dell founds Dell Computer Corporation 1985 - First Dell designed PC is introduced: the Turbo, featuring Intel 8080 processor 1987 - Dell is first PC company to offer next-day, on-site service Subsidiary in United Kingdom opened 1988 - Organization around customer segments IPO 1990 - Manufacturing center in Limerick, Ireland 1991 - Dell’s first notebook PC

  3. Dell’s History 1993 - Dell among the top-five PC makers worldwide Subsidiaries in Australia and Japan mark entry into Asia-Pacific market 1996 - Manufacturing center in Penang, Malaysia Launch of dell.com Dell added to S&P 500 index 1997 - Introduction of first workstation systems 1998 - Manufacturing center in Xiamen, China First enterprise storage product

  4. PERSONAL COMPUTER SERVERS WORKSTATIONS STORAGE CONSUMER ELECTRONICS Product Segmentation

  5. Personal Computers Laptops and desktops constitute core products 80% of sales in 2003 • Direct Sales Key strategy • Aggressive Price Cut Implications • Market share growth • Brand Awareness

  6. Workstations Enterprise and medium business segment Key strategy • Powerful • Cost Effectiveness based on Windows usage Implications By 2000 Dell was the US and worldwide leader of in Windows NT workstations

  7. Servers Enterprise and medium business segment Key strategy • Open architecture system • Entry-level servers Implications By 1999 Dell gained 12% of sales

  8. Storage Enterprise and medium business segment Key strategy • Linux • Alliance with EMC • Standardisation Implications Broader target market including small-medium business

  9. Consumer Electronics Individual Consumers Key strategy • Narrow range of standardized products closely integrated with computer technology • Direct Sales Implications Challenge for the future – The biggest test of the Dell business model

  10. Customer Segmentation RELATIONSHIP BUSINESS SMALL-MEDIUM BUSINESS CONSUMER BUSINESS • Global Enterprise and Large Corporate Accounts (Fortune 5000 companies) • 60% of Dell North America revenues • Execution - Key Success Factor • Equipment needs to be deployed globally in timely basis • Longer payment cycle • Preferred Account PAD (400 – 3500 employees) • Business System Division BSD ( 10 - 400 employees) • 30% of Dell North America revenues • Efficient Customer Database - Key Success Factor • Individual customers • Transaction Segment • 10% of Dell North America revenues • Ability to convert sales into cash within 24 hours • Customers less educated

  11. SupplyChain Value INBOUND MANUFAC TURING OUT BOUND SALES SERVICES BTO Direct Sales Investment on customer services COMPETITIVE ADVANTAGE Inventory Cost Cut Mass Customization Steady Delivery Channel Cost Cut Orders on the Web Sale People for relations customer VALUE PROPOSITIONS Low Price Fulfilling Request Customer Convenience to order Reliability with deliver Best Customer Services Good Reputation in Service Keeping Good Relation Price Timing quality Service quality Reputation quality Relationship quality Technical Quality

  12. Industry Analysis MainCompetitors HP Hewlett Packard 45$ Billion Revenues • Global provider of a broad range of computing system • Segments: enterprise, commercial and consumer markets IBM 89$ Billion Revenues • Desktops, portables, servers, storage • Offering of a variety of tech solutions (systems, products, services, software and financing) Sun Microsystem 16$ Billion Revenues • Scalable computer and storage system, high-operating network computing equipment • Broad range of services including support and professional services Gateway Corp. 7$ Billion Revenues • Direct marketer of PCs and related product and services • Servers, workstations

  13. Industry forces BARRIERS TO ENTRY MEDIUM High investment required with moderate tech level SUPPLIERS MEDIUM Suppliers size comparable to manufacturers RIVALRY HIGH Many players with relatively low differentiation CUSTOMERS HIGH Customers have choices • SUBSTITUTE PRODUCTS • LOW/MEDIUM • No substitutes for PCs, network computers potential substitute

  14. SWOT AnalysisStrengths Complicated and time consuming transition for competitors in the short term DIRECT MODEL SUPPLIER RELATIONSHIP • INVENTORY MANAGEMENT • Pull System • Shared demand information with suppliers • FOCUS ON CUSTOMER VALUE ACTIVITIES • Outsourcing of non-core activities Ability to exploit the high elastic demand of the industry undercutting prices PRICING

  15. SWOT AnalysisWeaknesses • Limited ability to innovate • High reliance on suppliers R & D • Not complete solutions • High client retention effort SERVICES

  16. APAC/Japan EMEA AMERICAS 9% 21% 70% SWOT AnalysisOpportunities • Further penetration in non US markets (only 33% of total revenues come from EMEA and APAC/Japan) • Growing telephony and internet infrastructure – Indonesia, India • Selling of high-end systems to global customers and local enterprise in China market INTERNATIONAL EXPANSION SERVICES AND SOLUTIONS • Complete solutions • Consulting and Support

  17. SWOT AnalysisOpportunities • Small-medium segment is growing • Open architecture systems are emerging in response to increased storage demand and need for standard solutions ENTERPRISE PRODUCTS EMC PARTNERSHIP • Extends Dell’s capabilities and drives additional customer value in: • R&D • Sales • Service • Manufacturing

  18. SWOT AnalysisOpportunities CONSUMER ELECTRONICS Advantages Issues • Huge number of potential customers • $800 bn market • Products highly integrated with PCs • Improvement of customer segmentation leverage • Shift from analogue to digital technology plays to Dell’s strengths • High reliance on third manufactures • Products not individually configured • Direct Sales as new channel distribution for c.e. • Brand Awareness? • PDAs market entry

  19. Other IssuePrinting At the beginning of 2003 Dell decided to enter the computer printer market Concerns • Analysts view the market as flat in the short-term and declining in the long term • Fierce competition (HP over 50%) • Reduced flexibility • Higher inventory costs

  20. SWOT AnalysisThreats DIRECT MODEL Duplication in the long term Increasing size of rivals through consolidation potential squeeze in market share and margins MARGINS PCs Saturated market with declining demand

  21. Conclusions AS IS PCs MARKET DIRECT MODEL • Commodity • Low margin Mid-term Duplication AS TO BE CONSUMER ELECTRONICS SERVICES • New source of revenues • Educate the customers • Fierce competition • Lucrative margin • Complexity • Differentiation

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