Dell Computer Corporation

Dell's first couple of years in the 21st century have not been quite as glamorous as the previous seventeen. For the first time in the company's history, Dell has recorded a drop in revenues; sales for fiscal 2002 were $31.17 billion, down 2.25% from 2001 levels. Earnings per share have dropped from $0.81 last year to $0.65 in 2002.

Dell Strategy

On the other hand, Dell, in 2002 was the 48th largest publicly traded company in the United States. It has grown to become larger than UPS, Wells Fargo, Du Pont and Disney. As Dell faces the 21st century, its history, success and size may very well present its greatest challenge. And, while its strategy remains solid and will continue to bear fruit well in to the future, now that it has pushed its business in to every available market segment as well as out to most of the world's countries, it has little additional opportunities for continued expansion within its existing markets. Its growth prospects, therefore, remain modest - and the company's stock price has reflected this over the last three years; in fact, the stock which had made it a habit to split several times a year had last split 2:1 in the first quarter of 1999.

Worldwide Market Sales

Since its inception in 1984, Dell has been an extremely successful company on every imaginable measure. Only two years after Michael Dell started the company in a small dorm room in Austin, Texas, Dell recorded $33 million in sales.

• By 1990, sales had grown to $338 million
• The company broke the one billion dollar sales mark during 1993.
• Over the next eight years, sales would grow 3200% to reach $31.8 billion in 2001.
• The company commanded 27% of Personal Computer (PC) market share in the United States in the year 2002, and 14% of the worldwide market.

Dell and authorized dealers research papers show that the main emphasis of Dell Computer Corporation is their direct-to-customer approach. Research papers illustrate that this approach is implemented from pre-sale through to long-term service contracts. Dell claims there are absolutely no "middlemen."

Dell has totally avoided the use of external dealers, wholesalers and retailers. All sales are done through their main headquarters, usually on-line. All customer support and warranty servicing is done by Dell service personnel, on-line, over the phone, or in person.This, according to Dell, eliminates communication flaws because the message goes directly from the customer to the manufacturer and vice versa. Dell also suggests that it allows them to provide more, and better, services to the customer for a competitive price.

Dell warranties are all written clearly stating that the products and services are covered under the warranty only if they are shipped to and repaired or replaced by the Dell staff at the Dell facility.There is no allowance for either authorized dealerships or authorized service personnel outside of Dell staff.

Dell service contracts are written similarly, but are priced up to cover expenses for Dell service personnel to travel to the customers' sites for maintenance, installation or repair.They do not allow for authorized dealerships or authorized service personnel to cover service contracts, except for their own employees, as well. Service and installation are priced down for additional quantities of on-site work.