History of Dell

This page contains the history of Dell.

Background and origins

Michael Dell founded Dell Computer Corporation, dba PC's Limited, ^[1] in 1984 while a student at the University of Texas at Austin.^[2] Operating from Michael Dell's off-campus dormitory room at Dobie Center,^[3] the startup aimed to sell IBM PC-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs.^[4] Michael Dell dropped out of school in order to focus full-time on his fledgling business, after getting about $1,000 in expansion-capital from his family.

In 1985, the company produced the first computer of its own design — the "Turbo PC", sold for US$795^[5] — containing an Intel 8088-compatible processor running at a speed of 8 MHz. PC's Limited advertised the systems in national computer magazines for sale directly to consumers, and custom assembled each ordered unit according to a selection of options. This offered buyers prices lower than those of retail brands, but with greater convenience than assembling the components themselves. Although not the first company to use this model, Limited became one of the first to succeed with it. The company grossed more than $73 million in its first year of trading.

In 1987, the company dropped the PC’s Limited dba to be Dell Computer Corporation and began expanding globally. The company name better reflected its presence in the business market, as well as resolved issues with the use of “Limited” in a company name in certain countries.^[6] The company set up its first international operations in Britain; eleven more followed within the next four years. In June 1988, Dell Computer's market capitalization grew by $30 million to $80 million from its June 22 initial public offering of 3.5 million shares at $8.50 a share.^[7] In 1989, Dell Computer set up its first on-site service programs in order to compensate for the lack of local retailers prepared to act as service centers.

In 1990, Dell Computer tried selling its products indirectly through warehouse clubs and computer superstores, but met with little success, and the company re-focused on its more successful direct-to-consumer sales model. In 1992, Fortune magazine included Dell Computer Corporation in its list of the world's 500 largest companies. Michael Dell became the youngest CEO of a Fortune 500 company.

In 1996, Dell began selling computers via its web site.

In 2002, Dell attempted to expand by tapping into the multimedia and home-entertainment markets with the introduction of televisions, Dell Axim handhelds, and Dell DJ digital audio players. Dell has also produced Dell-brand printers for home and small-office use.

In 2003, at the annual company meeting, the stockholders approved changing the company name to "Dell Inc." to recognize the company's expansion beyond computers.

In 2004, the company announced that it would build a new assembly-plant near Winston-Salem, North Carolina; the city and county provided Dell with $37.2 million in incentive packages; the state provided approximately $250 million in incentives and tax breaks. In July, Michael Dell stepped aside as Chief Executive Officer while retaining his position as Chairman of the Board. Kevin Rollins, who had held a number of executive posts at Dell, became the new CEO.

In 2005, the share of sales coming from international markets increased, as revealed in the company's press releases for the first two quarters of its fiscal 2005 year. In February 2005 Dell appeared in first place in a ranking of the "Most Admired Companies" published by Fortune magazine. In November 2005 BusinessWeek magazine published an article titled "It's Bad to Worse at Dell" about shortfalls in projected earnings and sales, with a worse-than-predicted third-quarter financial performance — a bad omen for a company that had routinely underestimated its earnings. Dell acknowledged that faulty capacitors on the motherboards of the Optiplex GX270 and GX280 had already cost the company $300 million. The CEO, Kevin Rollins, attributed the bad performance partially to Dell's focus on low-end PCs.

In 2006, Dell purchased the computer hardware manufacturer Alienware. Dell Inc.'s plan anticipated Alienware continuing to operate independently under its existing management. Alienware expected to benefit from Dell's efficient manufacturing system.^[8]

On January 31, 2007, Kevin B. Rollins, CEO of the company since 2004, resigned as both CEO and as a director, and Michael Dell resumed his former role as CEO. Investors and many shareholders had called for Rollins' resignation because of poor company performance. At the same time, the company announced that, for the fourth time in five quarters, earnings would fail to reach consensus analyst estimates.

In August 2005, Dell became the subject of an informal investigations by the U.S. SEC.^[9] In 2006, the company disclosed that the U.S. Attorney for the Southern District of New York had subpoenaed documents related to the company's financial reporting dating back to 2002.^[10] The company delayed filing financial reports for the third and fourth fiscal quarter of 2006, and several class-action lawsuits were filed.^[11] Dell Inc's failure to file its quarterly earnings report could have subjected the company to de-listing from the NASDAQ,^[12] but the exchange granted Dell a waiver, allowing the stock to trade normally.^[13] In August 2007, the Company announced that it would restate its earnings for fiscal years 2003 through 2006 and the first quarter of 2007 after an internal audit found that certain employees had changed corporate account balances to meet quarterly financial targets.^[14] The SEC investigation was ongoing as of April 2010, and the Company announced that some ex-employees might face civil action from the SEC.^[15]

On March 1, 2007, the company issued a preliminary quarterly earnings report showing gross sales of $14.4 billion, down 5% year-over-year, and net income of $687 million (30 cents per share), down 33%. Net earnings would have declined even more if not for the effects of eliminated employee bonuses, which accounted for six cents per share. NASDAQ extended the company's deadline for filing financials to May 4.^[16]

Dell and AMD

When Dell acquired Alienware early in 2006, some Alienware systems had AMD chips. On August 17, 2006, a Dell press release^[17] stated that starting in September, Dell Dimension desktop computers would have AMD processors and that later in the year Dell would release a two-socket, quad-processor server using AMD Opteron chips, moving away from Dell's tradition of only offering Intel processors in Dell PCs.

CNet's News.com on August 17, 2006 cited Dell's CEO Kevin Rollins as attributing the move to AMD processors to lower costs and to AMD technology.^[18] AMD's senior VP in commercial business, Marty Seyer, stated: "Dell's wider embrace of AMD processor-based offerings is a win for Dell, for the industry and most importantly for Dell customers."

On October 23, 2006, Dell announced new AMD-based servers — the PowerEdge 6950 and the PowerEdge SC1435.

On November 1, 2006, Dell's website began offering notebooks based on AMD processors (the Inspiron 1501 with a 15.4-inch (390 mm) display) with the choice of a single-core MK-36 processor, dual-core Turion X2 chips or Mobile Sempron.^[19]

Dell and desktop Linux

In 1998, Ralph Nader asked Dell (and five other major OEMs) to offer alternate operating systems to Microsoft Windows, specifically including Linux, for which "there is clearly a growing interest"^[20][21] Possibly coincidentally, Dell started offering Linux notebook systems that "cost no more than their Windows 98 counterparts" in 2000,^[22] and soon expanded, with Dell becoming "the first major manufacturer to offer Linux across its full product line"^[23] However, by early 2001 Dell had "disbanded its Linux business unit."^[24]

On February 26, 2007, Dell announced that it had commenced a program to sell and distribute a range of computers with pre-installed Linux distributions as an alternative to Microsoft Windows. Dell indicated that Novell's SUSE Linux would appear first.^[25] However, Dell on February 27, 2007 announced that its previous announcement related to certifying the hardware as ready to work with Novell SUSE Linux and that it (Dell) had no plans to sell systems pre-installed with Linux in the near future.^[26] On March 28, 2007, Dell announced that it would begin shipping some desktops and laptops with Linux pre-installed, although it did not specify which distribution of Linux or which hardware would lead.^[27] On April 18, 2007 a report appeared suggesting that Michael Dell used Ubuntu on one of his home systems.^[28] On May 1, 2007, Dell announced it would ship the Ubuntu Linux distribution.^[29] On May 24, 2007, Dell started selling models with Ubuntu Linux 7.04 pre-installed: a laptop, a budget computer, and a high-end PC.^[30]

On June 27, 2007, Dell announced on its Direct2Dell blog that it planned to offer more pre-loaded systems (the new Dell Inspiron desktops and laptops). After the IdeaStorm site supported extending the bundles beyond the US market, Dell later announced more international marketing.^[31] On August 7, 2007, Dell officially announced that it would offer one notebook and one desktop in the UK, France and Germany with Ubuntu "pre-installed". At LinuxWorld 2007 Dell announced plans to provide Novell's SUSE Linux Enterprise Desktop on selected models in China, "factory-installed".^[32] On November 30, 2007 Dell reported shipping 40,000 Ubuntu PCs.^[33] On January 24, 2008, Dell in Germany, Spain, France, and the United Kingdom launched a second laptop, an XPS M1330 with Ubuntu 7.10, for 849 euro or GBP 599 upwards.^[34] On February 18, 2008, Dell announced that the Inspiron 1525 would have Ubuntu as an optional operating system. On February 22, 2008, Dell announced plans to sell Ubuntu in Canada and in Latin America^[35] From September 16, 2008, Dell has shipped both Dell Ubuntu Netbook Remix and Windows XP Home versions of the Inspiron Mini 9 and the Inspiron Mini 12. As of November 2009 Dell ships the Inspiron Mini laptops with Ubuntu version 8.04.^[36]

Personnel

On January 31, 2007, Michael Dell returned to the company as CEO. As chairman of the board, Michael Dell had significant input into the company's operations during Rollins' years as CEO. However, with the return of Michael Dell as CEO, the company saw immediate changes in operations, the exodus of many senior vice-presidents and new personnel brought in from outside the company.

Michael Dell announced a number of initiatives and plans (part of the "Dell 2.0" initiative) to improve the company's financial performance. These include elimination of 2006 bonuses for employees with some discretionary awards, reduction in the number of managers reporting directly to Michael Dell from 20 to 12, and reduction of "bureaucracy."

On April 23, 2008, Dell announced the closure of one of its biggest Canadian call-centers in Kanata, Ontario, terminating approximately 1100 employees, with 500 of those redundancies effective on the spot, and with the official closure of the center scheduled for the summer. The call-center had opened in 2006 after the city of Ottawa won a bid to host it. Less than a year later, Dell Inc. planned to double its workforce to nearly 3,000 workers and to add a new building. Journalists cited a high Canadian dollar and suggested high pay-rates as among the reasons for the cuts.^[37] The company had also announced the shutdown of its Edmonton, Alberta office, losing 900 jobs. In total, Dell announced the ending of about 8,800 jobs in 2007-2008 — 10% of its workforce.^[38] On January 8, 2009 Dell announced the closure of its manufacturing plant in Limerick, Ireland with the loss of 1,900 jobs and the transfer of production to its plant in Poland.

See also

• List of Dell ownership activities

References