Dell Computer Corp. Michael Dells Success Story

Published: 08th February 2007
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Famous Quote
"You don't have to be a genius or a visionary or even a college graduate to be successful. You just need a framework and a dream."

Growing Up
Despite Mr. and Mrs. Dell's hopes that their son would become a doctor, by the time Michael Dell was in grade seven, the boy's only area of interest was computers. While his classmates started playing around under the hoods of classic cars, Dell spent all of his time with his Apple II.

Dell showed an aptitude for business from an early age. He was making thousands of dollars in mail-order sales to stamp collectors at the age of 12, and - through careful planning - earned an astonishing $18,000 by selling newspaper subscriptions for the Houston Post (with which he bought his first BMW) in his final year of high school. By 18, Dell began planning to build a company that could rival IBM.

Succumbing to his parents' wishes, Dell began a pre-med course at the University of Texas in 1983. However, all of his time outside the classroom was spent buying remaindered, out-of-date computers, upgrading them, and then selling them for a profit. His room became so cluttered with hardware that, out of consideration for his roommate, he finally decided to move his operation off campus. His parents were extremely disappointed at the news that Dell would be dropping out of university, but he promised to return if his venture failed to be profitable by the end of the summer. At the end of one month of operation, Dell had made $180,000 in PC sales. Needless to say, Dell did not go back to school.

Starting the Business
As Dell planned out the future of his business, he identified price and delivery as the most important aspects of the growing computer business. By buying parts and putting the PC together on his own, Dell was able to put the machines together cheaply. He then decided to sell his computers over the phone to established brand name companies at a 15% discount, getting rid of the middleman and establishing a name for himself. "The direct model of selling", as it has come to be known, completely changed the way computers would be sold.

Dell called his company PCs Ltd., and at nineteen years old, his company had become one of the fastest growing in the U.S. The secret of Dell's success was the emphasis that was placed on creating customized computers to meet the specific demands of his clients. Within a year, PCs Ltd. had made more than $6 million. The company's name was changed the Dell Computer Corp. in 1987. And a year later, Dell's sales surpassed $159 million.

Building an Empire
Dell pushed forward and set as his next goal to surpass IBM to become number one in the industry. Around that aim, Dell employees worked hard to bring sales past $800 million by 1991. His new goal for the following year was to make more that $1.5 billion, however, Dell ended up pulling in nearly $2 million in 1992.

The company was growing at such a rate that in 1993 it began to get out of Dell's control as stock prices dropped from $49 to $16 over the first six months of the year, his CFO stepped down, and the newest line of computers was dropped because of its low quality.

Dell quickly turned to older, experienced managers, Mort Topfer from Motorola, Kevin Rollins from Bain and Co., and John Medica, designer of the Apple Powerbook, to get his business back on the right track. A year after these management changes were implemented, profits again began to rise, and in 1995, came close to $150 million. After having reestablished his company, Dell worried about how to stay on top. Together with his executives, he made two decisions that went against the norm; to focus solely on high-margin business customers, and to rely entirely on direct marketing.

Contrary to expectations, the implementing of these policies was a success and sales reached $5.5 billion by December of 1996. Dell then set up a web site for consumers to purchase computers directly from the company, one of only a few at the time, and after being up for only two months, sales had surpassed $2 million daily, reaching $6 million daily by 1996. In 1998, Dell reached total sales of 12.3 billion and was outselling IBM and Hewlett-Packard (a close second behind Compaq). Dell's breadth of vision, insistence on continual improvement, and willingness to make decisions that did not conform to industry standards has made him both a very wealthy man and the computer industry's longest-tenured CEO.

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Evan is an entrepreneur and international speaker. At the age of 19, he became an owner and Chief Operating Officer in Redasoft, a biotechnology software company. The company quickly grew to over 300 organizations as clients, including NASA and Johnson & Johnson, in 30 countries. He started Evan Carmichael & Associates with the goal to give entrepreneurs the Inspiration to follow their passion and the strategies they need to succeed. Evan has delivered over 100 keynote presentations to entrepreneurs in North America, Europe, and Asia. He has been interviewed by newspapers, radio stations, and television stations including The Globe and Mail, CHUM FM, CityTV, Global TV, OMNI TV, Enterprise, and the Toronto Sun. Evan's website, http://www.evancarmichael.com, is the world's #1 website for small business motivation and strategies.



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