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Dell is the world's leading computer systems company. They design, build and customize
products and services to satisfy a range of customer requirements. From the server, storage
and Premier Services needs of the largest global corporations, to those of consumers at home.
They do business directly with customers, one at a time, and believe They do it better than
anyone on the planet.
Over the last 18 years, Dell has emerged as one of the most successful technology franchises
in the United States. Founded in 1984 and public since 1988, Dell has be-come one of the
largest suppliers of personal computers in the world, growing revenue from less than $1 billion
in fiscal 1992 to over $31 billion in fiscal 2002. To-day, Dell commands 15% of the
worldwide PC market and has over 35,000 employees with manufacturing facilities in Texas,
Tennessee, Brazil, Ireland, China and Malaysia. While Dell operates a highly collaborative
research and development model, leveraging technology partners Microsoft and Intel, among
others, Dell has 730 patents and 535 pending patents that include everything from
manufacturing process patents to computer design patents.
We attribute Dell’s success within the computer industry to its unique, low-cost busi-ness
model, direct sales approach and collaborative research and development. By focusing on
leveraging its core competency in supply-chain management and low-cost manufacturing
within mature technology segments, such as PCs, Dell has a proven strategy to disrupt
traditional technology business models that rely on proprietary technology or multistage sales
and distribution. A key part of Dell’s success stems from leveraging widely available industry
technology within a low-cost manufacturing framework as a way of displacing the
competition. This is already evident by market-share gains in PCs, and it is becoming more
evident by recent success in servers, storage and low-end networking.
Today, about 46% of Dell’s total revenue is tied to PC hardware while the remaining 54% of
revenue is tied to enterprise systems (storage, servers, networking, etc.), third-party products
and services (both PC and non-PC related). Interestingly, while PC hardware accounts for 46%
of total revenue, non-PC hardware accounts for more than 50% of total gross profit. Going
forward, we believe profit growth, as it is today, will be driven primarily by non-PC hardware
revenue.
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