Recently I had the opportunity to join a group of IT executives from about
thirty medium sized companies who were invited to participate in two days of
briefings at Dell Computer Corporation. All of us were required to sign
non-disclosure agreements prior to attending these meetings. Consequentially, I
can not report on any specifics of the presentations - especially the future
marketing and product plans. However, I can discuss some of the general
information which is already public. The highlight of these briefings for me was
when I found myself seated at lunch between Michael Dell and John Kinnaird (VP
of the Preferred Accounts Division) - but more on that later.
Clearly Dell computer has come a long way from
its beginnings at Michael Dell's dormitory room at the University of Texas. To
get a better understanding Dell's recent accomplishments, take a moment to read
the following two articles:
The Resurrection of Michael Dell
Michael Dell: Whirlwind on the Web
Now, back to the Dell meetings:
First, John Kinnaird highlighted Dell's commitment to being a full
lifecycle vendor. He clearly expressed Dell's "passion" for excellence in the
planning, deployment, and maintenance lifecycles of the technology procurement
process. In order to support this, he explained that Dell has expanded their
services to include asset financing and leasing, software sales (through
DELLWare), factory software loading of customer software (through DELLPlus), and
asset disposal of Dell products. He pointed out that Dell continues to
strengthen their "direct sales" business model through the aggressive use of the
Internet. Of course, he also focused on Dell's efforts in keeping leading edge
desktop, laptop, and server technology flowing from their three major factories.
John is a very articulate and dynamic presenter, and I was impressed with his
Bill Morris, from Dell On-line, gave us a brief overview of the Dell
Internet site. Dell has built a sophisticated web site for both marketing and
customer support. Recently, Dell has made over 35,000 pages of technical support
documentation available over the Internet. This is the same documentation that
is used by Dell's help desk representatives. In addition, Dell is creating
custom web pages for key customers which reflect the specific product and
support requirements of the particular company.
Ralph Mango, from Dell Leasing, made an excellent presentation
regarding the benefits of leasing computer assets rather than than buying them
and depreciating them over a five year period. Did you know that in 1998 over
94,000,000 personal computers will be retired? In addition, The Gartner Group
has stated that a Pentium computer will have no value on the market three years
from today. This growing compression of the life cycle for these types of assets
is creating new financing issues for accounting departments at many companies. A
comparison of the cost of a purchased machine, depreciated over a three year
period, to the cost of a machine on a three year lease, shows that the
difference can be as great as 10% in favor of the lease.
Jay Bell, Senior Dell Fellow (translation: Head Guru), covered some of
the interesting issues Dell is facing in designing the next generation of
personal computers. Unfortunately, none of his presentation can be disclosed.
About all I can do is cover a few non-sensitive, public knowledge tidbits. Dell
is currently focused on the issues surrounding the new system and peripheral
buses (as are all the vendors). Dell is obviously studying designs for future
serial buses (as is everyone). The new 1394 standard "Firewire" serial SCSI is a
development to watch from all the vendors. If you are really interested, you can
find many of the next generation PC requirement details in the "PC 97" standards
document from Microsoft (required reading for compliance by hardware vendors).
Jay also showed us some interesting charts which pointed out that much
of the performance increases to be gained from current technology come from the
addition of more memory to the computer (a Pentium 200 shows a 63% performance
increase with 64 meg of memory compared to 16 meg). Given the price of memory
today, taking advantage of this is to good to pass up.
Of course the Dell product line representatives covered each of the
major Dell product strategies for the next two years in detail. All of this was
confidential, but you can guess where they are going by looking at Intel's
marketing roll-out plans. Without disclosing any sensitive information, I can
tell you that a big push is coming in the server area. Watch for Dell to
continue to gobble up market share.
I had the opportunity to tour the new Dell server factory. The concept
Dell is using for production of these machines is not an assembly line approach.
Instead, they are using manufacturing "cells" to individually build each new
server to specific customer requirements. They can also load specialized,
customer specific software at the end of the manufacturing process. This allows
the server to be shipped to a final destination with software loaded and
configured to MIS department specifications. This is a part of the DELLPlus
Now, for the lunch:
Michael joined our group at the Renaissance Hotel in Austin. This was
mostly MIS executives from all over the United States and some of Dell's key
regional sales representatives. I sat with Michael, John, and the
representatives from McAfee (the antivirus software company). Since I am a part
of a larger international company, with offices in many countries, my concerns
during our lunch discussion centered around the challenges of having
international employees working in foreign offices, and the MIS issues this
situation can pose. Michael and John gave us some background on Dell's continued
international expansion plans, and examples of how they are currently serving
After lunch, Michael gave an informal "stand-up" talk about Dell's
future vision, and then we moved to a period of question and answer. Dell had
just announced a huge earnings increase the day before, and their stock had
jumped up to 108! As you can imagine, the lunch was very upbeat.
My final impressions: Dell is on a roll, their "direct sales" model is
proving to be incredibly successful, the Internet will be a very important tool
for Dell marketing and support in the future, and the Dell Power Edge server
line is now a serious contender.