(founder)
Founding and start-up Michael Dell founded Dell Computer Corporation, doing business as PC's Limited, in 1984. Dell was a student at the
University of Texas at Austin, and operated the business from his off-campus dormitory room at
Dobie Center. The start-up 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 services to meet those needs. Dell dropped out of college upon completion of his freshman year at the University of Texas in order to focus full-time on his fledgling business, after getting about $1,000 in expansion-capital from his family. As of April 2021, Dell's net worth was estimated to be over $50 billion (). In 1985, PC's Limited launched its first computer, the "Turbo PC", priced at US$795 (). The Turbo PC featured an Intel 8088-compatible processor with a maximum speed of 8 MHz. At that time PC's Limited was considered one of many
white box vendors, although by 1986
Hughes Aircraft was evaluating its products for corporate use after an executive's positive experience with a personal purchase. The company marketed these systems through national computer magazines, selling directly to consumers while custom-assembling each unit based on a range of options. This approach allowed PC's Limited to offer competitive prices compared to retail brands, coupled with the convenience of pre-assembled units, making them one of the early success stories of this business model. The company grossed over $73 million in its first year of operation. The company dropped the ''PC's Limited'' name in 1987 to become Dell Computer Corporation and began expanding globally. The reasoning was that this new company name better reflected its presence in the business market, and also resolved issues with the use of "Limited" in a company name in certain countries. The company set up its first international operations in Britain; 11 more followed within the next four years. In June 1988, Dell Computer's market capitalization grew by $30 million to $85 million ($ million in ) from its June 22 initial public offering of 3.5 million shares at $8.50 a share on
NASDAQ under the ticker symbol DELL. In 1989, the company launched its first laptop product, the Dell 316LT.
Growth in the 1990s and early 2000s 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 included Dell Computer Corporation in its list of the world's
500 largest companies, making Michael Dell the youngest CEO of a Fortune 500 company at that time. Senior vice president
Joel Kocher told
The Wall Street Journal in 1993 "this isn't a technology business anymore". His view, that PCs were commodities, was reportedly widely held by others in the company. They thought that Dell differentiated itself from others—like fellow Texas company and archrival
Compaq—with its distribution expertise and "database engine" of customers that, Kocher said, could sell anything including non-technology products: "We're more like
Mary Kay Cosmetics than we are like
General Motors". In 1993, to complement its own direct sales channel, Dell planned to sell PCs at big-box retail outlets such as
Wal-Mart, which would have brought in an additional $125 million () in annual revenue.
Bain consultant
Kevin Rollins persuaded Michael Dell to pull out of these deals, believing they would be money losers in the long run. Margins at retail were thin at best and Dell left the reseller channel in 1994. Rollins would soon join Dell full-time and eventually become the company president and CEO. By the early 1990s the
laptop computer market was both more profitable and faster-growing than the overall personal computer market. After discontinuing its unsuccessful existing products in 1993, and hiring John Medica—who had led development of the very successful Apple
PowerBook—the company in 1994 introduced the
Dell Latitude laptop line. Originally, Dell did not emphasize the consumer market, due to the higher costs and low profit margins in selling to individuals and households; this changed when the company's Internet site took off in 1996 and 1997. Dell surpassed Compaq to become the largest PC manufacturer in 1999. Operating costs made up only 10 percent of Dell's $35 billion in revenue in 2002 (), compared with 21 percent of revenue at Hewlett-Packard, 25 percent at Gateway, and 46 percent at Cisco. In 2002, when Compaq merged with Hewlett-Packard (the fourth-place PC maker), the newly combined Hewlett-Packard took the top spot for a time but struggled and Dell soon regained its lead. 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. Despite no longer holding the CEO title, Dell essentially acted as a de facto co-CEO with Rollins.
Struggles in mid-2000s In 2005, while earnings and sales continued to rise, sales growth slowed considerably, and the company stock lost 25% of its value that year. By June 2006, the stock traded around US$25 which was 40% down from July 2005—the high-water mark of the company in the post-dotcom era. The slowing sales growth has been attributed to the maturing PC market, which constituted 66% of Dell's sales, and analysts suggested that Dell needed to make inroads into non-PC business segments such as storage, services, and servers. Dell's price advantage was tied to its ultra-lean manufacturing for desktop PCs, but this became less important as savings became harder to find inside the company's supply chain, and as competitors such as Hewlett-Packard and
Acer made their PC manufacturing operations more efficient to match Dell, weakening Dell's traditional price differentiation. Throughout the entire PC industry, declines in prices along with commensurate increases in performance meant that Dell had fewer opportunities to upsell to their customers. As a result, the company was selling a greater proportion of inexpensive PCs than before, which eroded profit margins. Heavily dependent on PCs, Dell had to slash prices to boost sales volumes, while demanding deep cuts from suppliers. The lack of a retail presence stymied Dell's attempts to offer
consumer electronics such as flat-panel TVs and MP3 players. By the mid-2000s many analysts were looking to innovating companies as the next source of growth in the technology sector. Dell's low spending on R&D relative to its revenue (compared to
IBM,
Hewlett-Packard, and
Apple Inc.)—which worked well in the commoditized PC market—prevented it from making inroads into more lucrative segments, such as MP3 players and later mobile devices. There was also criticism that Dell used faulty components for its PCs, particularly the 11.8 million OptiPlex desktop computers sold to businesses and governments from May 2003 to July 2005 that suffered from
faulty capacitors. A battery recall in August 2006, as a result of a Dell laptop catching fire, caused much negative attention for the company though later,
Sony was found responsible for the manufacturing of the batteries, however a Sony spokesman said the problem concerned the combination of the battery with a charger, which was specific to Dell. 2006 marked the first year that Dell's growth was slower than the PC industry as a whole. By the fourth quarter of 2006, Dell lost its title of the largest PC manufacturer to Hewlett Packard whose Personal Systems Group was invigorated thanks to a restructuring initiated by their CEO
Mark Hurd.
SEC investigation In August 2005, Dell became the subject of an informal investigation by the United States
SEC. In 2006, the company disclosed that the US Attorney for the Southern District of New York had subpoenaed documents related to the company's financial reporting dating back to 2002. The company delayed filing financial reports for the third and fourth fiscal quarter of 2006, and several class-action lawsuits were filed. Dell Inc's failure to file its quarterly earnings report could have subjected the company to de-listing from the
Nasdaq, but the exchange granted Dell a waiver, allowing the stock to trade normally. 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. In July 2010, the SEC announced charges against several senior Dell executives, including Dell Chairman and CEO Michael Dell, former CEO Kevin Rollins, and former CFO James Schneider, "with failing to disclose material information to investors and using fraudulent accounting to make it falsely appear that the company was consistently meeting Wall Street earnings targets and reducing its operating expenses." Dell, inc. was fined $100 million, with Michael Dell personally fined $4 million.
Dell 2.0 and downsizing After four out of five quarterly earnings reports were below expectations, Rollins resigned as president and CEO on January 31, 2007, and founder Michael Dell assumed the role of CEO again. 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. Dell announced a change campaign called "Dell 2.0," reducing the number of employees and diversifying the company's products. While chairman of the board after relinquishing his CEO position, Michael Dell still had significant input in the company during Rollins' years as CEO. With the return of Michael Dell as CEO, the company saw changes in operations, the exodus of many senior vice-presidents and new personnel brought in from outside the company. 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 planned to double its workforce to nearly 3,000 workers add a new building. These plans were reversed, due to a high
Canadian dollar that made the Ottawa staff relatively expensive, and also as part of Dell's turnaround, which involved moving these call-center jobs offshore to cut costs. 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. By the late 2000s, Dell's "configure to order" approach of manufacturing—delivering individual PCs configured to customer specifications from its US facilities was no longer as efficient or competitive with high-volume Asian contract manufacturers as PCs became powerful low-cost commodities. Dell closed plants that produced desktop computers for the North American market, including the Mort Topfer Manufacturing Center in
Austin, Texas (original location) and
Lebanon, Tennessee (opened in 1999) in 2008 and early 2009, respectively. The desktop production plant in
Winston-Salem, North Carolina, received
US$280 million in incentives from the state and opened in 2005 (), but ceased operations in November 2010. Dell's contract with the state required them to repay the incentives for failing to meet the conditions, and they sold the North Carolina plant to Herbalife. Much work was transferred to manufacturers in Asia and Mexico, or some of Dell's own factories overseas.
Attempts at diversification The release of Apple's
iPad tablet computer had a negative impact on Dell and other major PC vendors, as consumers switched away from desktop and laptop PCs. Dell's own mobility division has not managed success with developing smartphones or tablets, whether running Windows or
Android. The
Dell Streak was a failure commercially and critically due to its outdated OS, numerous bugs, and low resolution screen.
InfoWorld suggested that Dell and other OEMs saw tablets as a short-term, low-investment opportunity running
Google Android, an approach that neglected user interface and failed to gain long term market traction with consumers. Dell has responded by pushing higher-end PCs, such as the XPS line of notebooks, which do not compete with the
Apple iPad and
Kindle Fire tablets. The growing popularity of smartphones and tablet computers instead of PCs drove Dell's consumer segment to an operating loss in Q3 2012. In December 2012, Dell suffered its first decline in holiday sales in five years, despite the introduction of
Windows 8. In the shrinking PC industry, Dell continued to lose market share, as it dropped below
Lenovo in 2011 to fall to number three in the world. Dell and fellow American contemporary Hewlett Packard came under pressure from Asian PC manufacturers Lenovo,
Asus, and Acer, all of which had lower production costs and were willing to accept lower profit margins. In addition, while the Asian PC vendors had been improving their quality and design—for instance, Lenovo's
ThinkPad series was winning corporate customers away from Dell's laptops—Dell's customer service and reputation had been slipping. Dell remained the second-most profitable PC vendor, as it took 13 percent of operating profits in the PC industry during Q4 2012, behind Apple's Mac that took 45 percent, seven percent at Hewlett Packard, six percent at Lenovo and Asus, and one percent for Acer. Dell attempted to offset its declining PC business, which still accounted for half of its revenue and generates steady cash flow, by expanding into the enterprise market with servers, networking, software, and services. It avoided many of the acquisition write-downs and management turnover that plagued its chief rival Hewlett Packard. Despite spending $13 billion on acquisitions to diversify its portfolio beyond hardware, the company was unable to convince the market that it could thrive or made the transformation in the post-PC world, Dell's market share in the corporate segment was previously a "moat" against rivals but this has no longer been the case as sales and profits have fallen precipitously.
2013 buyout After several weeks of rumors, which started around January 11, 2013, Dell announced on February 5, 2013, that it had struck a $24.4 billion ()
leveraged buyout deal, that would have delisted its shares from the NASDAQ and Hong Kong Stock Exchange and taken it private.
Reuters reported that Michael Dell and
Silver Lake Partners, aided by a $2 billion loan from
Microsoft, would acquire the public shares at $13.65 apiece. The $24.4 billion buyout was projected to be the largest leveraged buyout backed by private equity since the
2008 financial crisis (). It is also the largest technology buyout ever, surpassing the 2006 buyout of
Freescale Semiconductor for $17.5 billion (). In March 2013, the
Blackstone Group and
Carl Icahn expressed interest in purchasing Dell. In April 2013, Blackstone withdrew their offer, citing deteriorating business. Other private equity firms such as
KKR & Co. and TPG Capital declined to submit alternative bids for Dell, citing the uncertain market for personal computers and competitive pressures, so the "wide-open bidding war" never materialized. In May 2013, Michael Dell joined his board in voting for the offer. The following August he reached a deal with the special committee on the board for $13.88 per share, a raised price of $13.75 plus a special dividend of 13 cents, as well as a change to the voting rules. The $13.88 cash offer (plus a $.08 per share dividend for the third fiscal quarter) was accepted on September 12 and closed on October 30, 2013, ending Dell's 25-year run as a publicly traded company. After the buyout, the newly private Dell offered a Voluntary Separation Program that they expected to reduce their workforce by up to seven percent. The reception to the program so exceeded the expectations that Dell may be forced to hire new staff to make up for the losses.
Acquisition of EMC On November 19, 2015, Dell, alongside
Arm Holdings,
Cisco Systems,
Intel,
Microsoft, and
Princeton University, founded the
OpenFog Consortium, to promote interests and development in
fog computing. On October 12, 2015, Dell Inc. announced its intent to acquire EMC Corporation in a cash-and-stock deal valued at $67 billion (), which has been considered the largest-ever acquisition in the technology sector. This combined Dell's enterprise server, personal computer, and mobile businesses with EMC's enterprise storage business in a significant Vertical merger of IT giants. Dell paid $24.05 per share of EMC, and $9.05 per share of
tracking stock in
VMware. The announcement came two years after Dell Inc. returned to private ownership, claiming that it faced bleak prospects and would need several years out of the public eye to rebuild its business. It was thought that the company's value had roughly doubled since then. EMC was being pressured by
Elliott Management, a hedge fund holding 2.2% of EMC's stock, to reorganize their unusual "Federation" structure, in which EMC's divisions were effectively being run as independent companies. Elliott argued this structure deeply undervalued EMC's core "EMC II" data storage business, and that increasing competition between EMC II and VMware products was confusing the market and hindering both companies.
The Wall Street Journal estimated that in 2014 Dell had revenue of $27.3 billion () from personal computers and $8.9 billion from servers, while EMC had $16.5 billion from EMC II, $1 billion from
RSA Security, $6 billion from VMware, and $230 million from
Pivotal Software. EMC owned around 80 percent of the stock of VMware. The proposed acquisition maintained VMware as a separate company, held via a new
tracking stock, while the other parts of EMC rolled into Dell. Once the acquisition closed, Dell began publishing quarterly financial results again, having ceased these after going private in 2013. The combined business was expected to address the markets for
scale-out architecture,
converged infrastructure and
private cloud computing, playing to the strengths of both EMC and Dell. Commentators questioned the deal, with
FBR Capital Markets saying that though it makes a "ton of sense" for Dell, it was a "nightmare scenario that would lack strategic synergies" for EMC.
Fortune said there was a lot for Dell to like in EMC's portfolio, but "does it all add up enough to justify tens of billions of dollars for the entire package? Probably not."
The Register reported the view of
William Blair & Company that the merger would "blow up the current IT chess board", forcing other IT infrastructure vendors to restructure to achieve scale and vertical integration. The value of VMware stock fell 10% after the announcement, valuing the deal at around $63–64bn rather than the $67bn originally reported. Key investors backing the deal besides Dell were Singapore's
Temasek Holdings and
Silver Lake Partners. On September 7, 2016, Dell completed the merger with EMC, which involved the issuance of $45.9 billion () in debt and $4.4 billion () of common stock.
Going public as Dell Technologies In July 2018, Dell announced intentions to become a publicly traded company again by paying $21.7 billion () in both cash and stock to buy back shares from its stake in VMware, offering shareholders roughly 60 cents on the dollar as part of the deal. As a result of pressure from Icahn and other
activist investors, Dell renegotiated the deal, ultimately offering shareholders about 80% of market value. As part of this deal, Dell once again became a public company, with the original Dell computer business and Dell EMC operating under the newly created parent,
Dell Technologies. In January 2021, Dell reported $94 billion () in sales and $13 billion () operating cash flow during 2020. On March 1, 2024, Dell Technologies' stock hit all-time high after earnings. It delivered a strong performance from its artificial intelligence unit that sent shares up nearly 40%, its highest daily gain since the company went public in 2018. In August 2024, the company announced it would be laying off 12,500 employees—10% of its workforce—in order to invest in artificial intelligence initiatives.
Dell and AMD When Dell acquired Alienware early in 2006, some Alienware systems had
AMD chips. On August 17, 2006, a Dell press release 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. 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 display) with the choice of a single-core MK-36 processor, dual-core Turion X2 chips or Mobile Sempron. In 2017, Dell released the AlienWare 17 gaming laptop. The model was primarily based on NVIDIA GeForce GTX 1080 systems.
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". Possibly coincidentally, Dell started offering Linux notebook systems that "cost no more than their Windows 98 counterparts" in 2000, and soon expanded, with Dell becoming "the first major manufacturer to offer Linux across its full product line". However, by early 2001 Dell had "disbanded its Linux business unit." 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. However, the next day, Dell 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. 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. On April 18, a report appeared suggesting that Michael Dell used
Ubuntu on one of his home systems. On May 1, 2007, Dell announced it would ship the Ubuntu Linux distribution. 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. 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. 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". On November 30, 2007, Dell reported shipping 40,000 Ubuntu PCs. 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. 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 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. Dell shipped the Inspiron Mini laptops with Ubuntu version 8.04. As of 2021, Dell continues to offer select laptops and workstations with Ubuntu Linux pre-installed, under the "Developer Edition" moniker. == Corporate affairs ==