Understanding the New Business Paradigm in Eastern Europe by Kozielski Robert;

Author:Kozielski, Robert;
Language: eng
Format: epub
Publisher: Emerald Publishing Limited
Published: 2017-02-03T00:00:00+00:00

3.11. Dell – Mass Individualization in the Computer Market12

Until 1976, the global computer market had been highly fragmented, without any specific standards nor an industry leader. Initially, in the second half of the 1970s, Apple took the leading role by offering a unique operating system and a user-friendly interface. At the beginning of the 1980s, IBM entered the market with their personal computer, and in 1983 they gained 42% of the market together with Microsoft. This was the beginning of setting the second technological standard. Since that moment, dynamic growth of the personal computer sector has been observed, as these computers became a mass common commodity at the beginning of the 1990s.

As a result of this development, a traditional model of computer sales was established, and it involved distributors. They acted as middle-men selling equipment for a commission, and producers paid for stock on hand. The dynamics of innovations and improvements caused stored goods and parts to quickly become obsolete. It was estimated at that time that every single day of keeping a computer in a warehouse lowered its value by about 2%.

Business concepts and business models created by Michael Dell eliminated the majority of these constraints, and introduced completely new rules of competition. Thanks to this concept, Dell Corporation became the leading seller of personal computers in the world during the 1980s and the 1990s. In 2006, Dell was ranked 25th on the Fortune 500 list, and 8th among the most admired US companies. However, it is not awards and recognition that makes Dell one of the most frequently cited examples. It is due to the innovative business concept and business model, as well as the courage to break the fixed schemes of competing in the industry.

Dell is an international corporation that designs and sells personal computers, servers, data storage devices, software, and other products based on modern technologies. In 2010 the company had revenue of about $60 billion, and they employed more than 95,000 people all over the world.

The beginnings of the company go back to 1984, when Michael Dell, a student at the University of Texas, created PC’s Limited company with a capital of $1,000. The company dealt with production (assembly) of computer orders while using purchased components. Eighteen-year-old Michael Dell had been earning a small amount of money formatting and adjusting hard drives to IBM standards. However, as the number of orders increased significantly, Michael left the university and began to take this business seriously.

Dell was an ideal company for well-educated customers who expected good computers for a reasonable price. If you add 24-hour service, delivery of spare parts or software within 48 hours, and the fact that they systematically caught up with development of innovations, the benefits of buying from Dell became obvious. One year after starting up, Dell began to sell computers under its own brand increasing sales to $70 million.

Dell distinguished between relational and transactional clients. Relational clients are big companies, mainly from the Fortune 2000 list, as well as state institutions and educational organizations that needed to make substantial purchases, exchanges, and service.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.