Dell gains market share in tight economy

A decade and half at the helm of Dell Computer Corp. has taught Michael Dell a thing or two, one of which is never to buy into the notion that something can’t be done because everyone says so.

Back in the mid 1980s Dell had the notion that selling PCs directly to the customer, in what amounted to a burgeoning market, was the way to go. Cut out the middleman and interact directly to those who are paying for your product.

At an Empire Club luncheon in Toronto yesterday, Dell, chairman and CEO of the company, spoke in a straightforward manner about how Dell has gained market share and continued to grow in a brutally tight and saturated computer hardware market.

“We made our success by doing things no one else has done before,” he told the audience.

He explained how Dell has managed to gain market share in China even though consumers tend not to have access to credit cards, something which could easily hinder selling directly to a customer. Dell advertises on television and gives a telephone number for people to call. When a computer is ordered and paid for though a bank, a confirmation number is given to the customer. Once Dell gets the confirmation number from the customer (indicating payment), the ordered computer is then shipped.

This is a Dell mantra – look for big markets that are inefficiently serviced (China is an obvious example), address the shortcomings of the market and make your pitch to the actual customer. To date, the Chinese market represents 45 per cent of Dell’s Asia-Pacific market (not including Japan).

Another Dell mantra is to take what ever you have and make it more efficient. If Dell has enough inventory for 96 hours, then the company looks for ways to cut that to 50 hours. Dell is one of the world’s leaders in just-in-time inventory management.

The ultimate goal is to theoretically have no inventory. “We just have works in progress,” he said. Dell computers are only built after they are bought – and once they are bought, they are shipped.

When queried where the company was going next, Dell mentioned the storage, networking and services markets, but was also quick to point out that there is still a large untapped market for Dell’s server technology.

Unlike some of the company’s competition, which are offering software with their hardware solutions, Dell said his company is more geared toward alliances with software vendors such as Oracle and PeopleSoft than trying to offer an end-to-end solution itself.

“The idea of one company trying to do it all is not really the answer,” he said.

Dell Canada in Toronto is at