Dell, the lean, mean, direct-selling machine was founded by its current CEO Michael Dell.

The company is so successful because it makes pretty high-quality products, delivers good service (to those who pay for it) and has competitive pricing. These are all things that the competition should also be able to do. But they don't always. Especially the product quality (durability in particular) on some of the cheaper models is a problem for some of Dell's competitors, and the smaller players in the business can't guarantee some of the higher service levels.

But the real wonder of Dell is that it is so darn profitable. Where the competition is struggling to remain profitable, or even loses money on each sold PC, Dell generally can show high profits. This is due to two factors: scale and costs.

The scale is gigantic. As the #1 giant in its business, it has such a strong position that it can negotiate much better prices than anyone else. This comes at the cost of the profitability of its contractors, but they usually stick with it because of the continuity of the business Dell can provide. Very interesting is Dell's relationship with Intel. Dell is the only major PC OEM that refuses to use AMD products. Chipzilla in turns treats Dell as its preferred partner, charging lower prices and delivering new products first to Dell.

And when it comes to cost, Dell is the king of the hill. Even when market-share growth, turnover and profits are more than healthy, Dell announces to be cutting costs wherever it can. It doesn't do much R&D, but leaves that to its partners. It has no product stock, because it manufactures every PC only after it's received the order for it. It subcontracts almost anything to cheaper companies, often in Asia (Taiwan, China, ...). With its direct-selling model, no profit remains in the hands of distributors or dealers. Dell usually doesn't even supply PCs to computer magazines to participate in tests, thinking 'if they want one, they can buy one'.

In the PC business everything - eventually - comes down to the price (see TCO), and that makes Dell a tough company to compete with.

Dell (?), n. [AS. del, akin to E. dale; cf. D. delle, del, low ground. See Dale.]


A small, retired valley; a ravine.

In dells and dales, concealed from human sight. Tickell.


A young woman; a wench.


Sweet doxies and dells. B. Jonson.


© Webster 1913.

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