Dell Direct

Led the PC microprocessor market and ousted competition through sole licensor decision: Post losing a contract to supply microprocessors to Apple, in early 1980s, Intel won a contract to provide the same to IBM for its PCs. IBM PCs were a huge success and catapulted Intel to gain market leadership. IBM initially forced Intel to license its product to other players to secure adequate supplies reducing Intel’s potential

Meanwhile, IBM, who was Intel’s star customer, decided to produce own proprietary components. This was an inflection point for Intel. It partnered with Compaq and Microsoft, to break the hegemony of IBM. Though Microsoft products did not

Microsoft is the software giant responsible for bringing Windows operating system to the PC (personal computer). Microsoft is also a known and well respected company in the global market. The tech giant has dominated the computer industry since 1981. Due to the nature of such a huge company, Microsoft has its hands in multiple markets. Microsoft currently competes in file hosting, software, operating systems, and gaming consoles. Unfortunately, each of the afore-mentioned markets differ from one another. For the purpose of this paper, the market that

Dell Share holders bear the risk in the form of cost of potentially issuing the stock at below market values if the employees do convert the options into stock when the options are in-the-money. However, if the options expires out of the money, the shareholders realize equally better benefits. In this case, the firm obtains labor from employees without having paid for the labor by issuing shares. The employee stock options provides a cushioning from the full burnt

Subsequently, several disruptive innovations, at their inception, are not better than existing products – they are worse. Anyone who required a mainframe at the dawn of the Personal Computer age discovered that it was an underwhelming, disappointing alternative; yet, the improvements and iterations demonstrated by the product eventually expanded to capture those in the mainframe market. The initial prospect of fostering low-quality alternatives, thus, does not always live up to the best that

The PC industry has started to develop fast in the 80 's when IBM launched its first PC series and later on when numerous small companies entered the market. PC is a new product and companies had to create the demand to it from the scratch.

Dell is a computer corporation recognized for manufacturing computer systems through parts assemble. In 1983, Michael Dell saw an opportunity in using IBM compatible computers for a new assembly line that can be sold to local businesses. The idea as explained by Michael Dell, in one of his interview, is that in the early days of computers' manufacturing, companies had to be able to produce every part of the system. As the industry matured, companies started to focus on single parts and to become specialized in creating items that can be assembled with other parts to prepare a computer. As a result, Dell understood that to have a competitive edge in the market, they needed to

The large capital requirements to enter the computer industry combined with established brand identities of the current incumbents make barriers to entry high, not to mention the economies of scale and distribution channels that incumbents enjoy which make entry barriers even higher. The current PC incumbents enjoy demand-side benefit of scale in the business sector where PC buyers prefer to buy products from large trusted companies, raising the level of entry barriers.

Dell Computer Corporation was founded in 1984 by Michael Dell. From the early 1990s until the mid-2000s, Dell was ranked as a PC market leader relying on their distinctive marketing pattern “Direct Model” which undertook direct communication with customers and provided customized products. Recently, the PC industry is facing inconceivable worldwide competition, and Dell is gradually losing their competitive advantages by using its direct model in critical business segments. The company is facing shrinkage of growth, increasing competition, declining quality of customer service, and limitation of expansion. These issues have an enormous impact on Dell’s position as a technological giant in the PC industry.

Intel excels at top-down innovation, where highly differentiated components and electronics command a high gross margin relative to competitors, enabling faster design wins with Original Equipment Manufacturers (OEMs) and development partners. This top-down innovation flow within Intel is so dominant, that the product design teams are significantly more productive than even the most advanced business process management teams (Segerstrom, 2007). Microprocessors and the follow-on Internet, networking, security and integrated motherboard products are all predicated on this top-down innovation cycle that leads to product line proliferation in Intel (Zimmerman, 2010). DRAMS were undifferentiated in structure, lacked industry standards that could create differentiated performance or compatibility based on adherence or alignment to standards or customer requirements (Nicholson, 1997). Intel chose to compete on the only other area of their core strength as a company, which is quality management and yield levels (Clark, Walz, Turner, Miszuk, 1993). Getting the yields for DRAMS to 60%, which for a brief period of time lead the global industry, only served to accelerate a very high level of commoditization in the industry (Voss, 1998).

And these analyses will be done with the help of Porter’s 5 forces (see appendix 1, 2, 3). This analysing toll deals with issues which are from outside the industry that impacts the nature of competition within the certain industry. Thurlby, (1998) stated “Understanding the nature of each of these forces gives organisations the necessary insights to enable them to formulate the appropriate strategies to be successful in their market”1. The analysis of the three industry are given belowPC industry (See appendix 1) This competition within the PC industry is extraordinarily high consisting with top companies like Dell, HP, Apple, Gateway and Sony. In order to gain competitive advantage, the key factors are advancement in technology, custom built PCs, reliability and standard customer service. The life cycle of PC industry can be seen as mature (See appendix 6); however the growth of PC’s has not decline. The reason is due to the globalisation trends taking place within the major firms. The barriers very high where there are already five main firms that dominate the market. Therefore, the chances of new PC companies entering the market and get significant hold of market share is very slender. The main two factors that are making the entry level high are mainly cost and distribution and the top five firms also control 70 per cent of the global personal computer market. Another factor may be is that

Dell is the largest computer-systems company based on estimates of global market share. It is also the fastest growing of the major computer-systems companies competing in the business, education government and consumer markets. Dell’s product line includes desktop computers, note book computers, network servers, work stations and storage products. Michael Dell founded the company based on the concept of bypassing retailers and

Dell Inc. is one of the world’s largest information technology firms, serving individual consumers as well as small businesses and large enterprises. The company manufactures and sells PCs and related equipment, including network servers, printers, displays, projectors, and storage systems. Founded from Michael Dell’s dorm at the University of Texas in 1984 with a mere $1,000, Dell’s revenues have grown to approximately $61 billion in 2009. This stemmed primarily from a direct-sales model and a well-managed supply chain, which provided Dell with significant operating margin advantages over competitors. Despite its historic success and legacy, in recent years Dell experienced difficulties in an evolving marketplace, which

The founder of Dell Computer Incorporation is Michael Dell in 1984. Dell’s primary products are personal and office computers and business of Dell also engages in other products such as printers and software. A feature that determines PC companies such as Dell to manage their products is through standardization of PCs. The main benefit of standardization is that it helps Dell to reduce the cost of productions. However, when Dell adopted standardization strategy, it made Dell more generic with other PCs companies such as IBM, Compact and Hewlett-Packard since most of PCs companies had access to the same suppliers such as Intel and Microsoft.

Compaq and Dell stole IBM’s PC market with the right price and the right message.