Dell Computer Corporations Michael Dells decisive and apparently uncontested vision for the sustained growth of the corporation hinges on advancing the Dell Direct Model. A distinct advantage displayed by Dell versus his closest competitors in this arena-Gateway, Compaq, Hewlett-Packard and Digital Equipment seems to be the synergy created by the integration of marketing communication efforts and their ability to accurately adjust sales staff and production levels to meet the corresponding demand.The primary problem facing Dell and its competitors is the general softening of the PC and PC server/peripheral markets during a time when the industry is in the maturity stage. The mature industry in this case finds that roughly 50% of U.S. households own one or more PCs at the present time. While the penetration into the household PC market is not effectively stalled, it has definitely slowed. The rate of replacements, upgrades and new penetration is not expected to continue to grow beyond the 10 to 15% rate in the near term (Spooner, 2001).1 This market becomes increasingly low-margin as Dell and its competitors are aggressively marketing the low-end PC models. These bare bones models fall into the sub $1000 range (and falling) and include some of the older processing components. In this area Dell has clearly led the field in price competition. The low-end models of the PC market are encroaching upon the market share high-end, high margin models. Industry shipments of notebook computer grew nearly four times faster than the rate for desktops, and Dell claimed a disproportionate share of that volume. Combined shipments of its Insperon and Latitude notebook computers rose at more than twice the industry average. Globally, the run rate for Dells portable computing business is nearly $9 billion, and nearly one in four notebooks sold in the U.S. last quarter carried the Dell name (Dell, 2001).2 This past fiscal quarter Dell over...
