Looking to the future - exclusive Michael Dell interview

By Martin Courtney
04 Sep 2008 View Comments
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Michael Dell
Dell: Customer loyalty is the foundation of good business

Last year, after a series of corporate problems, Michael Dell returned to the role of chief executive at the company that bears his name. The vendor was subjected to an investigation into its accounting practices by US authorities; it faced criticism over poor customer service; and perhaps most painful of all for its founder, Dell was overtaken by HP as the world’s largest PC supplier.

Computing talked exclusively to Dell about his plans for the future.

Further reading

What impact is the economic situation having on the company?

Dell has increased its growth rate over the past three quarters, and is growing at more than 1.5 times the industry growth rate. The macro-economic situation creates some challenges, in the financial sector for example, but even here firms still have enormous requirements to process information using servers and storage, and there is good growth in emerging countries as well. Lots of people in emerging countries are going straight from using a mobile phone to using a laptop.

How has Dell changed over the past few years?

Dell used to be focused on cost, but it is moving from a “cost at all costs” model to a value model ­ there are things we can invest in that increase the value of our product quite a lot.

There is a lot still to do in the commercial world, but there is more opportunity to drive success in the consumer and datacentre market. Also, if you ask customers what they know about Dell, they say it makes PCs that big companies buy. In the consumer market, we use personalisation as a differentiator, but no one thing defines the business sector.

Has Dell completely abandoned the direct sales model?

There is now a new relationship with the customer. After 10 years, Dell had used up its direct strategy, so it had to change. The direct business was great for big firms, they like it, but they also like partnerships. Even our competitors rely on some benefits of the direct business model.

Will Dell aim to be more like IBM in terms of a products and services business mix going forward?

It is never good strategy to say, let’s be like this company or that one. It is better to say, let’s meet the needs of the enterprise or consumer customer more effectively, and build the skills to do that, either through acquisition or partnerships, and get the technologies to expand into new areas. Customer loyalty is the foundation of good business.

Why does Dell have a presence in both Facebook and Second Life?

We believe in listening to what people say and now we have big ears backed up by big servers. We have two million customer conversations a year ­ when things go right, we find out faster and if they go wrong we find that out faster too.

What made you return as chief executive in February 2007 after standing down in 2004?

The board asked me to come back as chief executive, but I had not really gone anywhere ­ I still had an office and came in regularly. The company was in need of a clearer strategy and focus. I had been the chief executive for 20 years, so I felt I would make a good candidate. I was happy to do it and things are going pretty well.

Why is Dell closing factories and do you expect to make more job cuts?

We had some excess manufacturing capacity and we needed to make things more efficient. I do not have figures on the job cuts but if employees are creating new products and services, or dealing with customers, we are investing in those areas, but we are not investing in factories.

Dell the company has your family name ­ how do you equate your personal performance with the performance of the firm?

The board of directors asks now and again: “Michael, what happens if you are hit by a truck?” But they know what to do if that happens. I stay away from trucks and I am in good health, but I have talented leaders and special responsibilities. It is an illusion that superstar executives in large companies run everything by themselves.

Where do you see Dell’s growth coming from in the next few years?

After 24 years we are finally at the point where the business outside the US is bigger than it is in the US, and it looks as if it will keep growing. Half the revenue comes from PCs, and the other half from storage, servers and so on, but our growth
is entrepreneurial because we are doing so many new product lines. We do not care if people just want notebooks or desktop PCs or workstations, we can do each just as well.

What will Dell look like in 10 years?

I think the value of predictions drops off beyond three or four years. A 10-year plan is not a good use of thinking time, and we tend to plan more in the three to five-year timeframe. There are significant opportunities for expansion in the enterprise business, new things to do and investments to make in new areas.

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