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Focus plus excitement: Michael Dell talks turnarounds
While avoiding trucks
Interview Despite harsh economic times, Michael Dell hasn’t been complaining. "We've been growing faster than the industry for the last three quarters," the Dell CEO told a group of Latin-American and European reporters.
In Round Rock, Texas, a town which wouldn’t have existed today if Dell hadn't established its headquarters there, Michael Dell walks the Turnaround Walk. Although Dell has a long way to go before it can recapture its former glory, customers are again embracing its products.
"Even the financial sector has enormous requirements to process information; they need more servers and storage than ever before,” Michael Dell explained. “We also profit from emerging countries, where sales of PCs echo the massive growth of the mobile phone. Even here in the US, where industry sales have been practically flat, we managed growth by expanding channel partners and retailers."
It has been more than a year since founder Michael Dell returned to the world's largest PC vendor as CEO. He hired a new slate of managers, including long-time General Electric executive Brian T. Gladden as CFO, but also issued a memo in which he promised to stop the bleeding, find new areas for business growth and eliminate overlaps in the organisation. "The company needed focus, a new direction.”
Since his return, the firm has started selling computers in more than 13,000 stores worldwide and is moving its focus from "cost at all cost, to value," Dell says. "As we move into the consumer and data centre space, there are more opportunities to differentiate ourselves. When we talk to consumers about the brand, people tended to say: Dell is what you get when you work for a big company. They weren’t too excited about our products. We are definitely going to change that by creating unique products with more color, style and personalisation."
Where did that come from?
In the business area Dell of course competes head to head with IBM and HP. "I don't think there is one silver bullet to differentiate us in the business space,” Dell explained. “We have become ten times larger in the past ten years and obviously started offering the same kind of services as our competitors because customers ask for it. But look where we are now. When we started in servers we had zero per cent market share, now we have 28 per cent worldwide and 40 per cent in the US. Where did that come from? Mainly from IBM and HP. Customers preferred Dell.”
Doesn’t HP's acquisition of computer services giant EDS worry Dell at all? "Not really. EDS has only three percent market share. The other 97 per cent comes from dozens of companies, who have intensified their relationship with Dell as a result."
One area Dell intends to invest in is building customer relationships. The company is promoting itself through online communities such as Facebook and recently generated $500m revenues off Twitter (!) by using the microblog service as a sales channel. "We started Dell by listening," Dell says. "Now we are turbocharging our listening by communicating directly with customers through forums and weblogs. It gives us the ability to understand the needs of our customers and to respond faster."
"I won't retire any time soon," Dell said when asked about Bill Gates leaving Microsoft and Steve Jobs’ alleged health issues. "For one, I'm a lot younger than these guys. One question the board asked me when I returned was: What happens when a truck hits you? This is why I’m avoiding trucks. But seriously, you can’t run a company these days as a superstar executive. Our company is build by a team. I’m pretty sure they can manage without me.” ®