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Registering a world-wide turnover of $12.3 billion for the four quarters which ended on
2 February 1998, Dell Computer, has become one of the largest computer system manufacturer
in the world. Founded by Michael Dell in 1984, the success of Dell is due to a basic
formula it follows–the direct business model–in contrast to the widely accepted
channel model. In India, though Dell’s product offerings range from servers to
desktops to high-end notebooks, it has had a niche focus, targeting only the MNCs and
large government and R&D institutions. 1998 could be the year when this company will
start being more aggressive than just overseeing its business from a small liason office
in Bangalore. Phillip E Kelly, president, Asia-Pacific, Dell
Computer reveals his company’s future plan’s in India in an interview with Nareshchandra
Laishram. The excerpts ...
While world-wide, companies follow the channel
way of selling products, why have you adopted the direct model?
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Dell’s success has essentially been driven by its direct business
model. Through it, we establish direct, personal relationships with customers and partners
(as we do in India) and this allows us to understand their needs better and provide
solutions customized to their requirements. Through our business model, Dell takes a
manufacturer-to-order approach which enables efficient procurement, manufacturing and
distribution, thereby providing Dell customers with the latest, relevant technology at
competitive prices.
In India, where channels seem to be in the
limelight, your direct model of selling has suffered.
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Let us clarify by adding that Dell has adopted a multi-partner
methodology for India. The market has been growing quite significantly and we need to
achieve broader coverage in response to requests from our customers. To address this, we
have established a robust network of distributors that are focused on providing the best
value technology to give the maximum return to our customers in India.
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Dell is relatively new to the region, having entered Asia-Pacific in
select markets with investments in regional facilities, management, service, and technical
personnel in 1993. However, according to IDC’s fourth quarter ’97 report for
Asia-Pacific, Dell is ranked #10 in India based on unit shipments. We are pleased with our
progress and look forward to continued growth.
Even as you persist with the direct model, you
still don’t have the infrastructure. India does not seem to be a priority to you ...
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On the contrary, the Indian market is important for Dell Computers. We
have set our sights on being very successful in the market-place and in order to do that
we now have an office in Bangalore and representatives in Delhi and Bombay. We have added
a number of team members to support our business.
As a first step in entering a market as large and diverse as India, we
focus on providing service and support to our global customers that have operations here
and are therefore able to support our customers on a truly global basis. Our Global
Enterprise Programme, is a specific suite of services and support that are customized to
meet customer needs.
Our enterprise systems |
As mentioned earlier, we have established a robust network of
distributors that are focused on providing the best value technology that will provide the
maximum return to our customers in India.
We continue to review our operations in India and our investments going
forward. India is undoubtedly an important market and Dell remains committed to existing
and new customers in the country.
Is Dell just a PC vendor? What kind of
marketing strategy do you have on the networking side? What is the range of your
networking products?
Dell is an enterprise solutions provider offering a complete range of
high quality desktops, notebooks, workstations, and powerful NT-based servers for large
corporations and multinational companies. As the capabilities of NT servers migrate
upwards, so will our already strong capabilities in that category.
Our enterprise systems business, comprising sales of server and
workstation products, grew more than 250 percent on a year-over-year basis for the period
that ended 2 February 1998. Dell’s momentum in this market reflects the quality of
the products and the price position we have maintained. In fact, we have just announced a
total technological evolution of all our products, leveraging on the next-generation of
Intel Pentium II processors. This includes server and workstation products designed to
meet the expanding needs of our enterprise customers.
For large enterprises, Dell is focused on helping them better manage
the total cost of technology ownership. Many of our largest customers are beginning to
devote a lot of time in understanding the cost of a product over its entire life, and what
needs to be done to reduce that cost. One area where we already lead the industry is
integration services. Through our Dell Plus program, we integrate a wide variety of
hardware and software offerings as systems move through our factory.
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Compaq has acquired Digital, obviously to
pitch itself in the high-end server segment. What about you?
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Our customers in the high-end server segment have indicated that they
are most concerned about accountability, technical efficiency, product quality, and
reliability. Dell’s business model meets these customer requirements and we continue
to be recognized as providing the best overall customer experience in the industry. These
companies care about lowering their total cost of ownership, which encompasses price,
quality and reliability, service capability, convenience and accountability, among other
things.
The fact that we provide a single point of accountability,
factor-integration of custom hardware and software, lifetime technical support, just to
name a few, has continually ranked Dell at the top of the industry in customer
satisfaction and services surveys.
At a recent DataPro survey, Dell was ranked #1 by PC server customers
world-wide as meeting customer demand for reliable servers with superior performance and
price.
Is NT the end for you? Are you looking at the
Unix platform?
The Wintel market continues to experience aggressive growth as
businesses recognize the need to adhere to a common base of industry standards. This
adherence will provide them with the ability to assemble a solution from a broad range of
choices in a competitive market.
The latest generation of Intel’s Pentium II processors has now
achieved availability, performance, and scalability capabilities previously associated
with minicomputer-class systems. Windows NT, on the other hand, has gained industry
recognition as setting a new standard of interoperability while at the same time lowering
the cost of entry for customers.
At Dell, we have a long and proven track record of being early in
market with the latest technologies that meet customer needs. We aim to deliver quality,
standards-based solutions to our customers and at the same time, remain committed to
supporting customers operating on their platform of choice.
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What is the volume of your business that comes
from Asia? How much does India contribute?
Asia-Pacific, including Japan, accounted for 7 percent of Dell’s
total revenue for the last financial year. For the last quarter ending 1 February 1998,
Dell’s Asia-Pacific revenues exceeded $240 million, a 79 percent increase over the
year-ago quarter, making the region the fastest growing in the world for Dell. According
to IDC’s fourth quarter ’97 report, Dell is ranked #9 in Asia-Pacific (excluding
Japan) based on unit shipments.
Generally, we do not provide country-specific revenue figures or
percentages but as mentioned earlier, Dell is #10 in India and we hope to see this move up
as we grow in the country and the region.