Dell Online

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DELL ONLINE

V. KASTURl RANGAN and
MARIE BELL are with Harvard
Business School.

Y. K a s t u r i
Marie

Rangan
Bell

Professor V. Kasturi Rangan and
Research Associate Marie Bell
prepared this case as the basis for
class discussion rather than to
illustrate either effective or
ineffective handling of an
administrative situation. Certain
facts and data in the case have
been disguised.
Copyright © 1998 by the President
and Fellows of Harvard College. To
order copies or request permission
to reproduce materials, call 1-800545-7685 or write Harvard Business School Publishing, Boston, MA
02163. No part of this publication
may be reproduced, stored in a
retrieval system, used in a
spreadsheet, or transmitted in any
form or by any means—electronic,
mechanical, photocopying,
recording, or otherwise—without
the permission of Harvard Business
School.

"It was Michaers idea. He is a visionaiy in our industry," stated Morton Topfer, Vice Chairmen of Dell Computer Corporation,
gesturing toward Michael Dell's office across the hallway.
"There's no doubt that Dell Online is a huge innovation, just as Dell Direct was a decade ago. But times have changed. We are now a big company, with 1997 revenues of nearly $12 billion and a growth rate of 50% over the last three years. We bave to be nimble but metbodical in how we absorb and build on this new approach of going to market," added Topfer.

In July 1996, Dell Computer had launched its online Web site, www.dell.com. The online store mirrored the experience customers had when they called Dell Computer's toll-free 800 number to place a direct order. Site visitors could customize tbe computer's configuration to suit their needs, noting how those changes improved performance and affected pricing. Additionally, customers could check on the status of their order at their convenience and even receive technical support online. The store was open 24 bours a day. The response to the retail store was oven\'helming, witb hundreds of thousands of people visiting the web site each week and generating millions of dollars of revenue for Dell. In addition to its online store. Dell also developed Premier Pages, online interfaces with its key corporate accounts, (kistomers viewed the Premier Pages to get technical help, to access their Dell account executive, or in some cases, to place orders using the Published by John Wiley & Sons, Inc. and

Direct Marketing Educational Foundation, Inc.
CCC 1094-9968/98/040063-24

JOURNAL OF INTERACTIVE MARKETING
VOLUME 12 / NUMBER 4 / A UTUMN 1998

JOURNAL OF INTERACTIVE

customer's preferred pricing and standard configurations. Scott Eckert, the 30-year-old director of Deli Online, remarked,

USA, Staples, and Sam's Clubs in the U.S. Moreover, quality problems with its laptops had exacerbated Dell's financial woes. While some ptuidits were qtiestioning Dell's future, the
company acted decisively, exiting the retail
channel and resolving to re-enter the laptop
market only when that product's quality
matched or exceeded the quality of the Dell
desktop. By 1997, tbe Latitude, Dell's laptop,
had won PC Computing md^dzine's Torture Test
twice in three years in addition to winning Business Week's Industrial Design Excellence Award. Dell's product line evolved with the P(^ market. In 1997, Dell manufactured two types of desktop systems: the Dimension line tbat offered higb-end technology at value prices, and the OptiPlex line featuring highly-reliable network ready systems designed for corporate and institutional customers. Similarly witb notebooks (laptops), the Inspiron line offered stateof-the-art tecbnology at aggressive prices, while the Latittide line offered reliable notebooks designed for the office network, eqtiipped with depenciable network connectivity. In addition

to its desktop and laptop products, Dell introduced its PC/LAN (server) product the PowerEdge in 1996 and workstations in 1997. By 1996, Dell sales...
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