Table of contents
Dell Computer Corporation was founded in 1984 by Michel Dell, as a result of a growing demand for his pre-formatted hard-disks and upgraded IBM-compatibles. Within a year, Dell introduces its first own-design computer system and in 1989, the company introduces its first laptop. The first laptop introduced did not live up to the Dell standards, and was therefore taken off the market again. Dell had to solve the problem of balancing the production of laptops, desktops and servers. On the laptop market, which Dell was committed to re-enter due to its growing customer base, there were a number of technological problems. Dell had hired John Medica, lead developer of Apple computer's Powerbook line, and according to him, only one of the laptops being developed would be able to compete on the market. However, it would take some time before it was fully developed, so Dell had to reject their customer's demand for laptops. In doing so, Dell made the customers understand that it would not take forever. Dell's way to approach the fact that the company was not able to fulfil the customers wishes, was through honesty. The question was whether this strategy was an advantage for Dell or not. The brand "Dell", which serves various consumer segments, is efficiently delivering attributes such as good quality computers along with operative support services. Dell takes position in direct communication with customers and delivers build-to-order computers. The value created by using the direct model to sell customized products and by providing on-site service ranked Dell between market leaders IMB, Compaq, HP. It represents good performance machines at a reasonable price as well as unique and distinctive "Direct Model", while targeting corporate, medium and small sized businesses and home office consumers.
The advantage of a strong brand, investment in R&D and direct communication with the customers could successfully lead the company into the laptop market. However, the laptop market differs from the desktop market in a number of ways. For Dell the main problem will be the manufacturing process. When producing laptops, most parts will be delivered by suppliers and Dell just ads the last parts. This limits the degree of customization possible and since one of Dell's most important distinguishing features is computer customization, the company risks not attracting customers.
Dell needs to find a way of approaching their former and present customers as well as trying to gain new customers, making their offer interesting to both sides. The new challenge the company faces is to decide whether or not to continue the with the direct business model for the laptop market, or if the Dell should follow its competitors and sell through the retail market.
Due to a changing market environment and existing product life-circle there is a need for the company to revise its present business units and to think about further expansion. There is a shift in customer demand and therefore it is crucial for Dell to recognize in what ways best to satisfy the customers' needs. Dell is considering if re-entering the laptop market is profitable and advisable for the company and whether the distribution channel should be based on the direct model or the indirect model (the retail market). Dell has successfully restructured the management team and hired John Medica, from Apple. Medica's team is developing a new line of Dell laptops, and together with advanced and newly introduced technology this creates an expectation of large profits from the portable production. The main issues related with entering the laptop market are: reduced degree of customization possible in laptops, competitors who are already established on the market, the...
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