Michael S. Dell

Biography

Michael S. Dell is the founder of Dell Inc., which revolutionized the personal computer industry through lean overhead, aggressive pricing and direct sales between manufacturer and consumer.

Dell was born in 1965 in Houston, Texas, to a Jewish family. His mother was a stockbroker and his father was an orthodontist. He showed an early interest in computers and entrepreneurship, becoming a successful newspaper salesperson while still in high school.

As a freshman at the University of Texas at Austin, he began a business assembling and selling upgrade kits for personal computers. He obtained a vendor’s license from the state of Texas to bid on government computing contracts. In January 1984, he registered his company as “PC’s Limited” and began operations out of his condominium. His plan was to manufacture computers and directly sell them to customers. By cutting out the retailer and staying lean, he planned to pass on savings to buyers.

In May, 1984, he incorporated his venture as “Dell Computer Corporation” and set up shop in North Austin with a few people to take and fulfill orders by phone and three employees to build the PCs. The company’s growth was explosive, even as its major competitors in the PC market, IBM and Compaq, declined. By the early 1990s, Dell was reporting quarterly sales gains of 75 percent or more. In 1992, when the company was first listed in the Fortune 500, Dell was only twenty-seven years old.

Dell’s success emerged at the intersection of several late-twentieth century economic and technological trends. Like Nike sneakers and other global labels, Dell focused more on developing a brand than on developing manufacturing capacity. Taking advantage of innovations in shipping and “just-in-time” production, Dell outsourced component manufacture to factories around the world. Suppliers shipped components to Dell, Inc., which assembled computers to order and shipped them directly to customers. With lower labor costs and leaner inventories than its rivals, Dell undercut competitors and could quickly respond to market changes. Dell was becoming less of a manufacturer, and more of a vehicle for marketing PCs and providing financing for their purchase. By 1996, Dell was selling its computers on the Internet, and also launched a server business. It had become a leader in both the consumer and business marketplace.

Dell, Inc., stock value peaked in 2000. Since then, Dell has come under criticism for increasingly relying on overseas manufacturing at the expense of American jobs, taking advantage of tax loopholes that have allowed the company to shield billions of dollars from federal taxation, and directing his private equity firm, MSD Capital, to acquire failed mortgage servicer IndyMac Bank with billions in government subsidies. Environmentalists have also faulted Dell for condoning its suppliers' use of exploited labor and failing to account for the problem of electronic waste. As the stock value has fallen, activist investors have attempted to divest Michael Dell from his leadership role, claiming he was unresponsive to shifts in the industry towards tablet and mobile computers. In response, Dell has recently acted to purchase and privatize his eponymous corporation.