From the king of PC to the delisting
Dropped out of school to start a business at the age of 19 to create Dell, became the richest man in Texas at the age of 32, retired at the age of 39, and re-emerged at the age of 42... Speaking of the legend of Silicon Valley, Michael Dell, the founder of Dell, is undoubtedly the most famous. of one.
In 1984, 19-year-old Michael Dell founded Dell Computer Corporation and produced the first computer, the Turbo PC, in 1985. With its original direct sales model and efficient supply chain management brought about by customized production, Dell Computer Corporation has grown extremely rapidly.
In 1988, Dell successfully landed on the Nasdaq and raised $30 million in its initial offering. Since then, Dell began to open sales branches in France, Switzerland, Ireland, and other European countries and established a European manufacturing center in Ireland. With rapid progress in the global market, throughout the 1990s, Dell's average revenue growth rate reached 97%, and the average annual growth rate of net profit was 166%.
In 1998, Dell surpassed IBM to become the world's No. 2 PC industry; in 1999, Dell replaced Compaq Computer to become the largest personal computer seller in the United States; since 2001, Dell has occupied the world's No. 1 position for five consecutive years, and has been ranked by the United States Named #1 on "100 Giants" by Business Week. Among them, although HP relied on the acquisition of Compaq to obtain a temporary lead, it is still difficult to compete with Dell in the end.
In 2002, Dell's market value exceeded 100 billion US dollars, and the company's development reached its peak. Two years later, the accomplished Michael Dell chose to step down as CEO and became a legendary entrepreneur.
However, with the increasing saturation of the PC market and the rapid advent of the mobile Internet era, Dell, which is too dependent on the personal computer market, is gradually facing ceiling pressure. To this end, Dell began to expand its product line to servers, notebook computers, storage, printers, and other fields. In 2003, Dell Computer Corporation officially changed its name to Dell Inc.
However, Dell's aggressive expansion into non-computer areas seems to have affected the focus on the main business. Beginning in 2005, the "explosion door" and "core change door" incidents caused by the explosion and fire of a laptop computer severely damaged the global image of Dell. Since then, Dell has been embroiled in a financial fraud scandal in 2006 and was eventually fined $100 million.
After a series of negative events, Dell's sales in the PC field plummeted, and the global PC champion position was also taken away by HP. In January 2007, Michael Dell returned to the helm of the company and immediately began a series of strategic adjustments. However, after a series of changes such as layoffs and diversification, Dell has not yet gotten out of the woods. In 2012, Dell's net profit plummeted by 70%; in 2013, Dell announced a privatization delisting for $24.4 billion.
Strategic transformation and a secondary listing
In fact, the direct selling model has always been a magic weapon for Dell's rapid development in the early days. With its original direct sales model, Dell can not only sell products directly to consumers at low prices by removing the profits of intermediate channel providers but also purchase and produce according to orders, which greatly reduces inventory pressure and capital costs.
However, as the IT industry continues to mature, hardware products become thinner and thinner, and the low-cost advantage brought by Dell's direct sales model gradually disappears. On the other hand, with the continuous expansion of product categories and the ever-expanding sales scale, Dell's sales-based production model has brought increasing pressure on supply chain management and even caused serious dysfunction of production plans.
From another point of view, unlike IBM, Microsoft and Apple, and other technology companies of the era, Dell's success at the end of the last century and the beginning of this century did not depend on core technologies, but on business model innovation, which is also for its future success. Decline laid the groundwork.
After Michael Dell took charge of the company again, he was determined to break the shackles and deadlocks brought by the direct selling model to Dell and began to pay attention to channel dealers and distribution customers in channel strategy. Statistics show that 5 months after Michael Dell took over as CEO of the company, Dell signed 10-20 key agreements with major global sellers, and these sellers sold Dell's products in channels and stores around the world. At this point, Dell officially ended more than 20 years of relying solely on the telephone and Internet to sell computers to individual users.
In addition to aggressive channel changes, Michael Dell also decided to drive Dell's transformation into the enterprise IT market. To this end, Dell has successively acquired dozens of enterprise software and service companies. In September 2016, Dell completed the acquisition of the famous data storage manufacturer EMC (Essential) for $67 billion, and the new company after the merger was named Dell Technology Group.
According to the data, EMC, founded in 1979, is the world's largest enterprise data storage manufacturer, providing innovative product portfolios and services from clients to data centers to the cloud for customers of different sizes in 180 countries. In addition to cloud computing storage technology, EMC's VMware has industry-leading virtualization technology that simplifies servers and saves costs.
It is worth mentioning that Dell was valued at about $24.4 billion when it was privatized and delisted, while the transaction value of the acquisition of EMC was as high as $67 billion. With this "snake swallowing elephant"-style merger, Dell has become the overlord in the field of enterprise data storage, with a market share of more than 35%. At this point, Dell has transformed itself into a technology company that integrates hardware and software for infrastructure, servers, storage, and data protection, and has the strength to rival IBM and other competitors in terms of software services.
After completing the splendid turn from a traditional PC manufacturer to a world-class infrastructure company, Dell Technologies re-listed on the New York Stock Exchange through a backdoor on December 28, 2018, becoming a major news event in the global technology industry that year.
The road ahead: opportunities and challenges coexist
After the re-listing, Dell Technologies has further accelerated the deployment of storage, networking, cloud computing, and other service fields continued to promote product updates and upgrades, and formed a portfolio including Dell, Dell EMC, Vmware, Pivotal The seven business groups including, Secureworks, RSA and Virtustream also achieved stable growth in operating performance.
Data shows that in fiscal years 2019-2021, Dell Technologies’ annual revenue was $90.62 billion, $92.15 billion, and $94.2 billion, respectively, and the revenue scale showed a steady growth trend; In January 2018), Dell Technologies’ revenue exceeded the $100 billion mark for the first time, operating profit was $4.7 billion, a year-on-year increase of 26%, and non-GAAP operating profit was $7.8 billion, a year-on-year increase of 12%, both hitting a record high.
At the same time, the total market value of Dell Technologies reached US$44 billion at the beginning of this year, and the total market value has nearly doubled within three years of its secondary listing. According to Forbes' latest 2022 ranking, Michael Dell is still ranked 16th among the top 20 richest people in the United States with a net worth of $50 billion.
Today, 57-year-old Michael Dell is still in charge of the restructured Dell Technologies Group and the virtualization software giant Vmware, which went public after being split from Dell Technologies, while contemporary Larry Ellison and Bill Gates have long retired or get old.
However, although the transformation of Dell Technologies has achieved certain results, the company's future development path is not smooth.
On August 26, Dell announced its fiscal 2023 financial results for the second quarter ending in July. The data shows that in the second quarter, Dell achieved revenue of 26.43 billion US dollars, an increase of 9% year-on-year, setting a record in the second quarter; however, due to the surge in business costs such as data centers and cloud services and the decline in the gross profit margin of its main business, Dell's second-quarter net profit. Profit fell 43% year over year to $506 million.
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