Dude, You’re … Michael Dell, Chairman and CEO, Dell
One of the giants of the PC industry, Michael Dell founded his namesake company (DELL) in 1984 with $1,000 and the brilliant idea of selling a complicated product directly to customers, both businesses and consumers. In 1992, Mr. Dell became the youngest CEO ever to earn a ranking on the Fortune 500, and Dell eventually became the world’s largest seller of personal computers. But, after stepping down as CEO a few years ago, Mr. Dell was forced to resume the role in 2007 after changing market conditions caused the company to falter. Average consumers, never Dell’s core audience, became more important, as did retail sales. And Dell has been scrambling to compete with the likes of Apple, HP and Sony in areas like design and technical innovation, which have become more important. Asked back in 1997 what he would do if he were CEO of Apple (AAPL), Dell replied, “What would I do? I’d shut it down and give the money back to the shareholders.” Today, Apple CEO Steve Jobs might say the same thing of Dell …
- Walt welcomes Dell to the stage. He recalls former Dell CEO Kevin Rollins telling a previous D audience that R&D was a waste of time and money. Was that truly the Dell philosophy at the time and is it the Dell philosophy today? Answer: No. Dell explains that the company makes significant investments in R&D and leverages the investments of the industry as well. He notes that Dell will offer a number of new products over the next seven quarters.
- What was it that happened at Dell that brought you back to the company and how are you fixing it? Dell talks about the company’s tenfold growth over 10 years. The strategy that enabled that worked pretty well at the beginning and the middle of our trajectory… but it didn’t work so well at the end. We lost sight of the consumer a bit, Dell says. We needed to reorient the company. We’ve done that now and it’s working.
- Does Dell feel his company is being driven toward low-cost devices, Walt asks, and does he worry about the slim margins on those products and their effects on the company’s bottom line? Dell doesn’t seem too concerned. Says he expects the company to gain market share and grow.
- Walt asks if Dell is feeling an impact from the current economic downturn. In the U.S., there’s definitely caution, replies Dell. The good news for us is that we’re growing significantly faster than the rest of the industry. The company is doing pretty well abroad as well.
- Moving on to industrial design. This ought to be interesting since Dell isn’t exactly a pioneer in that space. Does Dell care about industrial design? Survey says … “NO!” … But Dell says it does and notes positive reviews of some of its new machines and their design and usability. Walt jumps back in: Weren’t design and usability always issues that consumers cared about? Why the sudden focus on it now? Dell says that these days design plays a role that it didn’t play a few years ago. Appearance is more important today.
- What’s Dell up to in the retail space? Will we see the company’s products in big-box retailers like Circuit City, etc. Dell says the company is adding the “walk” option to the “talk” and “click” purchase options it used to offer. Says Dell has a presence in 13,000 retail stores worldwide. Apparently there’s a Dell kiosk in Dubai …
- Walt: Are you going to build your own stores? Dell says the company would prefer to work with retail partners. No plans to recreate the Apple store experience, apparently.
- New topic: When Microsoft looks at the problem its had with Vista, Walt notes, it feels there wasn’t a good coordination between Redmond and hardware makers like Dell. Walt asks if Dell is interested in working more closely with Microsoft to create the next Windows experience–Windows 7. Dell says he is and notes that there’s been an early and very high level of engagement around Windows 7.
- We’re talking craplets now. As he did in his interview with Howard Stringer, Walt notes Microsoft’s complaints about craplets from PC manufacturers ruining the Vista experience. Apparently, Dell offers a “craplet-free” option.
- Dell says that on the consumer side, the company has strong acceptance of Vista. That said, he acknowledges there were some difficulties in the beginning. Things are turning around now, though, he says.
- Walt: Is multi-touch the new interface for interacting with PCs? Will it replace the mouse and other interfaces we have today? I don’t think it will replace them, Dell says. It will complement them. It’s not an all-or-nothing proposition, says Dell. It will be relatively easy for us to build a machine with multi-touch and one without multi-touch as well.
- Reader question about Apple’s recent market share gains and asks what Dell is doing to hedge against that. Dell stresses again that the company is growing market share. Notes that the company has seen very strong growth in China and elsewhere.
- Talking now about Dell’s green initiatives. Dell facilities use a lot of renewable energy (lots of wind in Texas, he deadpans). The company is also working to develop energy-efficient PCs.
- Walt asks: Will Dell ever make a phone? Dell: “You know, if you turn over a Dell notebook, you’ll notice that there’s a place where you can put a SIM card.” He says Dell sees an opportunity for a device that sits between the PC and the phone. Walt notes that people are doing lots of PC tasks on their phones these days. Isn’t Dell interested in a piece of that? The smart-phone market? Dell says the company’s priority right now is in the consumer PC market.
- Q&A: Esther Dyson asks Dell to describe the blogosphere’s influence on Dell.
He responds that what’s going on now with consumer communications and email and blogs means a tremendous level of interaction. We’ve reached out to consumers, he notes, and have “really big ears.”
- Next question: Definition of marketing? We have been working a lot on that. As we introduce new products and platforms, you’ll see more interesting stuff from Dell. When we built the company, we had a lot of entrepreneurial activity: ended up with about 800 marketing agencies, which turned out to be a real challenge. He mentions the DaVinci project, which hopes to bring together all marketing aspects with the goal of more value to consumers.
- Next question: cloud computing? Dell says one of the fastest-growing parts of the business is “clouds.” “We absolutely see some amount of computing shifting into the clouds,” he notes. We think we are powering about half of the Chinese Internet at this point and we don’t see that slowing down. You’ll see us focusing on consumer Web services in the years ahead. Walt wonders if this strategy might come back to bite Dell if consumers decide they can rely on Web services and dispense with more powerful, more expensive PCs. Dell thinks not…
A note about our coverage: This live blog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations expeditiously written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.