The Farmer in the Dell, The Farmer in the Dell, All Praise the Farmer in the Dell!

The amazing success of Dell computers seems contrary to many of today's business trends. In a field where innovation is key, and being "the first" to introduce new technology into a market appears to be crucial for success, Dell managed to reign supreme by doing exactly the opposite. Instead of spending large amounts of money toward product development, Dell allocated only 10% of its revenues for research and development, while competitors such as Gateway, Compaq, HP, and Cisco budgeted between 20-45% of their revenues for research and development (Hartley, 2005). Dell patiently waited for its competitors to spend their money and time in product development, and would scoop up the "new" technology only after it entered a market. Not only was Dell able to save on R&D, but it could offer the "new" technology at lower prices. Apparently many consumers were more than willing to wait for the less expensive Dell versions to become available rather than buying the newest innovations right away.

The second important way that Dell saved money was in the production process. Dell was vigilant in continually streamlining the production process, making sure production details were communicated, and using machines and computers whenever possible, thereby reducing costs associated with employees (Hartley, 2005).

These cost saving measures on the production side, as well as being the first computer company to offer direct sales to consumers, saving greatly in the process, has kept Dell a leader in the computer sales market.

Today, Dell is still striving to provide consumers with the least expensive computers possible. Dell's latest move has been to announce that they will be offering Linux, the free open-source operating system, rather than Microsoft's Windows, as an option during the customization process (Zachary, 5/16/2007). Dell is also leading the way in the rapidly developing country of India, where it is already one of the fastest growing companies. In fact, Dell's plan is to target the Educational, Governmental, and Public Sectors (ITVar News, 5/17/2007). Dell is once again positioning itself to outdo its competition, especially now that Michael Dell has returned to the helm.

Sources:

Hartley, Robert F. 2005. Management Mistakes and Successes. Eighth edition.
Hoboken, NY. John Wiley & Sons Inc.

Dell Aims for Government Business. May 17, 2007. IT Varns News Online. Reference URL: http://www.itvarnews.net/news/journal_comments.asp?JournalID=4746&
PagePosition=1&sTitle=Dell%20aims%20for%20government%20business

Zachary, Daniel. May 16, 2007. Dell Backs Open Source Operating System.
City on a Hill Press Online. Reference URL: http://www.cityonahillpress.com/article.php?id=650

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