Dell 3 - Dell s Dilemma-Enc

Dell’s DilemmaCorporates or Consumers?Case studyReference no 305-633-1

This case was written by Sireesha Mallareddy, under the direction of Sumit Kumar Chaudhuri, ICFAI Business School Case Development Centre.It is intended to be used as the basis for class discussion rather than to illustrateeither effective or ineffective handling of a management situation. The case wascompiled from published sources.

© 2005, ICFAI Business School Case Development Centre.No part of this publication may be copied, stored, transmitted, reproducedor distributed in any form or medium whatsoever without the permissionof the copyright owner.

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DELL’s Dilemma: Corporates or Consumers?

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DELL’s Dilemma:Corporates or Consumers?

“Dell is too much of a one-trick pony. They’re not innovating, or building enough new businesses. They’veexecuted flawlessly for 10 years, but that’s kind of an impossible thing to continue.”1

Dell Inc., the pioneer of direct selling through ‘Virtual Integration’ in the global PC industry is expected to generaterevenue of $55 billion2 by the fiscal year end, January 2006. The company plans to increase its revenue to $60 billion bythe end of fiscal year 2007.3 It is the world’s largest PC maker with a global market share of 14% and 33.2% market sharein the US, its home market.4 Since its inception during the mid-1980s, Dell has been known for its built-to-order manufacturing,5% inventory, low costs, high margins and its focus on large enterprises.

However, in January 2006, the company is expected to record a decrease in growth of its consumer business to 10%(at $8.4 billion) from 18% and 13% in 2004 and 2005 respectively.5 Forecasting the future trends in the global PC market,IDC,6 a US based market intelligence company, reports that the global consumer market would grow at 10% in 2007, whilethe corporate market would grow at 7.8%.7 To compete in the converging PC and consumer electronics market, it is opinedthat Dell needs to invest in innovations and marketing to match the fast changing tastes of its tech-savvy consumers.

Selling to Corporates: DELL’s Traditional Business Line“You actually get to have a relationship with the customer. And that creates valuable information, which, in turn, allows

us to leverage our relationships with both suppliers and customers. Couple that information with technology, and you havethe infrastructure to revolutionize the fundamental business models of major global companies.”8

– Michael Dell, Chairman, Dell Inc.

When Dell Computer Corporation was formed in 1984 [Exhibit 1], the PC industry had developed its own standards forcomputer components – the monitor, keyboard, memory, disk drive as well as software. The industry had verticallyintegrated companies like IBM as well as specialists like Microsoft, a software developer. PC customers, enterprises as wellas consumers, were well informed about computing technology and required no personal selling. Michael Dell, the founderof Dell had an intuition that customization and speed in delivery of the finished product would give his company a higher profitmargin over industry leaders like HP and IBM. The company delivered its products directly to its customers without theinvolvement of middlemen. Dell avoided the display of its products in retailer stores contrary to the then existing trend andfocused its attention on improving and maintaining the quality of its products.1 Lee, Louise “It’s Bad to Worse at Dell”, www.businessweek.com, November 1st 20052 Lee, Louise and Burrows, Peter “Dell’s Edge Is Getting Duller”, www.businessweek.com, November 14th 20053 Burt, Jeffrey “Dell Means Business”, www.eweek.com, May 10th 20044 “It’s Bad to Worse at Dell”, op.cit.5 “Dell’s Edge Is Getting Duller”, op.cit.6 IDC is a subsidiary of IDG, the world’s leading technology research and events company established in 1964. IDC provides market intelligence, advisory services and events to the information

technology and telecommunications industries. It has 775 analysts in 50 countries providing global, regional and local expertise on technology and industry opportunities and trends.7 “Dell’s Edge Is Getting Duller”, op.cit.8 Magretta, Joan “The Power of Virtual Integration: An Interview with Dell Computer’s Michael Dell”, Harvard Business Review, March – April 1998, p.74


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Dell directly sourced the components of its computers from component manufacturers and assembled them in its ownmanufacturing facilities according to the specifications of customers. Sales personnel of Dell received orders from customersdirectly over telephone. Later, Dell started its e-Commerce platform www.dell.com to receive orders in addition to telephone.Dell delivered the PCs free of cost directly from its factories to its customers. Customization of PCs as per the needs of thecustomers eliminated the requirement of plants, equipments and R&D at Dell. Analysts opined that Dell’s business modelturned a product business into a service industry.

In 1985, Dell introduced its first indigenously designed computer system, Turbo, with an Intel 8088 processor and speedof 8 MHz. Dell also introduced its ‘next day, on-site’ product service in 1987, to have first-hand information about customercomplaints and trends prevalent in the PC industry. In 1986, Dell had revenue of $60 million,9 which increased to $2 billionin 1992. During its IPO in 1987, Dell raised $30 million and the company was valued at $87 million.10 In 1992, for the firsttime, Dell featured in Fortune 500 world’s largest companies. Dell also became one of the five largest computer manufacturersworldwide in 1993. It was believed that the success of Dell was partly due its focus on enterprises which boosted its costefficiencies.

In 1993, to further expand globally, Dell forayed into Australia and Japan. Before this, it had entered the UK in 1987.Dell’s UK business had revenues of $2 billion by 1999.11 Dell supported its global expansion by establishing its ownmanufacturing plants in Ireland (established in 1990 it serves the needs of the European, Middle-Eastern and Africanmarkets.), Penang, Malaysia (in 1996), Xiamen, China (in 1998) and Eldorado do Sul, Brazil (to serve Latin America in1999). The company has also established two manufacturing plants in Texas and Tennessee, US, its main market.

In addition to expanding its manufacturing capabilities the company also improved its products [Exhibit 2] in sync with thetrends in the industry and tastes of its customers. The company introduced its notebook computer as early as 1989 and laterentered the network-server market in 1996 with the advent of computer networking technology. In 1997, the companyintroduced its first workstation systems (in 2000, Dell was No.1 in global workstation shipments) and storage products. It alsointroduced network switches (in 2001), projectors as well as printers (2002) for the corporate as well as consumer markets.The year 2003 witnessed the launch of Dell’s consumer electronics, an extension of the company’s product portfolio. Dellintroduced flat-panel TVs, DJ music player and online music download service which could be purchased from its websitethat was launched in 1994.

Dell’s direct selling model was further enhanced with the introduction of its website www.dell.com as a static page. Initiallythe web page provided information about the various activities carried out by the company. Dell started selling desktops andnotebooks through its web portal in 1997 and started selling servers in the next year. Through Dell’s portal, buyers couldclick through the web page and assemble a computer system piece by piece. They could choose parameters like hard drivesize and processor speed based on their budget and requirement. While its competitors too offered this service, purchasingthrough www.dell.com allowed the customer to bypass their visit to the retail store in order to get their products. Dell directlydelivered the product to the customers after they completed the payment formalities through their credit card on the website.Dell has no central warehouse facility but instead shipped the product to customers directly from its manufacturing plants.Based on customer’s location, a shipment may originate from a Dell plant in Ireland, China, Brazil, Malaysia, Texas orTennessee. Deborah McNair, spokesperson of Dell Inc., said, “This direct contact with consumers gives Dell a competitiveadvantage. Because we know exactly what our customers are ordering, it’s a 1-to-1 proposition. We get feedback on howour site is working so we’re constantly making tweaks to it to make the experience for our customers easier.”12

To further improve the efficiency of the services of its predominantly enterprise customers, Dell introduced its ‘PremierPages’ web page. Premier Pages were customized to the specific needs of its corporate customers. Each company’sPremier Page gave its employees Internet access to password protected, customer specific information about Dell’s productsand services. When a customer places the order through Premier Pages, the order gets routed up to the person concernedin the company who needs to approve it and is sent directly to Dell for further evaluation. Through the Premier Pages,customers can track records and inventory through detailed purchasing reports on the basis of group, geographic location,product, average unit price and total dollar value. Commenting on the Premier Page service provided by Dell, Michael Dell,Chairman of Dell Inc., said, “Premier Pages are not a substitute for a live sales representative. Instead they augment the9 Dell, Michael and Catherine Fredman “Direct from DELL”, PROFILE BOOKS LTD, 2003, p.2610 Ibid. p.3211 Ibid. p.2812 Maguire, James “Case Study: Dell.com”, www.ecommerce-guide.com, March 3rd 2003


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sales rep’s functions. The relationship is similar to that between a customer and a bank. For major transactions, customerswant to talk directly to a real person; other times they’re happy to use an ATM.”13

By the end of fiscal year 2001, Dell had half of its $32 billion revenue coming from its website.14 It was estimated that inthe last quarter of 2002, www.dell.com logged a billion page views and became the first ever company to do so.15 By the endof fiscal year 2002, in the backdrop of the global IT recession, Dell had revenue of $ 31 billion, 70% of it from the enterprisesas well as consumers in the US [Exhibit 3]. The business segments of Dell — enterprises, government and educationalinstitutions accounted for 78% of the revenue while consumers and small businesses accounted for 22% [Exhibits 4]. By2003, one out of two PCs purchased by large enterprises worldwide was from Dell. In the backdrop of converging digitaltechnologies, in addition to keeping up with the tradition of its focus on large enterprises, Dell also concentrated on improvingits consumer market that predominantly purchased desktop PCs and notebook computers.

In 2003, in addition to entering the consumer electronics market, Dell started its own kiosks in shopping malls in the US.The kiosks were mini-stores, about 10-12 feet wide which had basic inventory and are supported by sales representativesof Dell. The company opened 57 kiosks in nine states of the US. The kiosks enabled the shoppers in the malls to acquaintthemselves with the Dell products. The shoppers could later place orders right in the kiosk or order over telephone orthrough the website. The company renamed itself as Dell Inc. in 2003, “to reflect the evolution of the company from acomputer manufacturer to a company that provides a wide array of technology-related services.”16 By the end of fiscal year2004-2005, Dell had revenue of $49 billion, of which $25 billion was contributed by US enterprises and consumerscontributed $8 billion.17 Bob Kaufman, spokesperson for Dell Inc, said, “About 13 percent of our total revenue is consumerbusiness and the rest is B2B. Our major focus in the IT marketplace is selling servers, storage products, network switchesand services to corporate customers. A lot of the e-commerce engine revolves around that. B2C keeps them in newspapersa lot, B2B keeps them in the black.”18

Growing Importance of Consumer PC Market“The whole new ballgame is these worlds (computing and consumer electronics) converging, and that’s a world we’re

comfortable in.”19

– Michael Dell, Chairman, Dell Inc.

The PC, which was introduced by IBM in 1981, underwent several transformations since its introduction, basiccomponents remaining the same. New technology or improvements in technology increased the speed of computing,increased the memory and added additional features to the PC like its capability to function as a part of the network.Traditional desktops, laptops, workstations and servers were joined by notebook and tablet PCs by late 1990s. During thisperiod, the emergence of digital technology and the Internet enhanced the basic functionality of the PC which broughttraditional IT and consumer electronics companies to share a common platform. The range of products that could beoperated through the PC continued to expand between 1999 and 2003. Devices like PDAs, cell phones, audio as well asvideo players, cameras could be operated through the PC. The consumers started perceiving PC more as a consumerelectronics product rather than a high technology product as in the past.

In addition to this, the standardization of PC components and increased product life cycles, coupled with slowdown ininnovation, resulted in the saturation of the consumer PC market. The consumer PC market includes customers of smallbusinesses and home PC users. According to a report of the computer industry almanac in 2001, Asia Pacific region, whichhas 63.6 million home PC users in 2001, would lead market with 197.6 million in 2007 [Exhibit 5]. According to a report givenby Bank of America Securities in 2002, US leads the global PC industry, accounting for 34% of total global PC sales. USaccounts for 32% of all home PC users and 26% of all non-home PC users around the world. A study conducted byForrester Research on the US households in 2001 revealed that 64% already owned at least one PC and were intendingto purchase replacement or additional units for the home. A survey by US Consumer Electronics Association in 200213 Dell, Michael and Catherine Fredman “Direct from DELL”, PROFILE BOOKS LTD, 2003, p.9814 “Financial Report”, www.dell.com, November 23rd 200515 “Direct from DELL”, op.cit.16 www.dell.com17 “Financial Report”, op.cit.18 “Case Study: Dell.com”, op.cit.19 Maney, Kevin “Dell to dive into consumer electronics market”, www.usatoday.com, August 25th 2003


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revealed that 52% consumers who do not own a PC had no intention of purchasing a PC in the future and only 32% hadthe intention to do so within the next three years. Decrease in demand from first-time buyers suggested that the primarysource of sales and revenue growth would be those consumers who already own PCs. This involved upgrading/replacingexisting models in order to take advantage of new technologies, new operating systems and applications.

As PC consumers became more experienced, the potential buyers from specialist retailers and manufacturers alsoincreased. It proved to be a boon for the direct-selling manufacturers who lack the provision for pre-sales advice requiredfor inexperienced consumers. However, buyers of consumer electronics relied on pre-sales advice and information fromsales staff in large electronics stores. Product advertising became a key source of general and pricing information for thecustomers.

Further, over a period of time, PCs offered by various companies were functionally identical and differences betweenthem were those related to speed, reliability and design. With the convergence of digital technology, many PC manufacturersforayed into consumer electronics and digital music. By entering the consumer electronics market, the traditional PCmanufacturers were in direct competition with consumer electronic majors like Sony Corp., Sharp Inc., Toshiba Corp.,Panasonic (the TV division of Matsushita Electric Industrial Co.) and Samsung Electronics Co. Under such circumstances,the big PC manufactures like Dell, HP and Gateway started differentiating themselves in the market. While HP targeted themass market, Gateway focused on users who work from their homes and Dell banked on knowledgeable customers. Sonyand Apple, the technology leaders, targeted the high-end electronics market. In 2002, Gateway expanded into big-screenplasma televisions and digital cameras. Apple introduced its iPod in the same year that enabled the PC user to download andstore music tunes from the Internet. In 2003, HP announced 158 new products aimed at consumers, involving digitalproducts like televisions and cameras. The market also witnessed the entry of new companies like Lenovo, a Chinese PCmanufacturer that acquired the PC business of IBM in 2004. Lenovo plans to re-enter the retail notebook market by usingthe IBM ThinkPad in 2006.

Analysts opined that leadership in the current PC business is also dependent on speed of design innovation as muchon the marketing and services offered to the consumers. Since 2004, HP launched initiatives to build customer loyalty. HPemployees collected and processed information on product complaints that they received from their customers. The customersreceived a call from a HP representative within 48 hours. Another is a diagnostic tool that HP developed to help consumersfigure out what kind of problem they have, even if it does not involve HP products. Dell, on a fee payment, helped itscustomers with non-Dell product problems. Diana L. Bell, senior vice-president at HP, said, “Given today’s digital lifestyle,it’s vital. We have to do more than say, ‘here’s the product, and catch me if you can.”20

Traditional PC manufacturers like HP and Apple spend on R&D to introduce new products as well as design. KevinKettler, Chief Technology Officer, Dell Inc., while commenting on the R&D strategy of Dell, said, “At Dell, our approach toinnovation focuses on customer requirements. Customers define what is important. Dell innovates internally and throughcollaboration with others in the industry. Many of Dell’s innovations are shared through standards, rather than lockingcustomers into proprietary solutions. Customers gain flexibility and real value. This approach is direct, customer-driveninnovation.”21 The R&D budget of Dell was 0.9% of the total revenue of the company in fiscal year 2003-2005, while it was6% for IBM. During the second quarter of the fiscal year 2005-2006, HP’s unit-growth rate was 17.9%, while it was 17.8%for Dell, which has been the only PC maker able to consistently post profits even during the recession in the industry.

The Strategic Choice: Corporates or Consumers?“Dell has two choices. Follow the consumer market down in pricing and adjust its costs accordingly. Or focus just on

[business] products and sacrifice market share and growth rate for profits.”22

– Charles Smulders, Analyst at Gartner Inc.

With 18% share in the total global IT market of $1.2 trillion, Dell plans to increase its current revenue of $49 billion to $80billion. Analysts forecast that 60% to 65% of Dell’s projected $80 billion revenue would be derived from PC products –including TVs, displays, media center PCs and accessories. It is estimated that the aggregate revenue growth of these20 Lee, Louise “Hanging Up On Dell?”, www.businessweek.com, October 10th 200521 www.dell.com22 “Dell’s Edge Is Getting Duller”, op.cit.


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categories would be twice that in desktop computers due to higher profit margins. By the end of fiscal year 2005-2006, Dellexpects a growth of 9% to 10% in its sales, which is less compared to its 20% to 25% growth in the late 1990s. The reductionis attributed to the decrease in prices of PCs and profit margins due to competition from its rivals that manufacture PC in Asiaat competitive costs.

Branded PC manufacturers including Dell Inc., Hewlett-Packard Co. and Gateway Inc., launched new consumer PClines in 2005. They offered desktop models priced at $250 to $350 after rebates. They priced notebooks at $500 to $600,after rebates. Starting prices for small and midsize business oriented PCs ranged from $350 to $400 and $700 for anotebook. Dell targeted the high-end customers with its XPS model.

Dell has been facing challenges in the enterprise as well as consumer market. With increasing Internet traffic, manyenterprise customers are looking for more powerful servers rather than connecting together lower-end models in which Dellspecializes. IBM and HP offered blade servers, which are servers on a motherboard that can be slid side-by-side into aconsole. Dell has been struggling to introduce blade servers, as managing the workload generated by them requiressophisticated software. While its competitors are manufacturing servers based on Advanced Micro Devices’ (AMD) Opteronchip, which is increasingly being used in high-speed servers by corporate customers, Dell uses Intel chips. GregPopodopolous, chief technology officer at Sun Microsystems, said, “Dell is stuck with only Intel and Intel is just not competitiveright now. Unless Dell comes up with big new ideas — say, a plan for making faster headway in other tech markets such asnetworking, storage, or consumer electronics — it’s in danger of putting up a performance that’s more in line with the rest ofthe industry.”23

The revenue growth of consumer business of Dell has been decreasing which was at its height in 2002 at 27%[Exhibit 6]. Commenting on the company’s strategy in the consumer market, Kevin Rollins, CEO of Dell Inc., said, “We’retrying to stay very close to the PC. For the time being, I think printing and imaging...color, both inkjet and laser—that’s reallythe big push. My guess is we’ll continue to broaden that product line out first, maybe (add) a few more televisions. We’ll haveto see on the handheld; convergence we don’t believe has happened yet, so we don’t believe that’s a near-term product.”24

Dell launched the Axim X50 model and refreshed its Dell DJ line with two models, including the miniature Pocket DJ 5. TheDJ 5, about the size of a deck of cards, is priced at $199 and has 5GB of storage. Dell also introduced its Inspiron 9200, anew notebook for consumers that has a 17-inch display. It is priced at $1,699 and is targeted at buyers who use notebookto watch movies or to manipulate multimedia files. The notebook is also offered with Wi-Fi, allowing it to connect to homenetworks and share files. Though the price of a 42" LCD panel by the end of 2005 could be below $1,000 according toElectronic Engineering Times, operating margins on TVs are higher than the industry average for PCs. Dell intends to makeits TV as the beachhead in its customers living rooms. The company intends to sell add-ons such as home servers and audiospeakers along with its TVs. The Media center PCs of Dell are all-in-one PC and entertainment systems with the ability toplay music, edit photos, play and record video together with all the applications needed for surfing the Internet. HP is theleader in the emerging Media Center PC market with its HP-z500 Windows XP based PC. Apple that offers the MacintoshMini is also a competitor in the Media Center PC market.

Though Dell offers competitive products, it does not own enough retail shelf space as its other competitors to display itsproducts. The customers of consumer electronics are accustomed to comparing their purchases with other available brandsin a retail store. Although Dell had withdrawn its products from the retail space once in 1992 as the profit margins from retailingwere not matching the company standards, in 2004, in addition to opening kiosks in malls the company displayed its productsin Sears stores – a deviation from its direct selling strategy.

In a survey conducted by the University of Michigan in 2005, Dell’s customer-satisfaction rating fell by 6.3% to a scoreof 74 while Apple Computer led the list with a score of 81[Exhibit 7]. Stephen Dukker, founder of emachines Inc., a PCmanufacturer, said, “Consumers want to have their cake and eat it, too. They want that $300 PC but expect the same supportthat came with a machine that 10 years ago cost $2,500.”25 Dell plans to introduce one-year memberships to customersin 2006 so that they can opt for various levels of help at varied prices. One of the options would include a quarterly PCtune-up, in which a company technician would clean the hard drive and check security settings. Dell also plans to redefinethe term “free shipping” for its low-end models. Instead of delivering them to the customer’s home, Dell would mail them to the

23 “It’s Bad to Worse at Dell”, op.cit.24 Spooner, John G “Dell angles for the best seat in the living room”, www.CNETNews.com, October 27th 200425 “Hanging Up On Dell?” op.cit.


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nearest post office for pickup. These customers have to pay extra for home delivery — although it delivers directly the newhigh-end models like XPS. This is to cover the lesser margin of 6% derived from Dell’s consumer business compared to11% from corporate buyers. Michael Dell, Chairman, Dell Inc. said, “The future holds great challenge and promise for Dell.While we approach our future respectfully, we also do so confidently. It’s a view we like very much. And our intention is to fullyrealize what it offers over time.”26

26 “Annual Report”, www.dell.com , 2005


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Exhibit 1History of Dell

Contd...


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Contd...

Source: www.dell.com

Exhibit 2Products and Services Offered by Dell

Servers Dell’s standards-based PowerEdge line of servers is designed to provide customers affordable performance,reliability, and scalability. Options include high performance rack and tower servers for enterprise customers andaggressively priced tower servers for small organizations and workgroups/remote locations.

Storage Dell/EMC and Dell’s PowerVault lines of storage products offer customers a comprehensive portfolio ofcost-effective hardware and software products to store, serve and protect customer data. The portfolio includes externalstorage, tape backup products, network attached storage, fibre channel arrays, storage area networks, and rack solutions.

Printing and Imaging Systems Dell features a wide array of Dell-branded printers, from photo printers for consumersto large multifunction lasers for corporate workgroups. The Dell printer product line is focused on making printing easier tobuy, own, and use. All Dell printers feature the Dell Ink Management System or Dell Toner Management System, whichsimplify the supplies purchasing process by displaying ink or toner levels on the status window during every print job andproactively prompting users to order replacement cartridges directly from Dell.

Contd...


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Workstations Dell Precision desktop and mobile workstations are intended for professional users who demandexceptional performance to run sophisticated applications, such as three-dimensional computer-aided design, digitalcontent creation, geographic information systems, computer animation, software development and financial analysis.

Notebook Computers Dell offers two lines of notebook computer systems. The Latitude line is designed to address awide range of business and organizational needs, including powerful performance, portability, and flexibility. Latitudeofferings range from wireless-ready, highly expandable full-featured models to thin, light ultra-portable models. TheInspiron line is targeted to customers who require high-performance computer systems at aggressive prices. Typicalcustomers are individuals or small-to-medium sized businesses that require optimum performance for their investment.

Desktop Computers Dell customers can select from two lines of desktop computer systems. The OptiPlex line is designedfor corporate, institutional and small business customers who demand highly-reliable, stable, manageable and easilyserviced systems within networked environments. The Dimension line is designed for small businesses and home usersrequiring fast technology turns and high-performance computing. The Dimension product line typically features the latesthigh-performance components.

Networking Products Dell’s PowerConnect switches connect computers and servers in small-to medium-sizednetworks. PowerConnect products offer customers enterprise-class features and reliability at a low cost.

Software and Peripheral Products Dell offers a multitude of competitively priced software and peripheral products,including software, monitors, printers, handhelds, notebook accessories, networking and wireless products, memory,digital cameras, projectors and scanners. The company also offers several new Dell peripheral products, including plasmaand LCD TVs, the Dell Digital Jukebox MP3 player and Axim handhelds.

Managed Services Dell’s wide range of IT management services allow customers to lower annual service costs andenhance performance without sacrificing control of their systems. Dell Managed Services assists customers in planning,deployment, maintenance, asset management, on-site field services and other related services.

Professional Services Dell Professional Services help businesses utilize emerging technology, enhance efficiencies,reduce business risk and maximize return on technology investment. Using its expertise and best practices in technologyconsulting, application development, solutions integration, and infrastructure design, Dell designs, develops andimplements end-to-end technology solutions.

Deployment Services Dell’s deployment services are designed to rapidly configure and deploy Dell systems andproducts into IT environments. Dell’s custom factory integration services allow customers to configure systems to meet theirspecific hardware and software needs. Additional deployment services include asset management and recovery services,custom delivery services, installation services, managed deployment services and image management services.

Support Services Dell offers a variety of customized services and support programs tailored to meet specific customerrequirements. Customers can select from four tiers of service levels through Enterprise Support for server and storagesystems. Additionally, the company provides a limited warranty for all computer systems and offers 24 hour telephone andonline technical support. Warranty upgrades and services such as CompleteCare accidental damage protection, At HomeService for technical support and Express Tech Support, give customers priority access to Dell’s technical support team.

Training and Certification Services Dell’s training and certification programs appeal to businesses and consumersworldwide. The company’s online training programs feature more than 1,200 courses for consumer, business and ITprofessionals. The courses are designed for all skill levels and range from personal finance to business productivity to ITcertification.

Contd...



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Exhibit 4Business Segments of Dell Inc.


Exhibit 5Home PCs in Use Worldwide (in Million)

Source: “Consumer PC market in the United States”, www.oft.gov.uk, December 2002


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Exhibit 6

Source: Lee, Louise and Burrows, Peter “Dell’s Edge Is Getting Duller”, www.businessweek.com, November 14th 2005

Exhibit 7

Source: Lee, Louise “Hanging Up On Dell?” www.businessweek.com, October 10th 2005

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