Dell Inc. in 2008: Can It Overtake Hewlett-Packard as the Worldwide Leader in Personal Computers?

Topics: Personal computer, Dell, Hewlett-Packard Pages: 7 (2168 words) Published: August 16, 2011
Dell Inc. in 2008: Can it overtake Hewlett-Packard as the Worldwide Leader in Personal Computers?
Dell is a global company that delivers products and services in more than 190 countries and over 40000 employees who live and work on six continents. The company deals in enterprise computing products, desktops, monitors, printers, notebooks, handhelds, software and peripherals with a focus on fully integrated improved environmental performance into business. The company had gone through many ups and down from its inception in 1984 and has to face many challenges and competitions to stay ahead in the market (Kolter and Lee, 2008). This paper strategically discusses the fall and rise of Dell Inc from 2007 to 2008 and to compare Dells strategy with that of Hewlett Packard with due reference from the case study “Dell Inc in 2008: Can it overtake Hewlett Packard as the worldwide leader in personal computers.” A) Dell’s Strategy to overcome HP in Personal Computers

Michael Dell founded the company with simple vision and business concept that the personal computers could be built and sold directly to the consumers which would eliminate the additional costs of intermediaries between the company and consumer and thus reducing the overall cost of the PCs making it cheaper than other PCs in the market. The other advantage was that it reduces the costs and risks associated with carrying large stocks of parts, components and finished goods (Thompson and Gamble, 2006). The company later became a public limited company and raised $34.2 million in its first offering of common stock and achieved sales of $388 million in 1990. During 1986 to 1993, Dell refined strategy, build an adequate infrastructure and established market credibility against better known rivals like IBM and Hewlett Packard. Dells computer strategy clicked into full gear in the late 1990s and the sell direct strategy provided the company with most efficient procurement, manufacturing and distribution capabilities in the global PC industry and gave a substantial profit margin advantage over rival PC vendors. It is further stated that Dell’s operating cost ran about 10 percent of revenues in 2002 as compared to 21 percent of revenues at Hewlett Packard, 25 percent at Gateway, and 46 percent at Cisco Systems (Thompson and Gamble, 2008). Dell Inc was the undisputed leader in the United States for sales in personal computer dominating the market. In 1998, the market share of Dell was 13.2% as compared to Hewlett Packard’s 7.8%. However it should be noted that Compaq was ahead of Dell during 1998 with 16.7%. This was the only period when any other vendors were ahead of Dell as the company occupied top position in 2000 with 19.7% as compared to Compaq’s 15.9% and HP’s 11.5%. The table below shows that Dell Inc has been ranked first since 2003 showing its dominance in the market for personal computer since 2000 in comparison to other companies. But, according to table 2, Hewlett Packard dominates the world market with 18.8% in the year 2007 as compared to 14.9% of Dell Inc. Though Dell Inc was dominated the market in United States and all over the world throughout 2000s, Dell Inc’s market share fell down from 16.6% in 2006 to 14.9% in 2007 whereas Hewlett Packard’s market share increased from 16.5% in 2006 to 18.8% in 2007 thus becoming the market leader in the industry. Table 1: U.S. Market Share of the Leading PC Vendors, 1998-2007 |2003 Rank |Vendor |2007 |2006 | | |Revenues |% of total |Revenues |% of total |Revenues |% of total | | |(in billions) |revenues |(in billions) |revenues |(in billions) |revenues | |Desktop PCs |$19.6 |32.1% |$19.8 |34.5% |$21.6 |38.7%...
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