Business Model Innovation at Dell

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Background Note

Early History In the early 1980s, an IBM PC typically sold in a store for about $3,000. But PC components could be purchased for only $600-$700. People who sold personal computers did not know much about the product... Recent History In the late 1990s, Dell announced a number of initiatives to leverage the Internet. In January 1997, Dell announced that it would use the Internet to sell its OptiPlex and Dimension desktop PCs. In September, the company announced that it would provide customers with a new level of personalized services and product offerings over the Internet...

Dell serviced the North American market from its plants in Austin, Texas, and Nashville, Tennessee. To support its global business, Dell had manufacturing facilities in Limerick, Ireland Penang, Malaysia, Porto Alergre, Brazil, and Xiamen, China. Many of Dell's major facilities were highly automated. A part rolled into the factory with its own identification number in a laser bar code...

By 2000, Dell generated $7.4 billion, about 25% of its total revenue outside the U.S. market. In all major markets, Dell used its direct model. In smaller markets, where the market potential had yet to be proven or infrastructure issues presented logistical challenges, Dell used a network of distributors to sell and service its products.

Dell had created three regions outside the United States: Americas International (that comprised Canada, Mexico, South and Central America), EMEA (Europe, Middle East and Africa), and APCC/Japan (covering Asia Pacific, China, Australia, India, and Japan)...

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