Thinking Outside the PC Box

Baldwin Louie — Tue, 24 Jul 2001 18:00:00 -0400

CARLSBAD, Calif. – Michael Dell, the founder of one of the world's biggest computer makers, is thinking outside of the box. At least outside of the PC box.

The 36-year-old CEO of Dell Computer wants to apply the customization model that has transformed his computer company into a $32 billion business to switches, storage and local area networks, the guts of the Internet.

"We're aiming to go from $32 billion in revenues to $100 billion," focusing on the new product lines, Dell told an audience of investors and entrepreneurs at The Industry Standard's Internet Summit on Tuesday.

Applying the lessons of customization from laptops to larger enterprise devices is a natural extension of his core business, he said. "At the moment, most LAN networks have to be installed by an engineer," he said. The Texas-based company has so much experience in building devices exactly to customer needs, he said, that it can make building networks a less difficult process.

Dell's low inventory – custom-built computers assembled with parts ordered just before they are needed – gives him the leeway to cut prices and put pressure on other manufacturers, such as IBM.

"All of the PC industry is unprofitable except for Dell. If we have a pricing advantage, we can have a price war," he laughed.

The entrepreneur, who started his PC business at age 17, said he wants to boost his company's market share to 40 percent from its current 13 percent by implementing "the Dell way" of tight strategy and decentralized execution. He also remembers important mistakes – such as a gamble on the retail business and an early and aggressive expansion into new countries – that forced him to retrench around his core business.

He urged Internet entrepreneurs to learn from such mistakes and focus on fundamentals. "If you're trying to grow and fix a problem at the same time," he said, "you're going to be in trouble."

In response to Scott McNealy's quip that Dell is "just a Wintel grocery store," he said the Sun Microsystems CEO should note that, "We may be a grocery store, but we have a market cap twice his."

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Thinking Outside the PC Box