Harvard Business School
Rev. March 26, 1999
"It was Michael’s idea. He’s a visionary in our industry,” stated Morton Topfer, Vice
Chairman of Dell Computer Corporation, gesturing toward Michael Dell’s office across the hallway.
"There’s no doubt that Dell Online is a huge innovation, just as Dell Direct was a decade ago. But
times have changed. We are nowa big company, with 1997 revenues of nearly $12 billion and a
growth rate of 50% over the last three years. We have to be nimble but methodical in how we absorb
and build on this new approach of going to market,” added Topfer.
In July 1996, Dell Computer had launched its online website, www.dell.com. The online store
mirrored the experience customers had when they called Dell’s toll-free800 number to place a direct
order. Site visitors could customize a computer’s configuration to suit their needs, noting how those
changes improved performance and affected pricing. Additionally, customers could check on the
status of their order at their convenience and even receive technical support online. The store was
open 24 hours a day. The response to the retail store wasoverwhelming, with hundreds of thousands
of people visiting the website each week and generating millions of dollars of revenue for Dell.
In addition to its online store, Dell also developed Premier Pages, online interfaces with its
key corporate accounts. Customers viewed the Premier Pages to get technical help, to access their
Dell account executive, or in some cases, to place orders using thecustomer’s preferred pricing and
standard configurations. Scott Eckert, the 30 year old director of Dell Online, remarked,
Dell’s foray into Internet-based sales, marketing a nd support has been a big
win. We’re getting a lot of publicity about selling $3 million a day on the Internet—
and our goal is to execute half of Dell’s sales volume over the Internet within three
years. It’s also clearthat major competitors such as Compaq are attempting to break
with tradition and imitate Dell, not only by going direct to the consumer, but also by
letting the customer configure his/her product. We need to leverage our initial
success into a sustainable competitive advantage.
The Story of Dell1
In 1983, Michael Dell, an 18 year old freshman at the University of Texas at Austin, spent hisevenings and weekends pre-formatting hard disks for IBM-compatible PC upgrades. A year later, he
1 Some parts of this section have been drawn and adapted from HBS case No. 596-058, "Dell Computer
Professor V. Kasturi Rangan and Research Associate Marie Bell prepared this case as the basis for class discussion rather
than to illustrate either effective or ineffective handling ofan administrative situation. Certain facts and data in the case
have been disguised.
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This document is authorized for use only in Centrum by Professor Julio de Castro from December 2010 to June
dropped out of college to attend to his burgeoning business, which had grown from nothingto $6
million in 1985 by simply upgrading IBM compatibles for local area businesses. In 1985, Dell shifted
his company's focus to assembling its own brand of PCs and the business grew dramatically, with $70
million in sales at the end of 1985. By 1990, sales had grown even further to over $500 million and
with it Dell’s capabilities as a national supplier to Fortune 500 companies. The...