For 25 years, Dell Inc. grew quite a lot and the stock went up by more than 13,500% and yielded 27 times better returns among the top 500 ICT companies but 6-7 years ago, 'we started developing our business in a different way', said Michael Dell, American investor and philanthropist, best known as the founder and chairman of Dell Inc. "We needed more than products to succeed."
Speaking at the IDA Distinguished Speakers Series in Singapore on April 2, Dell was addressing a large gathering of customers, researchers and businessmen.
Steve Leonard, Executive Deputy Chairman of Infocomm Development Authority of Singapore (IDA), who introduced him to the audience, said that Dell was just one month shy of completing its 30 years of incorporation.
As the Forbes magazine once noted, 'Michael Dell defined the myth of the American tech prodigy before Mark Zuckerberg and Kevin Systrom, Drew Houston and David Karp. Only Bill Gates and the Apple founders could come close.'
During his hour-long talk, Dell discussed his journey as an inventor and businessmen, why he took Dell private and what he foresees as the emerging opportunities in the world of technology. He shared his insights with the audience.
Referring to his legendary journey of entrepreneurship, Dell said that he started his company with US$1,000 from his dorm in the University of Texas. It grew to become a US$25 billion company.
"It has been a fun journey," he said. 'Dell was only 23 years old at his IPO in 1988, five years younger than Zuckerberg at the same milestone. He was 29 when his company hit $1 billion in revenue and 31 when it hit $5 billion.' (Fortune) "I was fortunate to be born in America where all people are allowed to take risks. I feel very blessed."
Dell, a biology major (pre-med freshman), had little knowledge of economics or finance (though he had done a module on macroeconomics) and yet he went on to build a great company. Did he make any mistakes in the early stage of his company? "Yes," he said. "In the first two-three years of Dell, we could have destroyed ourselves. But we differentiated ourselves by services and quality."
When Dell had started out, his competitors saw his venture as a "mail-order company". They could not understand his business model, he said. But that was his strength-his way of disrupting the PC business. According to the company's first president, Lee Walker, 'Dell possessed both brilliance and the bravado to think he could take on HP and IBM as a college freshman simply because he was willing to assemble PCs himself and sell them directly over the phone'.
When asked if it was still possible to give birth to a big company with a seed fund of US$1,000, Dell said, yes, it was still possible.
Television personality Timothy Go, who was leading the conversation with Dell on stage, asked him why he took the company private last year.
"Financial markets are incredibly short-term focused," Dell said, justifying his move to take the company private. "Why bother with short-term minded shareholders?"
"We're the largest company in terms of revenue to go from public to private," Dell had announced to his 350 employees in his Silicon Valley office at the time he privatized his company. "In another week or two we'll be the world's largest startup."
After going private, the company is now turbo-charged like a start-up: "We can now go faster, bigger, and stronger," he said. "It's much simpler." But Dell is a startup with huge advantages. The company has plenty of capital and the balance sheet is strong, and people know us, he said.
Growth in PCs
When Go asked him where he saw growth in PCs (personal computers), Dell replied, "In Dell." The hall reverted with guffaws.
While it's true that Dell was once at the top of the PC business (the world's third-largest PC maker) and was getting most of its revenue from the PC business, the future did not look rosy for the PC industry. The price of PCs was falling, the shipments were dwindling and customers were turning to tablets and smartphones.
Before the company went private, it got more than 60% of revenue from PCs and its market share in services and software stood at less than 1%.
In Dell's opinion, the PC business is still going strong. "PC is different today than what it was 20 years ago," he said. "There are different form factors today including tablets, virtual PCs, high-end workstations, and convertibles, but these do not replace the need for PCs. One million PCs are still being sold everyday and some 1.5 billion people use the PC everyday."
Dell gave the analogy of shoes and bicycles. 'If we have bicycles, it does not mean that we don't need shoes to walk anymore.' Likewise, buses will not replace cars and cars will not replace buses. Every form factor has its own use-that's what he tried to say, justifying the need for PCs in a world of burgeoning tablets and smartphones.
Cyber security and BYOD
As the business is changing, Dell said that his company is focused on new business areas such as cloud computing, BYOD (bring your own device), big data services and security.
Cyber security and BYOD with security are important growth areas for the company, he said. Dell is committed to help the companies with the data security challenge, he said.
IT services now forms a significant arm of Dell's offerings. 50,000 of our employees (out of 100,000) are now in IT services and Dell is No. 1 in healthcare IT, he said.
Dell also proudly spoke of his Social Media Command Centre. The learning and experience from running this centre is something that could be spun off as an offering for customers, he hinted.
Dell did not clearly spell out if he was fascinated with cyber-physical systems (such as wearable tech or 3D printers even though he supports ventures such as Make A Bot) but he emphasized on data informatics. "Data information area is a growth area. Jobs will be specific in future and advance education will be important. Data science is the job of the future. We need a lot of data scientists," he said.