When was dell created

Dell hired former investment banker E. Lee Walker as president in to help deal with his firm's explosive growth. By Dell held a dominant position in the mail-order market, but it was clear that the firm had to move beyond mail order if it was to continue growing. To accomplish this goal the firm needed a larger professional management staff, and Dell hired a group of marketing executives from Tandy Corporation, another maker of low-cost PCs.

The group built a sales force able to market to large corporations and put together a network of value-added resellers, who assembled packages of computer components to sell in specialized markets.

The Tandy team soon helped raise gross margins to 31 percent, up from 23 percent a year earlier. Rather than merely undercutting the prices of competitors, they set prices in relation to the firm's costs. The new marketing department soon ran into trouble with Michael Dell, however. Battles erupted over advertising budgets and the number of salespeople required for corporations and resellers. While Dell believed that the new team did not understand direct selling and was trying to create a traditional marketing department with an overly large sales force, the Tandy group alleged that Dell lacked the patience to wait for the sales force to pay off.

By early , most of the Tandy group had resigned or been forced out. Dell also formed a Canadian subsidiary. Early in the firm formed various divisions to raise its profile among corporate, government, and educational buyers. The firm faced several challenges, however.

Furthermore, Dell faced competition from several Japanese manufacturers, which were offering IBM clones at low prices. Further, having had trouble meeting demand, Dell used money raised from its stock offering to expand capacity and warehouse space, leaving the company with little cash.

When it overestimated demand during the fourth quarter of , the firm suddenly had no cash and warehouses full of unsold computers. Dell responded to the increasing competition by increasing the level of technical sophistication in its computers. Half of its sales came from PCs using the Intel Corporation's microprocessor, the most powerful PC chip at the time, and the company began producing file servers using the sophisticated Unix operating system.

Henry built Dell's research and development staff from almost nothing to engineers, who began working on ways to combine the function of several chips onto one chip. When Intel released its microprocessor, Dell began speeding to market the computers that could use it. Another of Henry's goals was high-quality graphics, which required better monitors and special circuit boards. By mid Dell had finished initial attempts at graphics hardware, giving it inroads into the higher end of the PC market.

Dell's share of the PC market was only 1. Dell considered itself as much a marketing company as a hardware company, and its sales staff played an important role in its successes. Dell's sales personnel trained for six weeks or more before taking their seats at the phonebanks, and, along with their managers, they held weekly meetings to discuss customer complaints and possible solutions. In addition to fielding questions and taking orders, sales staff were trained to promote products.

They helped buyers customize orders, selling them more memory or built-in modems. Orders were then sent to Dell's nearby factory where they were filled within five days. The telemarketing system also allowed Dell to compile information on its customers, helping the firm spot opportunities and mistakes far more quickly than most other PC companies. It also began selling some computers through large computer stores, whose high-volume, low-margin strategy complemented Dell's established operations.

Dell became the sixth largest PC maker in the United States--up from number 22 in and retained a staff of 2, Furthermore, the company's emphasis on customer satisfaction paid off, as it was rated number one in J. Powers Associates' first survey of PC customer satisfaction. That year, however, Dell purchased too many memory chips and was forced to abandon a project to start a line of workstations. Also during this time, the traditional PC market channels were in flux.

With a recession dampening sales, PC makers engaged in a furious price war that resulted in slumping profits nearly across the board. Compaq, IBM, and Apple all had profit declines or were forced to lay off employees.

Furthermore, Compaq filed a lawsuit against Dell, which it eventually won, claiming that Dell's advertising made defamatory statements against Compaq. Nevertheless, the economic recession actually benefited Dell. While customers had less money, they still needed PCs, and they purchased Dell's inexpensive but technologically innovative IBM clones in record numbers. In , Dell Computer Corporation tried selling its products indirectly through warehouse clubs and computer superstores, but met with little success, and the company re-focused on its more successful direct-to-consumer sales model.

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