Extending discussion on Lizzie Hepp: Dell on Products

Extending discussion on Lizzie Hepp's post: Dell on Products

Dell exec: Standards, simplicity are key
" Dell continues to inch its way deeper into corporate data centers with a standards-based, modular approach to computing that is starting to catch on industrywide. Competitors such as HP, IBM and Sun are recognizing a move away from proprietary systems and toward standard, low-cost boxes. "

As Lizzie said in her post, Dell's unique value proposition, built-to-order products and direct to customer business approach, allowed Dell to sell its products for much less than its competitors while still providing great value. A deeper look into Dell's current product offerings, as well as its philosophies and strategies for the future, reveals why Dell is and will remain an industry leader.

Over a four-year period, Dell's revenues grew from $2 billion to $16 billion, a 50 percent annual growth rate. Earnings per share increased by 62 percent per year. Dell's stock price increased by over 17,000 percent in a little over eight years. In 1998, Dell's return on invested capital was 217 percent, and the company had $1.8 billion in cash.

Product development and technology

From the technology life cycle’s point of view, different from HP, IBM, Sun, Dell rarely use provide products based on Proprietary technology, most of Dell’s products are based on industry standards products, like PC desktop, laptop, or 1-4 way CPU Servers. It's SAN storage are products which partnered with EMC.

Dell does do R&D on its products, but compare with HP/IBM/Sun, it invested in much less proportion comparing to its annual revenue. Q&A: Dell's CTO on unconventional innovation,
Sun's McNealy, HP's Fiorina slam Dell on R&D comment

In year 2002, Dell decided to develop its 8 way PC server with Intel, but final gave up. Dell's 8-Way Server Detour

Dell's Commitment to Standards Based Solutions

Key to Dell's innovation strategy is Dell ability to drive industry standards that directly address customer challenges. Open standards enable flexible solutions to meet evolving computing models. Unlike proprietary technologies, standards allow customers:

• Increased choice
• Decreased cost and complexity
• Product and process interoperability

In addition, its effective R&D model allows Dell to partner with industry-leading suppliers. Together dell integrate "best-in-class" technologies, services and standardized components to provide customers the latest relevant technology at very aggressive price points.

Product lifecycle management.

Because Dell's customers were largely high-end repeat buyers who rapidly adopted new technology, Dell's marketing could focus on managing product lifecycle transitions. The company's direct marketing provided real-time customer feedback, which led to the rapid rounds of learning essential to product development and crisp lifecycle timing. Dell became expert at curtailing the end-of-life tail of its six-to-nine-month product cycle. Dell Manages Profitability, Not Inventory