Subject category:
Strategy and General Management
Published by:
IBS Research Center
Length: 11 pages
Data source: Published sources
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Abstract
Dell, in 2005, was the number one seller of PC''s (personal computers) - both desktops and notebooks - worldwide with a 17.8% market share and $50 billion in annual revenues. The company''s direct business model, which eliminated the need for middlemen was a major factor contributing to this success. However, with the corporate PC growth declining from double digits in the 1990s to single digits post 2001, Dell entered the consumer PC segment with its Dimension desktop and Inspiron notebook line and the consumer electronic segment with digital TV, an MP3 player and Axim handhelds in 2003. Consumer business was seen as a key revenue driver by Dell''s management, which announced an ambitious plan to increase revenues to $80 billion by 2008. However, 2005 proved to be a challenging year for Dell. Not only did the company struggle in the consumer electronics segment leading to the withdrawal of MP3 players but even in its core PC segment, Dell was cornered by traditional rivals such as Hewlett Packard and Gateway and new competitors such as Lenovo and Acer. This resulted in lower than average selling prices for Dell''s products and adversely impacted its operating margins. With Dell encountering problems on various fronts, its share price declined to $29 in October 2005, it''s lowest in two years, leading to the question of whether Dell''s direct business model could ensure further success in the changing scenario.
Location:
Industry:
Size:
USD50 billion in revenue (2004-2005)
Other setting(s):
2005
About
Abstract
Dell, in 2005, was the number one seller of PC''s (personal computers) - both desktops and notebooks - worldwide with a 17.8% market share and $50 billion in annual revenues. The company''s direct business model, which eliminated the need for middlemen was a major factor contributing to this success. However, with the corporate PC growth declining from double digits in the 1990s to single digits post 2001, Dell entered the consumer PC segment with its Dimension desktop and Inspiron notebook line and the consumer electronic segment with digital TV, an MP3 player and Axim handhelds in 2003. Consumer business was seen as a key revenue driver by Dell''s management, which announced an ambitious plan to increase revenues to $80 billion by 2008. However, 2005 proved to be a challenging year for Dell. Not only did the company struggle in the consumer electronics segment leading to the withdrawal of MP3 players but even in its core PC segment, Dell was cornered by traditional rivals such as Hewlett Packard and Gateway and new competitors such as Lenovo and Acer. This resulted in lower than average selling prices for Dell''s products and adversely impacted its operating margins. With Dell encountering problems on various fronts, its share price declined to $29 in October 2005, it''s lowest in two years, leading to the question of whether Dell''s direct business model could ensure further success in the changing scenario.
Settings
Location:
Industry:
Size:
USD50 billion in revenue (2004-2005)
Other setting(s):
2005