Dell Computers Inc - Essay Example

Download file to see previous pages... onal costs of intermediaries between the company and consumer and thus reducing the overall cost of the PCs making it cheaper than other PCs in the market. The other advantage was that it reduces the costs and risks associated with carrying large stocks of parts, components and finished goods (Thompson and Gamble, 2006). The company later became a public limited company and raised $34.2 million in its first offering of common stock and achieved sales of $388 million in 1990. During 1986 to 1993, Dell refined strategy, build an adequate infrastructure and established market credibility against better known rivals like IBM and Hewlett Packard. Dells computer strategy clicked into full gear in the late 1990s and the sell direct strategy provided the company with most efficient procurement, manufacturing and distribution capabilities in the global PC industry and gave a substantial profit margin advantage over rival PC vendors. It is further stated that Dell’s operating cost ran about 10 percent of revenues in 2002 as compared to 21 percent of revenues at Hewlett Packard, 25 percent at Gateway, and 46 percent at Cisco Systems (Thompson and Gamble, 2008). Dell Inc was the undisputed leader in the United States for sales in personal computer dominating the market. In 1998, the market share of Dell was 13.2% as compared to Hewlett Packard’s 7.8%. However it should be noted that Compaq was ahead of Dell during 1998 with 16.7%. This was the only period when any other vendors were ahead of Dell as the company occupied top position in 2000 with 19.7% as compared to Compaq’s 15.9% and HP’s 11.5%. The table below shows that Dell Inc has been ranked first since 2003 showing its dominance in the market for personal computer since 2000 in comparison to other companies. But, according to table 2, Hewlett Packard dominates the world market with 18.8% in the year 2007 as compared to 14.9% of Dell Inc. Though Dell Inc was dominated the market in United States and all over the world throughout 2000s, Dell Inc’s market share fell down from 16.6% in 2006 to 14.9% in 2007 whereas Hewlett Packard’s market share increased from 16.5% in 2006 to 18.8% in 2007 thus becoming the market leader in the industry. Table 1: U.S. Market Share of the Leading PC Vendors, 1998-2007 2003 Rank Vendor 2007 2006 2005 2004 2002 2000 1998 Shipments (in 000s) Market Share Shipments (in 000s) Market Share Shipments (in 000s) Market Share Shipments (in 000s) Market Share Shipments (in 000s) Market Share Shipments (in 000s) Market Share Shipments (in 000s) Market Share 1 Dell 19645 28% 20472 31.2% 21466 33.6% 19296 33.7% 13324 27.9% 9645 19.7% 4799 13.2% 2 HP 16759 23.9 11600 21.5 12456 19.5 11600 20.3 8052 16.8 5630 11.5 2832 7.8 3 Compaq - - - - - - - - - - 7761 15.9 6052 16.7 Source: Thompson and Gamble (2008) Table 2: Worldwide Market Shares of the Leading PCs, 1998-2007 2003 ...Download file to see next pagesRead More