First attempt (2000)

In 1998 Ralph Nader asked Dell (and five other major OEMs) to offer alternate operating systems to Microsoft Windows, specifically including Linux, for which "there is clearly a growing interest"^[18][19] Possibly coincidentally, Dell started offering Linux notebook systems which "cost no more than their Windows 98 counterparts" in 2000,^[20] and soon expanded, with Dell becoming "the first major manufacturer to offer Linux across its full product line"^[21] However, by early 2001 Dell had "disbanded its Linux business unit."^[22]

The reason(s) for such a quick reversal remain the subject of debate. Court documents accused Microsoft of coercing OEMs to drop Linux:

Microsoft executive Joachim Kempin described his plan of retaliation and coercion to shut down competition from Linux: "I am thinking of hitting the OEM harder than in the past with anti-Linux actions" and will "further try to restrict source code deliveries where possible and be less gracious when interpreting agreements — again without being obvious about it," continuing "this will be a delicate dance"^[23]

While in a 2003 interview Michael Dell denied that Microsoft pressured Dell Inc. into doing an about-face with regard to desktop Linux, citing a lack of sales: "unfortunately the desktop Linux market didn't develop in volume. It's more of a server opportunity" but adding: "We continue to offer Linux on the desktop and there is nothing else to say."^[24] However, a 2004 report noted that Dell no longer offered pre-installed desktop Linux:

So what does it mean "factory installed Linux"? If you want Dell to install Linux for you, first add on $119. But here is the annoying part. They won't send you a computer with Linux pre-installed. They sell you the computer and the boxes of software on the side, and then they make an appointment to send you someone who comes to your house or business and installs it there.^[25]

[edit] Ubuntu on Dell systems

On February 26, 2007 Dell announced that it had commenced a program to sell and distribute a range of computers with pre-installed Linux distributions as an alternative to Microsoft Windows. Dell indicated that Novell's SUSE Linux would appear first.^[26] However, Dell on February 27, 2007 announced that its previous announcement related to certifying the hardware as ready to work with Novell SUSE Linux and that it (Dell) had no plans to sell systems pre-installed with Linux in the near future.^[27] On March 28, 2007, Dell announced that it would begin shipping some desktops and laptops with Linux pre-installed, although it did not specify which distribution of Linux or which hardware would lead.^[28] On April 18, 2007 a report appeared suggesting that Michael Dell used Ubuntu on one of his home systems.^[29] On May 1, 2007, Dell announced it would ship the Ubuntu Linux distribution.^[30] On May 24, 2007, Dell started selling models with Ubuntu Linux 7.04 pre-installed: a laptop, a budget computer, and a high-end PC.^[31]

On June 27, 2007, Dell announced on its Direct2Dell blog that it planned to offer more pre-loaded systems (the new Dell Inspiron desktops and laptops). After the IdeaStorm site supported extending the bundles beyond the US market, Dell later announced more international marketing.^[32] On August 7, 2007, Dell officially announced that it would offer one notebook and one desktop in the UK, France and Germany with Ubuntu "pre-installed". At LinuxWorld 2007 Dell announced plans to provide Novell's SUSE Linux Enterprise Desktop on selected models in China, "factory-installed".^[33] On November 30, 2007 Dell reported shipping 40,000 Ubuntu PCs.^[34] On January 24, 2008 Dell in Germany, Spain, UK and France launched a second laptop, a XPS M1330 with Ubuntu 7.10, for 849 euro or GBP 599 upwards.^[35] On February 18, 2008, Dell announced that the Inspiron 1525 would have Ubuntu as an optional operating system.^{[citation needed]} On February 22, 2008 Dell announced plans to sell Ubuntu in Canada and in Latin America^[36] From September 16, 2008, Dell has shipped both Dell Ubuntu Netbook Remix and Windows XP Home versions of the Inspiron Mini 9 and the Inspiron Mini 12. As of 2009^[update] Dell ships the Inspiron Mini 9 and the Inspiron Mini 12 laptops with Ubuntu version 8.04.^{[citation needed]}

[edit] Personnel

On January 31, 2007 Michael Dell returned to the company as CEO. As chairman of the board, Mr. Dell had had significant input into the company's operations during Rollins' years as CEO. However with the return of Michael Dell as CEO, the company saw immediate changes in operations, the exodus of many senior vice-presidents and new personnel brought in from outside the company.

Departures announced include:

• Kevin Rollins, CEO^[37]
• James Schneider, CFO^[37]
• John Medica, senior vice president, consumer products^[38]
• Joe Marengi, senior vice president, Americas^[38]
• John Hamlin, senior vice president, worldwide online operations^[39]
• Paul McKinnon, senior vice president, human resources^[38]
• Rosenda Parra, senior vice president/general manager, home and small business group^[40]
• Glenn E. Neland, senior vice president, procurement^[41]

Additions announced include:

• Michael Dell, CEO and co-Chairman of the Board (previously Chairman of the Board)
• Don Carty, CFO and co-Chairman of the Board (previously Board member)
• Michael R. Cannon, former CEO of Solectron, as President, Global Operations^[42]
• Ron Garriques, who formerly headed Motorola's mobile phone unit, as President, Global Consumer Group^[43]
• Stephen F. Schuckenbrock, Senior Vice President, Global Services^[41]

Mr. Dell announced a number of initiatives and plans (part of the "Dell 2.0" initiative) to improve the company's financial performance. These include:

• elimination of 2006 bonuses for employees with some discretionary awards
• reduction in the number of managers reporting directly to Mr. Dell from 20 to 12
• in a noted departure from previous years, "build, partner, and buy" to increase services capabilities
• reduction of "bureaucracy"

On April 23, 2008, Dell announced the closure of one of its biggest Canadian call-centers in Kanata, Ontario — terminating approximately 1100 employees, with 500 of those redundancies effective on the spot, and with the official closure of the center scheduled for the summer. The call-center had opened in 2006 after the city of Ottawa won a bid to host it. Less than a year later, Dell Inc planned to double its workforce to nearly 3,000 workers and to add a new building. Journalists cited a high Canadian dollar and suggested high pay-rates as among the reasons for the cuts.^[44] The company had also announced the shutdown of its Edmonton, Alberta office, losing 900 jobs. In total, Dell announced the ending of about 8,800 jobs in 2007-2008 — 10% of its workforce.^[45] On January 8, 2009 Dell announced the closure of its manufacturing plant in Limerick, Ireland with the loss of 1,900 jobs and the transfer of production to its plant in Poland.

Dell and AMD

When Dell acquired Alienware early in 2006, some Alienware systems had AMD chips. On August 17, 2006, a Dell press-release^[15] stated that starting in September, Dell Dimension desktop computers would have AMD processors and that later in the year Dell would release a two-socket, quad-processor server using AMD Opteron chips, moving away from Dell's tradition of only offering Intel processors in Dell PCs.

CNet's News.com on August 17, 2006 cited Dell's CEO Kevin Rollins as attributing the move to AMD processors to cost-advantage and to AMD technology^[16]. AMD's senior VP in commercial business, Marty Seyer, stated: "Dell's wider embrace of AMD processor-based offerings is a win for Dell, for the industry and most importantly for Dell customers."

On October 23, 2006, Dell announced new AMD-based servers — the PowerEdge 6950 and the PowerEdge SC1435.

On November 1, 2006, Dell's website began offering notebooks based on AMD processors (the Inspiron 1501 with a 15.4-inch (390 mm) display) with the choice of a single-core MK-36 processor, dual-core Turion X2 chips or Mobile Sempron.^[17]

Background and origins

While a student at the University of Texas at Austin in 1984, Michael Dell founded the company as PC's Limited with capital of $1000.^[4] Operating from Michael Dell's off-campus dormitory room at Dobie Center,^[5] the startup aimed to sell IBM PC-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer-systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs.^{[citation needed]} Michael Dell dropped out of school in order to focus full-time on his fledgling business, after getting about $300,000 in expansion-capital from his family.

In 1985, the company produced the first computer of its own design — the "Turbo PC", sold for US$795^[6] — which contained an Intel 8088-compatible processor running at a speed of 8 MHz. PC's Limited advertised the systems in national computer-magazines for sale directly to consumers, and custom-assembled each ordered unit according to a selection of options. This offered buyers prices lower than those of retail brands, but with greater convenience than assembling the components themselves. Although not the first company to use this model, PC's Limited became one of the first to succeed with it. The company grossed more than $73 million in its first year of trading.

The company changed its name to "Dell Computer Corporation" in 1988. In 1989, Dell Computer set up its first on-site-service programs in order to compensate for the lack of local retailers prepared to act as service centers. Also in 1987, the company set up its first operations in Ireland; eleven more international operations followed within the next four years. In June 1988, Dell's market capitalization grew by $30 million to $80 million from its June 22 initial public offering of 3.5 million shares at $8.50 a share^[7]. In 1990, 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. In 1992, Fortune magazine included Dell Computer Corporation in its list of the world's 500 largest companies.

In 1994, when Dell celebrated 10 years of trading, the company changed its logo to the current^[update] version.

In 1996, Dell began selling computers via its web site.

In 2002, Dell attempted to expand by tapping into the multimedia and home-entertainment markets with the introduction of televisions, handhelds, and digital audio players. Dell has also produced Dell-brand printers for home and small-office use.

In 2003, at the annual company meeting, the stockholders approved changing the company name to "Dell Inc." to recognize the company's expansion beyond computers.

In 2004, the company announced that it would build a new assembly-plant near Winston-Salem, North Carolina; the city and county provided Dell with $37.2 million in incentive packages; the state provided approximately $250 million in incentives and tax breaks. In July, Michael Dell stepped aside as Chief Executive Officer while retaining his position as Chairman of the Board. Kevin Rollins, who had held a number of executive posts at Dell, became the new CEO.

In 2005, the share of sales coming from international markets increased, as revealed in the company's press releases for the first two quarters of its fiscal 2005 year. In February 2005 Dell appeared in first place in a ranking of the "Most Admired Companies" published by Fortune magazine. In November 2005 BusinessWeek magazine published an article titled "It's Bad to Worse at Dell" about shortfalls in projected earnings and sales, with a worse-than-predicted third-quarter financial performance — a bad omen for a company that had routinely underestimated its earnings. Dell acknowledged that faulty capacitors on the motherboards of the Optiplex GX270 and GX280 had already cost the company $300 million. The CEO, Kevin Rollins, attributed the bad performance partially to Dell's focus on low-end PCs.

In 2006, Dell purchased the computer hardware manufacturer Alienware. Dell Inc.'s plan anticipated Alienware continuing to operate independently under its existing management. Alienware expected to benefit from Dell's efficient manufacturing system.^[8]

On January 31, 2007, Kevin B. Rollins, CEO of the company since 2004, resigned as both CEO and as a director, and Michael Dell resumed his former role as CEO. Investors and many shareholders had called for Rollins' resignation because of poor company performance. At the same time, the company announced that, for the fourth time in five quarters, earnings would fail to reach consensus analyst-estimates.

In February 2007 Dell became the subject of formal investigations by the US SEC^[9] and the U.S. Attorney for the Southern District of New York.^[10] The company has not formally filed financial reports for either the third or fourth fiscal quarter of 2006, and several class-action lawsuits^[11] have arisen in the wake of its recent^[update] financial performance. Dell Inc's lack of formal financial disclosure would normally subject the company to de-listing from the NASDAQ,^[12] but the exchange has granted Dell a waiver, allowing the stock to trade normally.^[13]

On March 1, 2007, the company issued a preliminary quarterly earnings report which showed gross sales of $14.4 billion, down 5% year-over-year, and net income of $687 million (30 cents per share), down 33%. Net earnings would have declined even more if not for the effects of eliminated employee bonuses, which accounted for six cents per share. NASDAQ extended the company's deadline for filing financials to May 4.^[14]

Dell, Inc. (NASDAQ: DELL, HKEX: 4331) is a multinational technology corporation that develops, manufactures, sells, and supports personal computers and other computer-related products. Based in Round Rock, Texas, Dell employs more than 76,500 people worldwide as of 2009^[update].^[1]

Dell grew during the 1980s and 1990s to become (for a time) the largest seller of PCs and servers. As of 2008^[update] it held the second spot in computer-sales within the industry behind Hewlett-Packard. The company currently sells personal computers, servers, data storage devices, network switches, software, and computer peripherals. Dell also sells HDTVs, cameras, printers, MP3 players and other electronics built by other manufacturers.

In 2006, Fortune magazine ranked Dell as the 25th-largest company in the Fortune 500 list, 8th on its annual "Top 20" list of the most-admired companies in the United States.^[2] In 2007 Dell ranked 34th and 8th respectively on the equivalent lists for the year. A 2006 publication identified Dell as one of 38 high-performance companies in the S&P 500 which had consistently out-performed the market over the previous 15 years.^[3]

In 2002, IBM strengthened its business advisory capabilities by acquiring the consulting arm of professional services firm PricewaterhouseCoopers. The company has increasingly focused on business solution-driven consulting, services and software, with emphasis also on high-value chips and hardware technologies; as of 2005^[update] it employs about 195,000 technical professionals. That total includes about 350 «Distinguished Engineers» and 60 IBM Fellows, its most-senior engineers. It should be noted, however, that IBM and some other U.S. firms use the term 'engineer' in a broad sense, applying it to technicians from diverse disciplines who may not be graduates from Engineering Schools of recognized Universities.

A chart showing IBM's revenue and net income, 1980–2005.

A chart showing IBM's patent history, 1993–2005.

In 2002, IBM announced the beginning of a US$10 billion program to research and implement the infrastructure technology necessary to be able to provide supercomputer-level resources "on demand" to all businesses as a metered utility.^[15] The program has since then been implemented.^[16]

In the same year its hard disk operations was sold to Hitachi. ^[17]

IBM has steadily increased its patent portfolio since the early 1990s, which is valuable for cross-licensing with other companies. In every year from 1993 to 2005, IBM has been granted significantly more U.S. patents than any other company. The thirteen-year period has resulted in over 31,000 patents for which IBM is the primary assignee.^[18] In 2003, IBM earned 3415 patents, breaking the US record for patents in a single year.^[19]

Protection of the company's intellectual property has grown into a business in its own right, generating over $10 billion dollars to the bottom line for the company during this period.^[20][21] A 2003 Forbes article quotes Paul Horn, head of IBM Research, saying that IBM has generated $1 billion in profit by licensing intellectual property.^[22]

In 2004, IBM announced the proposed sale of its PC business to Chinese computer maker Lenovo Group, which is partially owned by the Chinese government, for US$650 million in cash and US$600 million in Lenovo stock. The deal was approved by the Committee on Foreign Investment in the United States in March 2005, and completed in May 2005. IBM acquired a 19% stake in Lenovo, which moved its headquarters to New York State and appointed an IBM executive, Steve Ward, as its chief executive officer. The company retained the right to use certain IBM brand names for an initial period of five years. As a result of the purchase, Lenovo inherited a product line that features the ThinkPad, a line of laptops that had been one of IBM's most successful products.

As of 2004^[update], IBM had shifted much of its focus to the provision of business consulting & re-engineering services from its hardware & technology focus. The new IBM has enhanced global delivery capabilities in consulting, software and technology based process services—and this change is reflected in its top-line.^[23]

On June 20, 2006, IBM and Georgia Institute of Technology jointly announced a new record in silicon-based chip speed at 500 GHz. This was done by freezing the chip to 4.5 K (−269 °C; −452 °F) using liquid helium and is not comparable to CPU speed. The chip operated at about 350 GHz at room temperature.^[24]. IBM acquires SPSS in July 2009 for $1.2 billion.

Since 1990, the rate of growth of IBM has lagged behind that of the US economy.

IBM's traditional mainframe business underwent major changes in the 1990s, as customers increased their emphasis on departmental and desktop computing. However, the decade of the 1990s began with IBM posting record profits up to that point in its history. This proved illusory as the rental to lease conversion was tapping out, demand for mainframes was waning and corporate downsizing was in full swing. Corporate spending shifted from high profit margin mainframes to lower margin microprocessor-based systems and the growth in IBM's PC business was not nearly enough to offset the company's mainframe revenue decline.^{[citation needed]}

On October 5, 1992, at the COMDEX computer expo, IBM announced the first ThinkPad laptop computer, the 700c. The computer, which then cost US$4350, included a 25 MHz Intel 80486SL processor, a 10.4-inch active matrix display, removable 120 MB hard drive, 4 MB RAM (expandable to 16 MB) and a TrackPoint II pointing device.^[13]

A decade of steady acceptance and widening corporate growth of local area networking technology, a trend headed by Novell Inc. and other vendors, and its logical counterpart, the ensuing decline of mainframe sales, brought about a wake-up call for IBM: after two consecutive years of reporting losses in excess of $1 billion, on January 19, 1993, IBM announced a US$8.10 billion loss for the 1992 financial year, which was then the largest single-year corporate loss in U.S. history.^[14]

That same year, Louis V. Gerstner, Jr. joined IBM and he is widely credited with turning the company around. His strategy to reverse the decision of his predecessor and re-integrate IBM's major divisions to focus on services first and products second, is often heralded as the decision that led the company from the brink of disaster and remains the fundamental underpinning of IBM's strategy today. A byproduct of that decision was a shift in focus significantly away from components and hardware and towards software and services.^{[citation needed]}

Starting in 1995 with its acquisition of Lotus Development Corp., IBM built up the Software Group from one brand, DB2, to five: DB2, Lotus, WebSphere, Tivoli, and Rational.

In 1997 the IBM chess playing computer system Deep Blue, in the match Deep Blue versus Garry Kasparov, was the first computer system to beat a reigning world chess champion.

In the 1980s, IBM consolidated its mainframe business, and expanded the scope of mainframes with the S/390 and ESA/390 series. Importantly, during this time, the company embarked on the practice of converting its large rental base of mainframes to lease agreements. This financial strategy created the perception that IBM's revenues and profits were much stronger than they really were as in the mid to latter part of the decade, management scrambled to react to the spending shift towards distributed computing, which threatened the monopoly IBM held within the technology business.^{[citation needed]}

The original IBM PC (ca. 1981)

The company hired Don Estridge at the IBM Entry Systems Division in Boca Raton, Florida. With a team known as "Project Chess," they built the IBM PC, launched on August 12, 1981. Although not cheap, at a base price of US$1,565 it was affordable for businesses — and many businesses purchased PCs. Typically, these purchases were not by corporate computer departments, as the PC was not seen as a "proper" computer. Purchases were often instigated by middle managers and senior staff who saw the potential — once the revolutionary VisiCalc spreadsheet, the killer app, had been surpassed by a far more powerful and stable product, Lotus 1-2-3. Reassured by the IBM name, they began buying microcomputers on their own budgets aimed at numerous applications that corporate computer departments did not, and in many cases could not, accommodate.

Up to this point in its history, IBM relied on a vertically integrated strategy, building most key components of its systems itself, including processors, operating systems, peripherals, databases and the like. In an attempt to speed time to market for the PC, IBM chose not to build the operating system and microprocessor internally, rather it sourced these vital components from Microsoft and Intel respectively. Ironically, in a decade which marked the end of IBM's monopoly, it was this fateful decision by IBM that passed the sources of its monopolistic power (operating system and processor architecture) to Microsoft and Intel, paving the way for rise of PC compatibles and the creation of hundreds of billions of dollars of market value outside of IBM.

In the midrange arena, IBM consolidated the market position its General Systems Division (GSD) had built in the 1970s with the System/3, System/32 and System/34. The System/38, with its patented advanced architecture and integrated relational database manager (DB2 RDBMS), experienced initial delays to customers after its 1978 announcement, but became very successful with robust sales establishing a loyal customer base. In 1982, IBM disbanded the organization leaving the Data Processing Division (DPD) to sell only mainframes to large customers while the General Systems Division sold only S/3x midrange machines to small and medium-sized customers. Instead, the new ISM (for small and medium customers) and ISAM divisions (large customers) could sell from the entire IBM portfolio.^{[citation needed]}

1983 saw the announcement of the System/36 to replace the System/34. Later in 1988, IBM announced the AS/400, combining the System/38 and System/36 computing environments into a single platform. The 1970s had seen IBM develop a range of Billing, Inventory Control, Accounts Receivable, & Sales Analysis (BICARSA) applications for specific industries: construction (CMAS), distribution (DMAS) and manufacturing (MMAS), all written in the RPG II language. By the end of the 1980s, IBM had almost completely withdrawn from the BICARSA applications marketplace. Because of developments in the antitrust cases against IBM brought by the US government and European Union, IBM sales representatives were now able to work openly with application software houses as partners. (For a period in the early 1980s, a 'rule of three' operated, which obliged IBM sales representatives, if they were to propose a third-party application to a customer, to also list at least two other third-party vendors in the IBM proposal. This caused some amusement to the customer, who would typically have engaged in intense negotiations with one of the third parties and probably not have heard of the other two vendors.)

As the decade ended, it was clear that competition and innovation in the computer industry was now taking place along segmented, versus vertically integrated lines, where leaders emerged in their respective domains. Examples included Intel in microprocessors, Microsoft in desktop software, Novell in networking, HP in printers, Seagate in disk drives and Oracle Corporation in database software. Soon IBM's dominance in personal computers would be challenged by the likes of Compaq and later Dell. Recognizing this trend, CEO John Akers, with the support of the Board of Directors, began to split IBM into increasingly autonomous business units (e.g. processors, storage, software, services, printers, etc.) to compete more effectively with competitors that were more focused and nimble and had lower cost structures.

1975-2000

In 1970, GE sold most of its computer business to Honeywell and in 1971, RCA sold its computing division to Sperry Rand. With only Burroughs, UNIVAC, NCR, Control Data, and Honeywell producing mainframes, people then talked, but by now in humorless, blistering criticism, of "IBM and the BUNCH."^[11] In April 1973 Honeywell v. Sperry Rand, a landmark U.S. federal court case, was decided. That decision invalidated the 1964 patent for the ENIAC, the world's first general-purpose electronic digital computer, thus putting the invention of the electronic digital computer into the public domain.

Most of those companies are now long gone as IBM competitors, except for Unisys, which is the result of multiple mergers that included Sperry Rand, UNIVAC and Burroughs, and General Electric, which has re-entered the business in recent years.^{[citation needed]} NCR and Honeywell dropped out of the general mainframe and mini sector and concentrated on lucrative niche markets, NCR's being cash registers (hence the name, National Cash Register), and Honeywell becoming the market leader in thermostats. The IBM computer, the IBM mainframe, that earned it its position in the market at that time is still growing today. It was originally known as the IBM System/360 and, in far more modern 64-bit form, is now known as the IBM System z10.

IBM's success in the mid-1960s led to inquiries as to IBM antitrust violations by the U.S. Department of Justice, which filed a complaint for the case U.S. v. IBM in the United States District Court for the Southern District of New York, on January 17, 1969. The suit alleged that IBM violated the Section 2 of the Sherman Act by monopolizing or attempting to monopolize the general purpose electronic digital computer system market, specifically computers designed primarily for business. Litigation continued until 1983, and had a significant impact on the company's practices. In 1973, IBM was ruled to have created a monopoly via its 1956 patent-sharing agreement with Sperry-Rand in the decision of Honeywell v. Sperry Rand, a decision that invalidated the patent on the ENIAC.

A key event at IBM in 1969 was the decision to "unbundle" software from hardware sales. See unbundling of software and services, below.

In 1970, IBM entered the office copier market, and was immediately sued by Xerox Corporation for patent infringement. Although Xerox held the patents for the use of selenium as a photoconductor, IBM researchers perfected the use of organic photoconductors which avoided the Xerox patents. The litigation lasted until the late 1970s and was ultimately settled. Organic photoconductors are now widely-used in office copiers.

The major technical development of the 1970s was IBM's System/370 series.

Between 1971 and 1975, IBM investigated the feasibility of a new revolutionary line of products designed to make obsolete all existing products in order to re-establish its technical supremacy. This effort, known as the Future Systems project, was terminated by IBM's top management in 1975, but had consumed most of the high-level technical planning and design resources during five years, thus jeopardizing progress of the existing product lines (although some elements of FS were later incorporated into actual products).

IBM was the largest of the eight major computer companies (with UNIVAC, Burroughs, NCR, Control Data Corporation, General Electric, RCA and Honeywell) through most of the 1960s. People in this business would talk jokingly of "IBM and the seven dwarfs," given the much smaller size of the other companies' computer divisions (IBM produced approximately 70% of all computers in 1964).^[11]

The major technical development of the 1960s was IBM's System/360 series.^[12]