Michael Dell Elevates Smith’s Third Annual
author, philanthropist, and global business leader, Michael S. Dell joined
students, alumni, and leaders from academia and business at the Smith
School’s Third Annual Netcentricity Conference on April 4, 2003. Students
lined the halls hoping to catch a glimpse of the famous billionaire,
photographers snapped hundreds of photos, and journalists took down every
word as Michael Dell toured the new $38-million wing of Van Munching Hall
and presented the keynote speech at the conference.
The daylong exchange of ideas, research, and practical experience in the
ever-changing, critical world of network communication and exchange is
Smith’s most anticipated technology-focused annual event. Keynote Speaker
Michael Dell, chairman and CEO of Dell Computer Corp., founded the company
in 1984 out of his University of Texas dormitory room with only $1,000.
Dell told the audience of more than 250 people that, as a 19-year-old
biology major, he thought the way computers were distributed and sold was
inefficient. Technology should not take a year to get to the consumer, he
implied. The innovator wanted to improve service and remove the dealers
through a new customer-centric approach.
Reinforcing topics discussed earlier in the day, Dell said that his
supply-chain management system is a “pull system instead of a push system,”
meaning that Dell waits for the order to come in, and then builds the
computer to the customer’s specifications, with the latest available
technology. Dell said this customer-centric business model could be applied
to other products and “works everywhere in the world.”
“We have the beauty of perfect information,” Dell said in comparison to
other manufacturers who “push” their products to the consumer through
retailers, not knowing exactly why the customer is buying a particular
product – price, technology, or availability. "We know instantly if
something's working or not, and we immediately go find what to change," he
Dell received 176 million telephone calls from customers last year and
nearly 46 million visitors to Dell.com – about one billion page requests –
in last year’s fourth quarter, he said.
After telling the story of Dell’s successful growth into a
multi-billion-dollar company, Dell spent the majority of his time answering
questions from the audience.
Howard Frank, dean of the Smith School, said Dell’s business model was
easy to understand but hard to implement. Frank asked if Dell thought that
all competitors would need to adopt this customer-centric business model to
Dell said that, back in 1992 when it was only a $1-billion company,
competitors wanted to copy the model, and now Dell is a $42-billion company
and they still haven’t been able to duplicate the success. He said it was
similar to WalMart – hard to copy – and competitors haven’t shown they are
Speaking of competitors, one student asked Dell if he thought the
Hewlett-Packard/Compaq merger presented a threat. Dell, not questioning
Hewlett-Packard CEO Carly Fiorina’s business education (she received her
Smith MBA in 1980), said the gap is widening between Hewlett-Packard and
Dell, with a revenue difference of more than 35 percent in last year’s
fourth quarter. The cross-subsidizing of a successful company with an
unsuccessful company is not a good strategy – it’s dangerous and proven to
be somewhat unsuccessful, he said.
When asked what was his biggest mistake, Dell recounted two instances:
creating our own version of Unix in 1989, and trying to grow too fast and
selling computers through retailers was a huge distraction.
the end of the presentation, Dell and Rosendo “Ro” Parra '82 (marketing),
senior vice president for Dell's Americas business, proudly accepted
personalized University of Maryland basketball jerseys. As they exited the
auditorium, students who had been watching the speech live on plasma
displays throughout the building were delighted to have the chance to see
Dell in person.
In addition to Michael Dell, the conference featured Smith School
scholars, faculty from the University of Texas and MIT, and business leaders
from companies such as Digex, IGI Earth Color, Daksh, and Impressa. Topics
included electronic supply chains, the network as a utility, and the future
Characterized by global connectivity, real-time collaboration, and rapid,
continuous information exchange, netcentricity is a powerful force shaping
every aspect of living. The Smith School is a management education leader
for the digital economy.