Dell has shown signs of weakness recently -- a 51% drop in second quarter profits a stock price down 60% from 2000, a battery recall and so on -- so it was interesting to see Michael Dell's view of the business. Knowledge@Wharton has an interview: Michael Dell: Still Betting on the Future of Online Commerce and Supply Chain Efficiencies.
At the end, he spells out the company's marketing strategy, for those who aren't necessarily aware of it:
The truth is that we don't go after the consumer first. We go after the largest businesses first. If you think about an entry into a country, what do you really do? Well, we don't go into a country and say that we are going to serve every customer, every place, all the time, starting today. We start with the multinationals and the largest of the local firms and we build a sales force. We build relationships and kind of get that going.
Then, after some period of time, we'll move into the government sector and medium-size businesses. And then after some more time, we'll move into smaller businesses, and as a result of going after small businesses, we also attract some number of consumers, even if we are not intentionally, at that point, speaking to the consumer per se. Eventually, we will more explicitly target the consumer. Now this could take several years. But it has also resulted in a leading share in the industry and in the world and a disproportionate percentage of all of the profits in the industry. So we're going to keep doing it.
Dell also points out that a lot of its market share in the US consumer market -- which has grown from 6% to 30% this century -- comes from people who were already using Dell machines in their offices.
Comment: Large businesses are conservative and very cost conscious in their computer choices, and both of these are governing factors in Dell's design and manufacturing decisions. They are also becoming increasingly concerned about recycling etc, which helps explain why Dell has taken a strong lead in "green" issues.
