The Farmer In Dell

CEO Michael Dell has cultivated a company and a culture that are delivering profits when the rest of the industry struggles to stay even. And his company is gaining in enterprise servers, storage, services, networking, printers, and PDAs. Read our exclusive Q&A with Dell about Dell.
InformationWeek: What's the greatest advantage of these customer-advocacy sessions?

Michael Dell: First of all, I think they really appreciate the opportunity to provide input. The second thing is that by getting their input, you have a much higher return on your research and development. If you look at the ratio of Dell's R&D to profit, it's five times that of our major competitors. Why? Because we know what to develop. If you develop something at Dell that saves the customer money, you're a hero. On the other hand, if you develop something at our competitors that's really cool, but nobody wants to buy it, you're still a hero. Here, if you develop something really cool, but nobody wants to buy it, you screwed up. Who did you talk to? Where was the input? What did the customers tell you? I'm not saying it never happens, but the accuracy rate on our methods is very, very high because the customers are very involved. The customers know our products because they were there telling us to develop them, saying, "No, we don't want one power supply in this server, we want two power supplies. We don't want this much memory; we want that much memory." They give us the input and we go do it.

We also find that there are customers who are always kind of pushing the leading edge of usage and capability and challenging us. Those are the best ones because we can learn from them. In certain markets, like Japan, they tend to lead into new features or client systems. And first you can look at that and say, "Well they have different requirements." Well, they aren't different; they're just ahead of the rest of the world.

InformationWeek: You're coming up on the 20th anniversary of the company. You've seen a lot of changes, a lot of things come and go. Do you see anything in particular that will have a high impact over the next several years? Maybe wireless changing the way people do computing or a combination cell phones and PDAs changing the way people communicate?

Michael Dell: I think there's a couple of ways to think about that question. If you think about the period that we went through in the 90s, the sheer growth and development in the industry was so massive that you had a lot of these things that sort of fit into a characterization or stereotype that you're talking about. The industry is now much, much larger, so to move the needle to that magnitude is a much more difficult thing to do. So, for example, a shift to wireless is massive and very, very important, but if you asked how many more units it represents, that sort of all gets gobbled up in the enormity of the industry. The kind of embryonic period that a lot of us went through in the 80s and early 90s--that was sort of a lost era; the industry only gets started one time. There will be new industries that are started within IT computing. But that was sort of a special thing.

Photo of Michael Dell Courtesy of Dell Inc.