Product Development at Dell Computer Corporation.

University Degree Business and Administrative studies

Product Development at Dell Computer Corporation

Ketul Patel

Management 480 – 101

Prof. A. Spencer

Product Development at Dell Computer Corporation

Charles Babbage designed the first digital computer in the 1830’s, but due to the limited materials and manufacturing capabilities, it only remained a vision. Army engineers created factory size computers during World War II, such as the 50-foot Mark I at Harvard, which allowed simple mathematical computations. Advancement in technology enabled a dramatic reduction in size and power. In 1974, an electronic magazine printed the circuit design of a board with instructions for simulation. This was known as the Mark 8 computer and over a thousand units were sold. Major improvements such as, improved microprocessors, a standard operating system, increased availability of software, disk drives, and cheaper memory saw the market grow.

In late 1970s and 1980s, Apple Computer came up with an easy-to-use interface. Apple put together as much technology into their products as possible. Apple targeted nucleus of trained personnel, primarily in the educational and hobbyist market. To stay in competition with Apple, IBM outsourced its hardware and software components to launch its IBM Personal Computer in 1981. IBM created a new operating system in conjunction with Microsoft and made it available to all personal computer manufacturers; this strategy enabled third parties to develop IBM compatible software. By 1983, IBM held 42 percent of the personal computer market with 25 percent profit. By 1990, microcomputers accounted for 40 percent of all the computers sold, and technological breakthroughs and competition helped drive down the costs of manufacturing the computers.

At the rate that the computer industry is advancing and with the increase in the difference between the speeds of the computers, computers become outdated very quickly. Wouldn’t it be great if you didn’t need to step outside, drive to a local computer store and go through the hassle of explaining to the customer service representative exactly how you want the computer. Now there are online computer stores that have better service then the local computer stores and makes it easier for you to personally customize your computer to your needs. Dell Computer Corporation is an online computer vendor. Dell specializes in building custom computers for their online customers. Dell computers are available at . Companies such as Dell have a business model that does not allow them to have a local store presence. So their online presence must represent their products for all of their clients. Thus the target audience for Dell’s website are varied types of customers, including: home and small business users, medium sized companies and large corporations.

Michael Dell founded Dell Computer Corporation in 1984. Originally, Michael Dell started by improving IBM-compatible personal computers and went door-to-door to local businesses. He dropped out of college due to a high demand for his services. In his first month, he had sales of $180,000. In 1985, Dell offered its first personal computer of its own design, buying and assembling components himself. In 1987, Dell expanded to United Kingdom and went public in 1988.

By 1990 Dell Computers had a broad line of personal computers that won several awards for products and services. Dell’s business model was: “Eliminate the ...

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By 1990 Dell Computers had a broad line of personal computers that won several awards for products and services. Dell’s business model was: “Eliminate the middle man.” At that time, Dell sold its computers directly to customers through mail. Dell provided service for its customers by having home-based telephone representatives and field-based representatives. Dell also had a 24-hour telephone support system that provided first level support. The technical team was able to assist customers solve their problems over the phone. By creating close relationship with its customers it gave the idea that its customers were working with one large entity.

Dell’s product development process consisted of six phases: (1) Profile phase – product team came up with a product and marketing plan with a two to three page features guide. (2) Planning phase – product team developed a detailed business case for the product. (3) Implementation phase – product team designed, built, and tested the prototypes. (4) Qualification phase – product development team built production prototypes of the proposed product. Prototypes were distributed to key customers to obtain feedback on potential improvements. (5) Launch phase – exhaustive testing was performed from opening the packed finished product to running various software applications. (6) Acceptance phase – team collected customer feedback about the product for up to three months after launch.

In 1991, Dell came out with its first line of portable computers. Portables accounted for 17 percent of Dell’s sales by 1992. Soon rumors fled the market about quality problems with the new portable systems, ranging from faulty battery packs to unreliable screens to frequent power failures to broken hinges. In March 1993, Dell reorganized its portable division due to the uncertainty about their laptop line. In August of 1993, Dell was in the process of making marketing decisions for its new laptop line. This was prompted due to Dell recalling 17,000 discontinued notebooks after owners reporting such technical problems as smoke returned three machines or melted spots. In October 1993, Mark Holliday, head of Dell’s Portable Division, faced a issue on hand in regards to developing a new line of laptops, this was a day after the recall of the 17,000 laptops. The lack of portables represented a gap in the company’s product line. Holliday had hoped that increasing battery life would differentiate Dell’s new line of laptops. Batteries did not last more than three hours before needing recharge, which was an inconvenience for the customers. Michael Dell had heard about the new lithium ion battery that Sony was currently testing, but had not been qualified for use in laptops. A new line of portables, which had the latest lithium ion technology, could possibly put Dell back into the portable market.

The decision to use the unproven LiOn battery to gain market share was the question on hand that Holliday was facing. Should he use the new technology and take a risk and face another fiasco? Or should he stick with the proven technology with NiHi batteries to get a product that is reliable?

Dell could continue to use NiHi batteries for their new line of laptops, Latitude notebooks. The use of NiHi battery would use less space than the LiOn battery and allow for including other features such as communications control or memory management accessories. The option of using NiHi was proven and many members at Dell agreed with this idea and would involve no delays in delivering a good Dell product. The down side to using NiHi battery would mean limited product differentiation in an increasingly competitive market.

On the other hand, Dell could incorporate the new LiOn battery into the notebooks. Using LiOn would mean incorporating a new technology that was unproven and was also more expensive. Use of LiOn would also take up more space than NiHi, requiring 40 cubic centimeters’ more space, space that is valuable to use for other features. Other competitors such as Compaq had decided to delay the use of LiOn battery, which meant that Dell would be the first to incorporate this technology if they decided to do so.

The biggest risk facing Dell is whether the LiOn battery will perform as expected or not. Dell’s image with respect to portable laptops is not great either, especially after the 17,000 laptops that were recalled. So, Dell has to work even harder and produce a high quality laptop that will bring them back into the portable market. Given that Dell’s competitors are not going to be implementing the LiOn battery for sometime to come, Dell should take this opportunity and gain an advantage by using the LiOn and implementing it in their new line of laptops.

Dell should implement the new LiOn in their new line of portables. Dell must thoroughly build a shell that will enable the battery to fit within the standards and the shell should have enough room to be able to hold other accessories. They should test and test again for longevity of the new LiOn to assure that it will last longer than its predecessor before launching the finished product.

By implementing the new LiOn, they will be the first to use the new technology. Customers will also be happy to have a portable system with a battery that will last longer than the NiHi. Not having to recharge the battery often is a definite plus. It will make life a lot easier for those who travel a lot and use the portable laptops on airplanes. This is a huge advantage for Dell and they should definitely take the opportunity to fix the mistakes they made with their last line of portables. By doing so, Dell will again gain the confidence of the customers and establish a solid part in the portable market.