Matching Dell - Case Summary
Matching DELL
History:
IBM Market Leader in Mainframe –market share 61%, starts PC business in ’81, in 2 yrs market share is 42%
IBM Strategy : • Purchase PC components as against manufacturing inhouse (Main frame) • Open Architecture : OS – Microsoft, Microprocessor – Intel , reason, to encourage application developers and enhance Peripheral market • Sales : o Largely corporate clients - thought its huge sales force o Retail clients through value added resellers – handled, installations, configured SW,customer networks and service part of responsibility • Competition : Apple with propriety architecture had 20% market share, Compac enters in ’82, Dell in ’84, • Competitors strategy :: use resellers for large corporate accounts, due to lack of sales force • 1986- IBM moves to propriety architecture with PS/2 line and rejects 386 chip • 1980-90 – PC performace improved and chip price declined, o New technology advancement of 386DX and Pentium II processors were significant o Windows 3.0 launched in 1990, commonly called Wintel architecture o PC Sales declined in 1990 due to US recession • Post 1990 o Demand picks up due to economic growth, and technology like computer Networking, email and WWW. o PC prices decline to less than 499USD, 45.5% of US household owsn PC in 1998 ▪ Modular architecture prevalent for HW and SW, PC differed depending on configuration ▪ Most HW components sourced my numerous companies and highly competitive, however the Microprocessor was controlled by INTEL with 90% share, similarly for OS , Microsoft owned the market and even 80% of the productivity SW, like word processor, ▪ HW and SW started selling as integrated bundle ▪ PC customers were of 4 types • Individuals (33% of Market)- buying depended on evaluations provided by consumer Reports •
History:
IBM Market Leader in Mainframe –market share 61%, starts PC business in ’81, in 2 yrs market share is 42%
IBM Strategy : • Purchase PC components as against manufacturing inhouse (Main frame) • Open Architecture : OS – Microsoft, Microprocessor – Intel , reason, to encourage application developers and enhance Peripheral market • Sales : o Largely corporate clients - thought its huge sales force o Retail clients through value added resellers – handled, installations, configured SW,customer networks and service part of responsibility • Competition : Apple with propriety architecture had 20% market share, Compac enters in ’82, Dell in ’84, • Competitors strategy :: use resellers for large corporate accounts, due to lack of sales force • 1986- IBM moves to propriety architecture with PS/2 line and rejects 386 chip • 1980-90 – PC performace improved and chip price declined, o New technology advancement of 386DX and Pentium II processors were significant o Windows 3.0 launched in 1990, commonly called Wintel architecture o PC Sales declined in 1990 due to US recession • Post 1990 o Demand picks up due to economic growth, and technology like computer Networking, email and WWW. o PC prices decline to less than 499USD, 45.5% of US household owsn PC in 1998 ▪ Modular architecture prevalent for HW and SW, PC differed depending on configuration ▪ Most HW components sourced my numerous companies and highly competitive, however the Microprocessor was controlled by INTEL with 90% share, similarly for OS , Microsoft owned the market and even 80% of the productivity SW, like word processor, ▪ HW and SW started selling as integrated bundle ▪ PC customers were of 4 types • Individuals (33% of Market)- buying depended on evaluations provided by consumer Reports •