With declining PC sales, Dell is making some major changes to the business model that made the company an IT force. Dell is hosting 250 equity analysts and institutional investors this week to discuss those changes.
The first day of the meetings and briefings on Wednesday set the stage for Dell to discuss its growth priorities on Thursday. Dell spent the first day providing a framework by which investors could understand the fundamental changes Dell is making to its business model — from manufacturing to channels to services.
Dell CEO Michael Dell also told the gathering Thursday in Round Rock, Texas, that the company will cut more than the 8,800 jobs it announced last year as part of a plan to shed $3 billion in costs.
“Dell has always been known for its direct model. With it, we created a direct customer relationship model and build-to-order manufacturing capability like the world had never seen,” said Robert Williams, director of investor relations for Dell. “Our assets were global and our cycle times were some of the shortest in the industry. But today’s PC economics are much different.”
Moore’s Law led to better performance, rapid growth and lower selling prices, and ultimately to smaller absolute-cost advantages, Williams said, and growth shifted from desktops to notebooks and from large enterprises to consumers and small enterprises. Williams said Dell’s customers are more diverse than ever before, and the company needs to serve them in different ways.
Focusing on the Supply Chain
Mike Cannon, president of Dell Global Operations, discussed how Dell is optimizing its global manufacturing network to better meet customer needs. By matching product design to customer segments, Dell expects to eliminate embedded product costs. Getting this part right lets Dell think more broadly about its manufacturing model to enhance consumer value, Williams said.
Meanwhile, Paul Bell,…