by Margaret Hopkins
A young, highly competitive and fragmented industry, characterized by companies that dazzle, then fizzle – that’s the global IT market, said Paul Bell, a top Dell Computer executive and 1982 Penn State graduate, who kicked off this year’s IST Industry Leader Lecture series.
“There’s a lot of hype in IT, so you have to know what’s real and what’s not,” Bell, senior vice president and president of Dell’s Europe, Middle East and Africa regional business operations, told a full house at the Palmer Museum of Art Auditorium Oct. 21. The company’s commitments to open standards, direct customer relationships and lean manufacturing have so far enabled Dell to distance itself from its competitors.
“This is not an industry where you can take anything for granted,” said Bell, who oversees 8,500 employees
His proof: Of the 182 PC vendors in 1994, only 94 companies were still doing business in 2001. The survivors, however, were joined by 180 new businesses.
Unlike a lot of industries that have a clear Number One company, the three biggest global players in the IT market have only 30 to 35 percent of the market. Second tier or regional players make up a similar percentage, Bell said.
But because there is a very low barrier to enter the marketplace in core hardware, the industry still has the white box makers or garage shops – some guy in a garage, in the backroom, putting computers together with a screwdriver.
“The point is we have to add value in many other ways,” Bell said. “If you stand still in this industry, you can get wiped out. We’ve had to stay one step ahead of our competitors.”
Started 18 years ago by founder Michael Dell in his college dormitory room, Dell holds grandfather status in the IT world. The company has carved out solid sales by selling direct to the customer and by building to order.
“We move material through as fast as possible with the fewest touches as possible with a seamless flow of information up and down the chain,” Bell said. “We believe that being in touch with the customer, knowing what you want, and keeping that information flowing seamlessly is very important.”
That approached has enabled Dell to reduce inventory to four days as opposed to competitors with up to ten weeks’ inventory. The strategy has lowered costs significantly, Bell said.
“I tell our employees to think of us like fresh fruits and vegetables,” Bell said. “There’s not a lot of products out there sitting on shelves that depreciate by 1 percent a week, but that’s what happens in our industry.”
Dell’s gains in market share haven’t come at a price: The company is profitable and continues to grow its market share, Bell said.
“Our goal is to double our company in five years,” Bell said. “Some of it is going to be by taking share in our core market, and a lot of it is going to be by extension.” Bell received his bachelor’s degrees in fine arts and business administration from Penn State in 1982. He holds an M.B.A from the Yale School of Organization and Management.
Prior to joining Dell, Bell was a managing consultant for Bain and Company. He has more than 16 years of experience in consulting, management and marketing in high technology and other industries.
*mah*
