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... nd climbed sharply to $ 35 million daily at the close of 1999. In early 2000, visits to Dells Web site for information and order placement were approaching 2. 5 million weekly, about 20 times more that the number of phone calls to sales representatives. In early 2000, about 43 percent of Dells sales were Web-enabled and the percentage was increasing. Dell in Europe In fiscal year 1999, $ 6. 6 billion of Dells $ 18. 2 billion in sales came from foreign customers.
Europe, where resellers were strongly entrenched and Dells direct sales approach was novel, was Dells biggest foreign market, accounting for sales of $ 4. 7 billion, up from $ 3. 0 billion the prior year. Dells European revenues were growing over 50 percent annually, and unit volume was increasing at nearly a 35 percent annual rate. Sales of PCs in Europe were 19. 7 million units in 1997, 25. 4 million units in 1998, and 29. 9 million units in 1999. Expectations were for continued growth of 18 to 22 percent for the next several years. Europe's population and economy were roughly the same as those of the United States, but computer usage was only half that of the United States in 1999.
Germany led Europe in sales of PCs, with 6. 6 million units in 1999 (up 21. 6 percent over 1998); Great Britain was second, with unit sales of 5. 5 million (up 25. 2 percent over 1998); and France was third, with 1999 unit sales of 4. 4 million (up 26. 7 percent over 1998). According to Dataquest, the top five market leaders in PCs in Europe were as follows: Fujitsu and Siemens had merged their PC operations in 1999 to move ahead of Dell in the ratings in Europe during 1999 (based on the combined market shares of the two brands); based on individual brand, however, Dell ranked second in Europe, ahead of both the Fujitsu brand and the Siemens brand. Dell in China Dell Computer entered China in 1998 and by 2000 had achieved a market share close to 2 percent. China was the fifth largest market for PCs in the world, behind the United States, Japan, Germany, and Britain.
But with unit volume expanding 30 percent annually and a population of 1. 2 billion people, the Chinese market for PCs was expected to become the second largest in the world by 2005 (with annual sales of $ 25 billion) and to become the worlds largest PC market sometime thereafter. The market leader in China was Legend, a local company; other major local PC producers were Founder (ranked fourth) and Great Wall (ranked sixth). IBM, Hewlett-Packard, and Compaq were among the top five market share leaders in China all three relied on resellers to handle sales and service. Other companies among the top 10 in market share in China included Toshiba, NEC Japan, and Acer (a Taiwan-based company). Dell, ranked eighth in market share in 1999, was the only market contender that employed a direct-sales business model. Dells sales in China in 1999 were up 87 percent over 1998 levels.
Dell management believed that in China, as in other countries around the world, the company could be very price-competitive by cutting out middlemen and selling direct via the Internet, telephone, and a sales force that called on large customers. Dells primary market target in China was large corporate accounts. Management believed that many Chinese companies would find the savings from direct sales appealing, that they would like the idea of having Dell build PCs to their requirements and specifications, and that once they became Dell customers they would like the convenience of Internet purchases and telephone orders. Dell recognized that its direct-sales approach would temporarily put it at a disadvantage in appealing to small-business customers and individual consumers. According to an executive from rival Legend, "It takes two years of a persons savings to buy a PC in China. And when two years of savings is at stake, the whole family wants to come out to a store to touch and try the machine. " 16 But Dell believed that over time, as Chinese consumers became more familiar with PCs and more comfortable with making online purchases, it would be able to attract growing numbers of small-business customers and consumers through Internet and telephone sales.
IBM was the market leader in 1999 in the entire Asia-Pacific region, with an estimated 8. 4 percent share, up from 8. 1 percent in 1998. 17 Compaq had a second-place 7. 3 percent share but was the market leader in a number of individual countries within the region. China-based Legend had a 7. 1 percent share, most all of which came from sales in China. Samsung had the fourth largest market share, followed by Hewlett-Packard. Dell in Latin America In 2000, PC sales in Latin America were approaching 5 million units annually. Latin America had a population of 450 million people. Dell management believed that in the next few years use of PCs in Latin America would reach 1 for every 30 people (one-tenth the penetration in the United States), pushing annual sales up to 15 million units.
The companys new plant in Brazil, the largest market in Latin America, was opened to produce, sell, and provide service and technical support for customers in Brazil, Argentina, Chile, Uruguay, and Paraguay. Customer Service and Technical Support Service became a feature of Dells strategy in 1986 when the company began providing a years free on-site service with most of its PCs after users complained about having to ship their PCs back to Austin for repairs. Dell contracted with local service providers to handle customer requests for repairs; on-site service was provided on a next-day basis. Dell also provided its customers with technical support via a toll-free phone number, fax, or e-mail. Dell received close to 40, 000 e-mail messages monthly requesting service and support and had 25 technicians to process the requests. Bundled service policies were a major selling point for winning corporate accounts.
If a customer preferred to work with its own service provider, Dell supplied that provider with the training and spare parts needed to service the customers equipment. Value-Added Services Selling direct allowed Dell to keep close track of the purchases of its large global customers, country by country and department by department information that customers found valuable. And its close customer relationships resulted in Dell being quite knowledgeable about what each customer needed and how its PC network functioned. Aside from using this information to help customers plan their PC needs and configure their PC networks, Dell used it to add to the value it delivered to its customers. For example, Dell could load a customers software at the factory, thereby eliminating the need for the customers PC personnel to unpack the PC, deliver it to an employees desk, hook it up, place asset tags on the PC, then load the needed software from an assortment of CD-ROMs and diskettes a process that could take several hours and cost $ 200 to $ 300. 18 Dells solution was to load the customers software onto large Dell servers at the factory and, when a particular version of a customers PC came off the assembly line, to use its high-speed server network to load whatever software the customer had specified onto the PCs hard disk in a few seconds. If the customer so desired, Dell would place the customers asset tags on the PC at the factory.
Dell charged customers only $ 15 or $ 20 for the software-loading and asset-tagging services the savings to customers were thus considerable. One large customer reported savings of $ 500, 000 annually from having Dell load its software and place asset tags on its PCs at the factory. 19 In 1997, about 2 million of the 7 million PCs Dell sold were shipped with customer-specific software already loaded on the PCs. In late 1997, in another effort to add value for its customers, Dell, following Compaq's lead, created a financial services group to assist customers with financing their PC networks. Premier Pages Dell had developed customized, password-protected Web sites (called Premier Pages) for 40, 000 corporate, governmental, and institutional customers worldwide.
Premier Page sites gave customer personnel online access to information about all Dell products and configurations the company had purchased or that were currently authorized for purchase. Employees of Dells large customers could use Premier Pages to (1) obtain customer-specific pricing for whatever machines and options they wanted to consider, (2) place an order online that would be electronically routed to higher-level managers for approval and then on to Dell for assembly and delivery, and (3) seek advanced help desk support. Customers could also search and sort all invoices and obtain purchase histories. These features eliminated paper invoices, cut ordering time, and reduced the internal labor customers needed to staff corporate purchasing and accounting functions. A customers Premier Pages also contained all of the elements of its relationship with Dell, including who the Dell sales and support contacts were in every country where the customer had operations, what software Dell loaded on each of the various types of PCs the customer purchased, and service and warranty records for each machine. So far, customer use of Premier Pages had boosted the productivity of Dell salespeople assigned to these accounts by 50 percent.
Dell was providing Premier Page service to thousands of additional customers annually and adding more features to further improve functionality. web At the companys Web site, which underwent a global redesign in late 1999 and had 50 country-specific sites in local languages and currencies, prospective buyers could review Dells entire product line in detail, configure and price customized PCs, place orders, and track those orders from manufacturing through shipping. The closing rate on sales coming through web were 20 percent higher than sales inquiries received via telephone or fax. The company was adding Web-based customer service and support tools to make a customers online experience pleasant and satisfying. Already the company had implemented a series of online technical support tools: Support. Dell.
com This Web-based feature allowed customers to create a customized support home page; review technical specifications for Dell systems; obtain information and answers from an extensive database collected by Dell technicians, service providers, and customers; click on online links to Dells primary suppliers; and take three online courses on PC usage at no charge. The site enabled customers to select how they received online help, based on their comfort and experience with PC technology. The information available at this part of Dells Web site was particularly helpful to the internal help-desk groups at large companies. In late 1999, customer visits to support. Dell. com were running at a rate of 19 million per year.
E-Support Dell had developed advanced technology called "E-Support Direct from Dell" that helped Dell systems detect, diagnose, and resolve most of their own problems without the need for users to interact with Dells support personnel. The goal of Dells E-Support technology was to create computing environments where a PC would be able to maintain itself, thus moving support from a reactive process to a preventive one. Michael Dell saw E-Support as "the beginning of what we call self-healing systems that we think will be the future of online support. " 20 Dell expected that by the end of 2000 more than 50 percent of the customers needing technical help would use E-Support Direct from Dell. Management believed the service would shorten the time it took to fix glitches and problems, reduce the need for service calls, cut customer downtime's, and lower Dells tech-support costs. Dell Talk An online discussion group with 100, 000 registered users, Dell Talk brought users and information technology (IT) professionals together to discuss common IT problems and issues. Ask Dudley The Ask Dudley tool gave customers instant answers to technical service and support questions.
Customers typed in the question in their native language and clicked on "ask. " In February 2000, 40 to 45 percent of Dells technical support activities were being conducted via the Internet. Dell was aggressively pursuing initiatives to enhance its online technical support tools. Its top priority was the development of tools (as described in the above list) that could tap into a users computer, make a diagnosis, and if the problem was software related, perform an online fix. Dell expected that such tools would not only make it easier and quicker for customers to resolve technical problems but would also help it reduce the costs of technical support calls (currently running at 8 million calls a year). The company estimated that its online technical support tools had resulted in 25 percent fewer support calls from users, generating savings of between $ 5 and $ 10 per call. Management believed that the enhancements it was making to web made it easier and faster for customers to do business with Dell by shrinking transaction and order fulfillment times, increasing accuracy, and providing more personalized content.
According to management, a positive Web site experience was a bigger driver of "e-loyalty" than traditional attributes like price and product selection. On-Site Service Corporate customers paid Dell fees to provide support and on-site service. Dell generally contracted with third-party providers to make the necessary on-site service calls. Customers notified Dell when they had PC problems; such notices triggered two electronic dispatches one to ship replacement parts from Dells factory to the customer sites and one to notify the contract service provider to prepare to make the needed repairs as soon as the parts arrived. 21 Bad parts were returned to Dell for diagnosis of what went wrong and what could be done to see that the problems wouldnt happen again. Problems relating to faulty components or flawed components design were promptly passed along to the relevant supplier, who was expected to improve quality control procedures or redesign the component. Dells strategy was to manage the flow of information gleaned from customer service activities to improve product quality and reliability.
On-Site Dell Support A number of Dells corporate accounts were large enough to justify dedicated on-site teams of Dell employees. Customers usually welcomed such teams, preferring to focus their time and energy on the core business rather than being distracted by PC purchasing and servicing issues. For example, Boeing, which had 100, 000 Dell PCs, was served by a staff of 30 Dell employees who resided on-site at Boeing facilities and were intimately involved in planning Boeing's PC needs and configuring Boeing's network. While Boeing had its own people working on what the companys best answers for using PCs were, there was close collaboration between Dell and Boeing personnel to understand Boeing's needs in depth and to figure out the best solutions. Migration to New Technology Dell had opened facilities in both Europe and North America to assist its customers and independent software providers in migrating their systems and applications to Windows 2000, Intel's new 64 -bit Itanium computer chip technology, and other next-generation computing and Internet technologies. Dell was partnering with Intel, Microsoft, Computer Associates, and other prominent PC technology providers to help customers make more effective use of the Internet and the latest computing technologies.
Dell, which used Intel microprocessors exclusively in its computers, had been a consistent proponent of standardized Intel-based platforms because it believed those platforms provided customers with the best total value and performance. Dell management considered both Intel and Microsoft as long-term strategic partners in mapping out its future. Customer Forums In addition to using its sales and support mechanisms to stay close to customers, Dell held regional forums to stimulate the flow of information back and forth with customers. The company formed "Platinum Councils, " com
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