UM crowd tunes in as Dell tells secrets

Presence: Computer company founder Michael Dell visits the new wing of the Robert H. Smith School of Business in College Park.

April 05, 2003|By Andrew Ratner | Andrew Ratner,SUN STAFF

COLLEGE PARK - Michael S. Dell, the wunderkind computer executive, toured wired classrooms with high-tech plasma screens and blinking stock market tickers at the spanking new $38 million wing of the Robert H. Smith School of Business at the University of Maryland, College Park before delivering a speech there yesterday.

But what really raised the eyebrows of the man Time magazine and CNN called one of the 25 most influential global executives was when the dean, Howard Frank, revealed that the school installed electrical outlets in lockers - so students can recharge their laptops during lunch.

Such engineering with the everyday user in mind was the essence of the message Dell brought to the college's third-annual "New Frontiers in Netcentricity" conference. About 250 information-technology executives and graduate students convened on campus for a day of talks about the future of the Internet and wireless communications for business.

"The heroes at Dell are the people who save the customer money," Dell said. "The heroes are not those who invent things that customers don't want to buy."

Dell was a biology major - not a computer science student - at the University of Texas at Austin in 1984 when he told his father, an orthodontist, and mother, a financial adviser, that he wanted to drop out of school at age 19 to build and sell computers. Though prevailing wisdom at the time was that computer dealers and Japanese companies would rule computer sales, as they did other electronics in the United States, Dell said, his theory was to cut out the middleman.

His company, funded with $1,000, is now the 36th largest in the United States, according to the Fortune 500. It had $35 billion in sales last year, selling nearly one of every six personal computers in the world, along with network servers, Ethernet switches and other equipment.

His visit to the university was arranged by Ro Parra, a 1982 College Park graduate who is now Dell's vice president for the Americas. Parra is to be honored next week as the school's distinguished alumnus of the year.

As Dell described it to an audience that clung to every word, his company is a triumph not so much of technology, but of operations and supply-chain management.

Building machines individually by specified order, not in bulk, turned out to be a fortuitous decision because the parts that go into a computer depreciate and become obsolete so rapidly, he said. Dell's operating expenses consume much less a percentage of revenue than do those of its competitors, he said. The company also believes that it gets faster and more genuine information directly about how its products are faring in the marketplace.

The company received about 175 million telephone calls from customers last year and nearly 50 million Internet contacts in the fourth quarter alone last year, he said. Dell was the first company to record $1 million in sales online after it launched in 1994.

"In our factories, you'll see us building machines this afternoon to fill orders we've received this morning or late last night," Dell said, adding that a retail store might move another maker's product by cutting price to clean out old inventory. "So the manufacturer asks, `How are they selling? Good? We'll make some more.' It's a pretty screwed-up process."

He mostly seemed down to earth for someone with a net worth of $10 billion - with a "b." But if he came off a bit smug at times, it's because he's trumped the competition. Gateway Inc., another direct seller, last month announced it needs to lay off 1,900 employees and close 80 stores to save $400 million and right its balance sheet. Hewlett-Packard, meanwhile, is emerging from a bruising wedding with Compaq Computer Corp. last year, but still benefiting more from its printer sales than from its computers.

Dell recently announced plans to begin competing in printers as well.

A student pointed out to Dell that Carleton S. "Carly" Fiorina, chairman and chief executive officer at Hewlett-Packard and one of the best-known female business leaders in the world, earned a graduate degree at the University of Maryland.

Dell beamed later while displaying a black Maryland basketball jersey that was presented to him as a gift, bearing his name and a big number "1."

Said Dell, "I'll show this to Carly next time."

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