Information Technology Reference
In-Depth Information
room in 1984. Later, after borrowing about $300,000 in start-up capital from his family,
Dell dropped out of school in order to pursue his business full-time.
The company produced its first computer - the "Turbo PC", selling for $795 - in 1985.
All of PCs Limited's sales were direct to consumers, the machines being marketed through
ads in computer magazines. Each unit shipped custom built according to a given pur-
chaser's selection of menu items (a unique service exclusive to PCs Limited, one made pos-
sible by their shunning of retail distribution). Direct selling also enabled the firm to price
their PCs at a sharp discount to the prices available through retailers for clones from other
manufacturers while at the same time assuring themselves a greater per-unit margin than
what their competitiors enjoyed.
The company grossed more than $73 million in 1986, changed its name to Dell Com-
puter Corporation in 1988, then began expanding overseas. In the course of one week in
June of 1988, Dell's market capitalization grew by $30 million to $80 million from its June
22 initial public offering of 3.5 million shares at $8.50 a share. Four years later,
Fortune
added Dell to its list of the world's 500 largest companies. This made Michael Dell the all-
time youngest CEO of a
Fortune 500
firm.
Adding to the demise of IBM's own PC sales (vs. clones) was the fact that IBM itself
failed to understand the importance of "IBM compatibility." Such products as the IBM
Portable (outperformed, out-priced and outsold by the earlier Compaq Portable) and the
PCjr (flawed by significant incompatibilities with the original PC) alienated many users,
and further encouraged the turn toward clone-makers. Through the years, releases of PC
hardware by clone manufacturers were always to directly mirror new releases and enhance-
ments of the original PC from IBM - including the XT of 1983, and the second-generation
AT ("Advanced Technology") designed around the 80286 chip, released 1984.
"Of course, IBM no longer makes PCs," comments
PC World
contributing editor Lin-
coln Spector. "In the mid-1980s the company attempted to take back control of the standard
with a significant upgrade - the Micro Channel Architecture PS/2, which was software-
compatible, but not hardware-compatible, with the PC. However, it was Compaq, the first
and largest of the clone manufacturers, that offered the upgrade everyone really wanted: a
PC based on Intel's 32-bit 80386 processor. Big Blue remained a major player in the PC
market throughout the 1990s, but it was no longer the biggest player. During that time it
concentrated on its ThinkPad notebooks rather than desktop PCs. In 2005 IBM sold its PC
division, including the ThinkPad, to the Lenovo Group."
Elsewhere he writes: "With their beautiful graphics, multitasking applications, and net-
working talents, today's gigahertz-plus systems seem a far cry from the PCs of two dec-
ades ago. Still, at the heart of every 21st century Windows-based computer lies an IBM
PC." The bootstrapping of evolution requires antecedents, all of whom leave their indelible
mark. As Mitch Kapor has recently noted: at least 98% of the DNA for today's PCs comes
from that original and now seemingly-ancient machine first released in 1981.
