After 20 years, Dell looks at future

Michael Dell discusses the hand-off of his CEO title and the company's future direction

ROUND ROCK, TEXAS -- Some CEOs just don't know how to retire. When Michael Dell officially hands over the chief executive officer title to long-time protégé Kevin Rollins at the company's annual shareholder meeting Friday, nobody is expecting a re-invention of the $41 billion computer company.

Rollins's takeover is so low key that tongue-in-cheek corporate video circulating at the company's Round Rock, Texas, campus shows Dell's new chief executive watering the plants, flipping burgers, and sorting company mail during his first day at the new job.

In fact, Dell and Rollins have been sharing management oversight of Dell since 1997, thanks to the company's unique "two in a box" corporate structure, which lets two executives share the responsibilities usually assigned to one.

Michael Dell himself is not yet 40 years old and is expected to remain just about as active as ever in charting the company's direction. He sat down with the IDG News Service in Round Rock the day before the hand-off to discuss just what that direction might be.

IDG News Service: What will be the biggest change at Dell after Kevin Rollins takes over your old job?

Michael Dell: If I look at my calendar, which I have done quite a bit, my activities, about 90 percent of them are the same. I'll have a little time that I didn't use to have that I'll spend in a building like this with our product teams and out with customers, which I've kind of already started to do.

But essentially Kevin and I have run the company together for pretty much the last seven years. It's just that as CEO -- and my name is on a few more things than his around here because I showed up first -- I would get a lot more credit than he would typically get. I thought it was a good idea to give him some of the credit too, because he's doing at least half of the work.

It doesn't really change a lot of what we're doing.

IDGNS: So why change anything?

Dell: It seemed like a good idea. The company's 20 years old. I'm going to turn 40 years old. I've spent half of my life (running this company) and now it's time to do some other things.

To some extent, it's more an affirmation of what Kevin has been doing. When I go to Europe and I go to give a speech, I suspect that people will still show up. If I want to go see customers, I think I'll be able to go see customers. Now when Kevin shows up, maybe they'll be a little more likely to see him because he's CEO. We've got two guys that are more recognized.

IDGNS: So it's all about building star power.

Dell: It's not all about that, but it certainly helps in that sense. And I think, also, things get over-attributed. If you read the glamour management magazines, they lead you to believe that there's one person in any company who does everything. Well that's really nonsense.

IDGNS: You started this company 20 years ago making the humble desktop PC, which is a very mature product nowadays. What are your thoughts on what we'll see over the next 20 years?

Dell: What's good now is that the variety of products is so dramatic -- from the Dimension XPS to the SX280 and everything in between, you have a pretty wide spectrum of sizes shapes, applications usage. And of course this was the problem that wasn't supposed to be here.

As far as I know, we're still the only company in the world that actually makes a profit on desktop computers and actually makes them. We thought it was a good idea, since we're a computer company we should make computers. What a novel idea. Our competitors basically gave up and said, "We're going to outsource that."

What do we see happening? It depends on the space. It's really fun and exciting to think about the high end: Workstations with multiple sockets, multiple processors, incredible power, digital content creation manipulation, all the things that you can do on the desktop that you didn't used to be able to do.

And then it's still the workhorse. The perception is that notebooks are outselling desktops. That's not the reality of the data. And of course we sell both, so we're in some senses indifferent.

IDGNS: Except for the profitability.

Dell: Yeah, if we could choose, we'd rather sell notebooks.

One of the fundamental tenants you'll find here is that we don't sit around saying, "I'm going to tell you what all customers need." That's not what we do. We believe in providing the customer with a huge variety of choices and serving the needs of the market. Some people want the silent super-small desktop that hides behind the monitor. Some people want the Dimension XPS third generation with color-changing light bezel, and serial ATA RAID (Advanced Technology Attachment Redundant Array of Independent Disks) and DDR2 (Double Data Rate 2 memory) and incredible performance. That's great too.

IDGNS: Recently Dell moved its technical support for corporate customers from India to America. What were the lessons you learned there?

Dell: Well, to move from India to America, that assumes we moved it from America to India, which isn't really true. This story got reported and confused quite a bit.

It is true that we did move some support from India to America, but it is also true that we did move some support from America to other places. We have support centers all over the world. The vast majority of our support for corporate customers is in the US is in the US.

IDGNS: I'm just trying to understand if there was anything to take away from this at all.

Dell: The take away from it is that stories that have themes of outsourcing can be easily misreported. That was my takeaway from it.

It's a fairly complicated topic. I think in an economic sense, the idea of saying, "Hey, we don't want companies to have people employed outside of the nation where they are based," doesn't really work.

IDGNS: But Dell seems to have managed to move a lot of functions offshore without a lot of disruption. And I think that’s what a lot of people want to know. They've made the decision to certain functions offshore. How do they do it?

Dell: That is a very complicated topic. There are cultural implications. There are business process implications. For example, in our case, our company's grown quite a bit. So let's say that we find some activity where we say, hey here's a function that is pretty low-skilled and it doesn't really interface with the customer and you can do it in a lot of different places, and we need more of them. So we'll add those in another place.

You could say, "Hey are we really doing our people a service by keeping them in jobs that are easy to move to another place?"

Every business has to make economic decisions. Ours might be a little easier than others because we're growing and we have a million dollars of revenue for every employee.

There's another final thing to consider here. In America, we have over half of the wealth of the world, but we have only three and a half percent of the world's population. That means that the things that we do are really valuable to all the other people in the world, and we trade and they buy things: pharmaceuticals, airplanes, computers.

Now, if we don't continue to make things that are really valuable, our little three and a half percent of the population isn't gong to have as much of the wealth. It's going to have a smaller percent. So trying to continue to do things that aren't really, really valuable is not the right strategy for success, because there are way too many people out there. That's the end of the story.

Copyright © 2004 IDG Communications, Inc.