Michael Dell Elevates Smith’s Third Annual Netcentricity Conference

Visionary, author, philanthropist, and global business leader, Michael S. Dell joined students, alumni, and leaders from academia and business at the Smith School’s Third Annual Netcentricity Conference on April 4, 2003. Students lined the halls hoping to catch a glimpse of the famous billionaire, photographers snapped hundreds of photos, and journalists took down every word as Michael Dell toured the new $38-million wing of Van Munching Hall and presented the keynote speech at the conference.

The daylong exchange of ideas, research, and practical experience in the ever-changing, critical world of network communication and exchange is Smith’s most anticipated technology-focused annual event. Keynote Speaker Michael Dell, chairman and CEO of Dell Computer Corp., founded the company in 1984 out of his University of Texas dormitory room with only $1,000.

Dell told the audience of more than 250 people that, as a 19-year-old biology major, he thought the way computers were distributed and sold was inefficient. Technology should not take a year to get to the consumer, he implied. The innovator wanted to improve service and remove the dealers through a new customer-centric approach.

Reinforcing topics discussed earlier in the day, Dell said that his supply-chain management system is a “pull system instead of a push system,” meaning that Dell waits for the order to come in, and then builds the computer to the customer’s specifications, with the latest available technology. Dell said this customer-centric business model could be applied to other products and “works everywhere in the world.”

“We have the beauty of perfect information,” Dell said in comparison to other manufacturers who “push” their products to the consumer through retailers, not knowing exactly why the customer is buying a particular product – price, technology, or availability. "We know instantly if something's working or not, and we immediately go find what to change," he said.

Dell received 176 million telephone calls from customers last year and nearly 46 million visitors to Dell.com – about one billion page requests – in last year’s fourth quarter, he said.

After telling the story of Dell’s successful growth into a multi-billion-dollar company, Dell spent the majority of his time answering questions from the audience.

Howard Frank, dean of the Smith School, said Dell’s business model was easy to understand but hard to implement. Frank asked if Dell thought that all competitors would need to adopt this customer-centric business model to succeed.

Dell said that, back in 1992 when it was only a $1-billion company, competitors wanted to copy the model, and now Dell is a $42-billion company and they still haven’t been able to duplicate the success. He said it was similar to WalMart – hard to copy – and competitors haven’t shown they are even close.

Speaking of competitors, one student asked Dell if he thought the Hewlett-Packard/Compaq merger presented a threat. Dell, not questioning Hewlett-Packard CEO Carly Fiorina’s business education (she received her Smith MBA in 1980), said the gap is widening between Hewlett-Packard and Dell, with a revenue difference of more than 35 percent in last year’s fourth quarter. The cross-subsidizing of a successful company with an unsuccessful company is not a good strategy – it’s dangerous and proven to be somewhat unsuccessful, he said.

When asked what was his biggest mistake, Dell recounted two instances: creating our own version of Unix in 1989, and trying to grow too fast and selling computers through retailers was a huge distraction.

At the end of the presentation, Dell and Rosendo “Ro” Parra '82 (marketing), senior vice president for Dell's Americas business, proudly accepted personalized University of Maryland basketball jerseys. As they exited the auditorium, students who had been watching the speech live on plasma displays throughout the building were delighted to have the chance to see Dell in person.

In addition to Michael Dell, the conference featured Smith School scholars, faculty from the University of Texas and MIT, and business leaders from companies such as Digex, IGI Earth Color, Daksh, and Impressa. Topics included electronic supply chains, the network as a utility, and the future of netcentricity.

Characterized by global connectivity, real-time collaboration, and rapid, continuous information exchange, netcentricity is a powerful force shaping every aspect of living. The Smith School is a management education leader for the digital economy.