NEWSWEEK: At 37, you’re now the longest-tenured technology CEO in America. How does that make you feel?
DELL: It surprises me a bit. At most companies, by the time you get the CEO job you’re 55 years old. You work a few more years and then you’re done. You move to Florida.
What’s your reaction to all the corporate scandals we’ve witnessed the last year or two, especially involving technology companies?
Surprise, disappointment and a bit of depression. It’s very surprising to see the magnitude and depth of financial creativity, if I can call it that. I probably feel like most people feel–disgusted.
I hear you have an unusual way of selling PCs in China.
First, about 85 percent of our business is with businesses and institutions. But, yes, consumers in China don’t have credit cards; they either have cash or debit cards. When a Chinese customer contacts us, we tell him how much the machine costs, give him an order number and tell him to go to the Bank of China. He goes to one of the bank branches, gives it his money and the order number, and within a couple of hours the money is transferred to us and we ship the computer. We also have a payment on delivery system with debit cards. They work very well.
Do you ever get ideas from foreign markets or your overseas partners?
Sure. Our Irish manufacturing operation has led the way in supply-chain innovations. They sped up the frequency of communications with suppliers, so literally they are getting [component deliveries] every two hours. And Dell Japan has led the way in so-called frictionless commerce. That means an order goes right to the manufacturer, isn’t touched by a person, doesn’t have to be re-entered or messed with in any way.In Japan, we have the highest percentage of customers who [interact] with us completely online. There are a lot more features on Dell.com in Japan than there are in other countries, even the United States.
What foreign markets have the most long-term growth potential?
For us, actually, Japan. What’s interesting in Japan is that you have a lot of irrational activity among our competitors. As they become more rational, we benefit. Let me see if I can state this diplomatically. Over the last 10 years, one Japanese PC maker has made no money. They sell things but make no money: that’s irrational activity. They’ll gradually say, “Hey, maybe we should try to make money.” That eventually will mean raising their prices much higher than ours, because their cost structure is [much higher].
Dell is moving fairly rapidly into the networking side of the industry. You sell servers, switches and storage devices, and are said to be going after low-end mainframe business. Analysts say it’s a risky move because the products in these markets are proprietary, not standardized, which is your stock in trade.
I believe that all of these industries will become [standardized]. In 1995, when we went into the server business, people said it wouldn’t work, that we had no business in that market. We’re No. 1 now in the U.S. server market. The people that are earning high margins from these products don’t want them to become commodities. But history is pretty clear on that: all of these markets will commoditize over time.
Are you surprised by how much the computer industry has changed since you started your company?
A little more than 20 years ago, if you wanted to have a computer you had to be either with the government or a big, rich corporation. Then the PC came along and became affordable. Soon, they were in homes, and in small businesses, and produced a real change in the way our society worked. And the change continues. There’s a researcher at Johns Hopkins University, and he’s got eight servers sitting in his office. With them he’s predicting global weather patterns based on water-temperature readings he gets off the Internet. It’s basically pulling down the cost of doing this complex research. It’s taking cutting-edge technology and making it affordable to the masses, if you will, which to me has both a business and social impact. That’s happening now.
