Mr. Chairman, Members of the Committee, I am Michael Dell, Chairman and Chief Executive Officer of Dell Computer Corporation. I am pleased to be invited to testify today on competitive conditions in the computer marketplace. I would like to discuss two key points: first, the computer systems industry is intensely competitive, and second, the standardization of software and hardware has been a positive, even necessary, development.
Since my viewpoint has been shaped by my history in the industry--which is the history of Dell Computer Corporation--I would like to begin by providing you with a brief overview of our company.
Dell Computer was founded in 1984 on a concept which was unconventional at the time: to design and sell custom-made computers directly to end-users, bypassing the dominant method of computer distribution, which was to sell mass-produced computers through retail stores.
Since then, we have further developed the concept of build-to-order, and it underlies nearly all of our business activities. These include computer systems built one at a time, factory-installed software, and factory integration of hardware and peripherals. We also tailor our after-sales services to the customer's business size and special requests.
This approach enables us to establish direct relationships with our customers. We currently have more than 125,000 contacts with our customers every week, by telephone or in person. In addition, more than one million customers and potential customers contact us each week over the Internet, via www.dell.com.
Through these direct relationships, we are able to gauge efficiently customer demand for our products. Because those products are built-to order, we also can determine customer demand for the individual components, including hardware and software.
Today, Dell has annual revenues of $12 billion and about six percent global marketshare. We are headquartered in Round Rock, Texas, near Austin. We employ slightly more than 16,000 employees worldwide, with nearly 12,000 of them located in the Greater Austin area.
Mr. Chairman, my experience with Dell has shown me that the most powerful competitive force in our industry is evolving customer demandand the companies that are successful are those that are able to stay closest to customer needs.
The trend to standardization in both hardware and software within our business has been market-driven. Standardization has been one of the reasons that Dell has been able to grow rapidly alongside much older and more established companies such as IBM and Hewlett Packard.
Standards simplify the computing environment and establish a common hardware and software platform to make it easier for systems to work together and to exchange information. Standards also simplify product development and service, thereby reducing our costs.
Just as important, standards have clarified computing technology for average users. By driving overall costs down, standards also have increased the penetration of computers into the consumer and business mainstream.
Mr. Chairman, Dell has achieved dramatic growth in a highly competitive environment by dealing directly with our customers and efficiently delivering Dell-designed systems built-to-order. We believe the trend to standardization has helped both Dell and our customers.
I thank the Chairman and the Committee for the opportunity to share these observations with you. I would be happy to answer any questions.