TO Head of combined HP/Compaq PC division

TO:Head of combined HP/Compaq PC division

October 21, 2014.

SUBJECT:Matching up with Dell

ThePC industry has been experiencing a low average profitability overthe years because of the heightened competition that led to lowerprices. Dell is leading in personal computer industry with a greatermarket share than other competitors. HP/Compaq PC division needs toknow how and why Dell is still ahead of it in the market, and how ithas attained a competitive advantage.

Dellhas risen tremendously over the years tripling its market share inthe personal computer market. It was able to overtake Compaq in salesbetween 1994 and 1998. As Dell was growing, it divided its customersinto finer categories. It classified its customers into smaller andlarger customers so as to take care of their needs. By 1996, it splitthe larger customers into categories such as large companies,educational institutions and mid size companies. It also launched awebsite that customers could use to gain information on the pricesand products. Dell also worked closely with its suppliers to ensuretimely delivery of parts. It also used electronic links forcommunicating with suppliers, which helped in cutting downinventories (Harvard Business School, 1999).

Theother factor that facilitated the success of Dell is that it providedtwo lines of desktop computers for different consumers. The companyfurther ensured that it provided its customers with detailedinformation about the computer usage. Likewise, it has a technicalsupport staff that offers technical solution to customers withproblems.

Dellhas been facing much competition from other PC companies. Thesecompanies have been putting much effort to compete with Dell.However, the CEO claimed that it was not afraid of the competitionbecause it will always be the best. The CEO further said that thecompetitors would not affect his market share because they are likein a different type of game. Dell is confident that it is the best inwhat it does amidst competition.


HarvardBusiness School. (1999). Matching Dell.