Dell 2007 Annual Report Download - page 9

Table of Contents
For large business and institutional customers, we maintain a field sales force throughout the world. Dedicated account teams, which
include field-based system engineers and consultants, form long-term relationships to provide our largest customers with a single source
of assistance and develop specific tailored solutions for these customers. For large, multinational customers, we offer several programs
designed to provide single points of contact and accountability with global account specialists, special global pricing, and consistent
service and support programs across all global regions. We also maintain specific sales and marketing programs targeted at federal, state,
and local governmental agencies, as well as at specific healthcare and educational customers.
We market our products and services to small-to-medium businesses and consumers primarily by advertising on television and the
Internet, advertising in a variety of print media, and mailing a broad range of direct marketing publications, such as promotional pieces,
catalogs, and customer newsletters.
Our business strategy also includes indirect sales channels. Outside the U.S., we sell products indirectly through selected partners to
benefit from the partner's existing customer relationships and valuable knowledge of traditional customs and logistics in the country, to
mitigate credit and country risk, and because sales in some countries may be too small to warrant a direct sales business unit. In the U.S.,
we sell products indirectly through third-party solution providers, system integrators, and third-party resellers. In Fiscal 2008, we
announced PartnerDirect, a global program that brings our existing partner initiatives under one umbrella in the U.S. PartnerDirect
includes partner training and certification, deal registration, dedicated sales and customer care, and a dedicated web portal. We intend to
expand the program globally. Continuing our strategy and efforts of better meeting customers' needs and demands, we began offering
select products in retail stores in several countries in the Americas, EMEA, and APJ during Fiscal 2008. These actions represent the first
steps in our retail strategy, which will allow us to extend our business model to reach customers that we have not been able to reach
directly.
Competition
We face intense price and product feature competition from branded and generic competitors when selling our services. In addition to
several large branded companies, there are other smaller branded and generic competitors. Historically, we competed primarily based on
the customer value that a direct relationship can bring — technology, performance, customer service, quality, and reliability. Our general
practice is to rapidly pass on cost declines to our customers to enhance customer value.
As a result of the intensely competitive environment, we lost 1.9 points of share during calendar 2007. We lost share, both in the U.S. and
internationally, as our growth did not meet overall personal computer systems growth. This was mainly due to intense competitive
pressure in our U.S. Consumer business, particularly in lower priced desktops and notebooks, as well as a slight decline in our worldwide
desktop shipments (compared to 5% worldwide industry growth in desktops). At the end of calendar 2007, we remained the number one
supplier of personal computer systems in the U.S. and the number two supplier worldwide.
We expect that the competitive pricing environment will continue to be challenging. However, we believe that the strength of our
evolving business strategy and indirect distribution channels, as well as our strong liquidity position, makes us well positioned to
continue profitable growth over the long term in any business climate. For consumers, we recognize the increasing importance of product
"ID", which is the appearance, ease of use, and ability to interact with peripheral products like cameras and MP3 players, and we are
focusing more resources to improve in this area.
In our financial services business we compete with the captive financing businesses of some of our competitors as well as with banks and
financial institutions. While DFS is one of the many potential sources for arranging funding that may be available to our customers, we
believe that our ability to offer or arrange financing for products, services, and solutions makes us competitive with banks and financial
institutions.
Manufacturing and Materials
We manufacture many of the products we sell and have manufacturing locations worldwide to service our global customer base. See
"Part I — Item 2 — Properties" for information about our manufacturing locations. We believe that our manufacturing processes and
supply-chain management techniques provide us a competitive advantage.
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