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American Morning
Dell Grabs Market Share With Good Prices, Commercial Series
Aired February 04, 2002 - 08:40 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN FINANCIAL ANCHOR: Not unsurprisingly, the personal computer business has been hard hit by the recession. During the first three quarters of last year, PC sales declined 31 percent. But during that same period, Dell increased its market share by more than 16 percent. How did the company do it? Well, in part by cutting prices, but it was also because of the Dell guy.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: What would you like, Timmy?
DELL SPOKESMAN: Okay, due to the length of this line and the unbearable...
(END VIDEO CLIP)
CAFFERTY: This kid has made quite an impact on Madison Avenue and on consumers psyches, but the real Dell guy, Michael Dell, the founder of the company, was in New York for the World Economic Forum, and he came by our studios, where we talked about those commercials and a whole lot more.
(BEGIN VIDEOTAPE)
CAFFERTY: Personal computer sales last year, across the industry, down 31 percent, and yet you managed to grow the market share of your company by 16.5 percent, over the year before. Is it the Dell guy, or is it that very aggressive pricing campaign that your company's been on? I mean, I get these flyers at home where you can buy these computers at almost unheard of prices, and it's all a part of trying to get market share in a down cycle.
MICHAEL DELL, CEO, DELL COMPUTER CORPORATION: For the last several years, actually, for our entire history, we've been growing faster than the market, and it really comes from the ability to deliver better value to the customer with a stronger business model. And it's been proven out in the business market. It's now happening, certainly, in the consumer market, and it's happening all over the world. So we were the only computer company among the top five to grow while the entire market declined pretty substantially.
CAFFERTY: What is it, though, about the business model? I mean, Gateway and IBM are -- they didn't just get here yesterday, they know a little about this business, too, and yet you're lapping the field. What is it about Dell's business model that sets you apart?
DELL: Well, our cost structure, for one, is about half of our competitors'. So, that means that we can price our products much lower, while still earning a reasonable profit, and our competitors have really been unable to do that. So, we have a structural cost advantage that we've been able to convey. We also provide the highest level of service in the industry. We've won more awards in our industry than any company in the last five years. So you combine great product, great price, great service, great value, and you win lots of market share.
CAFFERTY: Let's talk about the "Dell guy," because everybody knows the "Dell guy."
DELL: Steven.
CAFFERTY: He is probably more familiar than you are, now, to Dell customers, and the rest of us.
DELL: I hope so.
CAFFERTY: Where did you find this kid?
DELL: Well, you know, we've had a growing consumer business now for several years, and people know Dell, mostly, because of the business market, where we have, you know, leading market share. But what Steven has been able to do is create a level of approachability for our brand, and a kind of friendly, approachable character, which has really helped the consumer business. That, in addition to a number of other things. You mentioned the direct mail catalogs...
CAFFERTY: Sure.
DELL: Print advertising, we've been on QVC. We're doing lots of things to get out in front of the consumer.
CAFFERTY: Any truth to the rumor that this guy represents you in a younger time in your life, dude?
DELL: No truth to that.
CAFFERTY: Dude.
DELL: No truth to that.
CAFFERTY: No truth to that at all.
Did you have to sign off on this campaign, I mean, did they run this stuff by you, or was this all done by the agencies?
DELL: Well, you know, certainly, we've been enamored with the campaign, and I was involved in the campaign, but I can't take any credit for it. Our teams came up with it, and the advertising folks came up with it. But what's really been gratifying to see, is that our customers really identify with it, and it is all customers, it's not just a particular group. CAFFERTY: You know, he's made an impact on the society, whether you're looking for PCs or not. Now we got -- IBM's got their dude, so you got dueling dudes. You got the Dell dude, you got the IBM dude. Gateway will probably have a dude, maybe they'll make a cow into a dude. You've started a trend.
DELL: Well, you know, it's hard to copy things. I mean, I think, you know, we've shown certainly with our business model, that you can set something out there, but it's not as easy to copy. In fact, I brought you your own dude here, I got you -- this is your very own "Dude, you're getting a Dell" t-shirt, so you can...
CAFFERTY: That's easy as Dell, as they say on the commercial (ph).
DELL: There you go, exactly.
CAFFERTY: Mr. Dell, thank you very much. Appreciate having you on the program. I will wear this with great pride throughout the neighborhood where I live.
DELL: Great, thank you.
CAFFERTY: Michael Dell, chairman and CEO of Dell Computer.
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