In the early days, as he was building an enormous business success almost out of nothing, plenty of people were slow to realize that Michael Dell was going to become one of the giants of the personal computer industry.
Dell was derided as being a mere "clone-maker" -- a technology follower who made a fortune on the coattails of innovations by Intel Corp. and others.
He wasn't put on the same pedestal as Bill Gates, the founder of Microsoft who became a key Dell business ally, or Steve Jobs, the maniacally creative co-founder of Apple.
It took a while for the public to realize that Dell -- introverted, reserved and tightly scripted in public -- had his own creative genius going on. Dell wasn't a technology visionary; instead, he was a tech-savvy business pioneer.
In the 1980s and 1990s, the University of Texas dropout helped create and perfect a new magic formula for computer industry success that caused his company and his personal fortune to take off like a rocket ship.
In recent years, that rocket ship has returned to earth. Dell Inc.'s growth has slowed, profits have dropped, and the stock price at the start of this year was a fraction of what it was 13 years ago. Now, two decades later, an older and wiser Michael Dell is telling the world he wants to recreate that magic and shake up the computer industry one more time.
Now, as he approaches his 48th birthday this month, Dell has unveiled a $24 billion buyout plan that amounts to a huge bet to create a new business success in a world that tends to regard the PC as yesterday's technology.
It is a bold move -- and a risky one. There are plenty of doubters about whether he can succeed.
Dell hasn't granted any interviews in the past week, but he offered some clues last week in a message to company employees: "Dell (Inc.) is a relatively young company and I'm a (relatively) young CEO. There is much more we can accomplish together and I am committed to this journey."
Despite his billions of dollars in personal wealth, Michael Dell isn't done yet. He still cares deeply about the company that bears his name and still thinks he has something to prove to the rest of the information technology industry.
'Personal credibility on the line'
Taking Dell Inc. from a publicly traded company makes both personal sense and business sense to some analysts who track the PC industry.
Fixing the business can translate into a big winning investment for Michael Dell, and it can show that he still has the drive and the smarts to shake up the computer industry even when PCs are no longer the dominant tech products they once were.
Analysts say Dell is out to bolster his standing in the industry and make a lot of money doing it.
"This is his personal credibility on the line," said analyst Patrick Moorhead with Moor Insights and Strategy. "Money is one thing, but making a personal commitment for the long haul is more meaningful. He has all the money he needs for a couple of lifetimes, but a personal commitment transcends all that money."
Analyst Cindy Shaw with Discern Investment put it another way: Michael Dell's motivation for the buyout is "reputation and greed, in our view."
"We believe Michael Dell is once again hungry. Thirty years ago, we think he hungered for success and wealth. In 2013, we think he hungers to restore his legacy and (his) personal balance sheet," Shaw said. "While we doubt he is as hungry or energetic now as he was in his youth, today he has all the advantages of a global footprint, brand name recognition and connections."
Michael Dell remains one of the wealthiest people in the U.S. Last year, he ranked 22nd in the Forbes 400 list with an estimated wealth of $14.6 billion. That was down from 2005, when Forbes ranked him fourth on the list with an estimated wealth of $18 billion.
Analysts and other observers say that taking the company private will give Michael Dell the freedom of action and movement that he sometimes lacked as head of a publicly traded company with a declining stock price.
"It is hard being a public company, and it is getting harder," said Bob Metcalfe, a computer networking legend who teaches entrepreneurship at the University of Texas. "Michael is confronting major dislocations in his market, and he needs to maneuver. And it is risky and dangerous, and it takes time. It is understandable, when the stock price has fallen so much, that he would take the opportunity to go private.
"He doesn't have to do this. He is not quitting. He is re-upping and doubling down."
A New Dell Inc.
The legacy that Michael Dell is preserving has to do with spotting compelling business opportunities by reconfiguring how the computer industry does business.
In the 1990s, he helped cut deeply into the fat profit margins of IBM and others by making and delivering PCs in a way that created more customer choice, cost savings and convenience. That added up to a value proposition that particularly appealed to business customers.
The early Dell Inc. didn't spend much on technology development, leaving that task to its suppliers. Its business process was its innovation.
The new Dell must do things a little differently. It has spent more than $13 billion over the past five years buying more than two dozen companies that have a broad range of technical prowess in such areas as storage, networking, software, security and services.
The CEO told employees and customers last week that he intends to pursue the same basic strategy of the past five years -- making the company a stronger one-stop shop for a range of information technologies. But he expects to drive change faster without the encumbrances of running a public company.
The old Dell focused on personal computers, but the new company will compete across a broader landscape -- the $3.7 trillion global information technology market, which includes business systems hardware, software, services and communications.
Analysts expect the new Dell will go after a wide swath of business customers worldwide that want to modernize their information technology investments and save money doing it.
The new Dell will push to sell more servers, data storage systems, security, software and services, such as "cloud computing," where businesses move more of their vital software and data into remote data centers that are shared with other companies.
The plan calls for appealing to cost-conscious business customers that want productivity from information technology advances but don't want to be locked into any one company's proprietary solutions, such as those offered by IBM Corp. and Oracle Corp.
While some industry analysts are optimistic about Dell's chances, others are more skeptical.
"We are not sure that going private improves the company's fundamental position," wrote Shaw Wu with Sterne Agee. "The reality is ever-growing competition ... isn't going to go away."
Can it work?
Some people who have worked with Michael Dell believe he still has the tools and the drive to reinvent his company and win with it in a new environment where the personal computer isn't the answer to every problem.
One of them is Jay Bell, a former Dell senior fellow, who says Michael Dell's strength is having the business savvy and the technical knowledge to match emerging technologies with evolving customer needs.
Now, Bell said, the Round Rock company owns more technological capabilities to apply to fixing customer problems.
Once the buyout is completed, he said, "they have an excellent shot at success."
Michael Dell has always had a strong faith in his ability to spot a business opening and then run hard to take advantage of it.
In the fall of 2011 he told a gathering of University of Texas students about his drive to start a computer company while still a freshman in college.
"My motivation was that I saw an incredible opportunity, and I just had to do it," he said. "When I was 19 years old, the risk-reward was overwhelmingly in favor of taking the risk."
It's now 29 years later, but it's likely Michael Dell sees his latest deal in much the same way.
Distributed by MCT Information Services
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OCTOBER 30, 2014
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