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Dell: A Dot-Com With a Business Model

Growth in today's economy stems from execution and a great strategy. Simple, huh? Well, not many companies have a clear strategy -- especially in the Net world.

Then there is Dell (DELL) . It has been a fast-charging company over the years -- primarily because it knows how to morph its strategy. Then again, it was the genius of Michael Dell to build a company that is, in essence, modular. This has sprung forth from Dell's mission to sell direct to the customer. This means cutting out intermediaries and designing direct links between customers and manufacturers.

Yet again, Dell has reached a new juncture. The PC market is competitive and slowing. So, this week, Dell announced it is redirecting energies to Web servers, business consulting services, venture funding and business incubation. Think of the company as, in a way, a new-style CMGI.

Dell's new Internet Partner Division intends on providing value-added services for e-commerce and personalized content. This is the company's first step in sharing their critical expertise in e-commerce. After all, www.dell.com is the world's largest e-commerce Web site, which generates $35 million a day in revenue.

In February, Dell announced its new service of Web site hosting for small-to-medium sized businesses, offered at www.dellhost.com. The service will be full-featured, offering Web site design and server configuration (dedicated or shared). It is, of course, the so-called ASP (Application Service Provider) approach. Customers like this because it means getting-to-market quicker, as well as more efficient and timely updates.

There is also a new line of PowerApp appliance servers for Web site management, such as for directing traffic flow. The appliance servers handle specific tasks like e-mail management. What's more, bundled with the technology are such things as Web-hosting software from Microsoft and solutions from Linux providers.

As Dell moves towards more complex technology solutions, there is a need for professional consulting services. To this end, Dell has partnered with such firms as Arthur Anderson Consulting and Gen3.

Finally, Dell has a venture fund, focused on providing funding and incubation services to early-stage private companies. This not only provides upside in terms of rate of return from the portfolio companies, but also access to new technologies to help Dell grow its core business.

This new redirected strategy does not mean Dell has given up on the desktop PC market. The desktop market still has growth left but margins are thinning and are not enough to sustain Dell's historical growth rate. With their brand name and customer relationships, though, Dell can leverage its huge PC customer base into a myriad of new revenue streams, keeping the growth coming.

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