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Dell seeks to turn the tables on its rivals.

Dell seeks to turn the tables on its rivals

Few sectors change as rapidly as information technology. Consider this. Five years ago, Dell was worth $100 billion - more than Hewlett-Packard and Apple combined. Dell's market value today is $30 billion, or less than a third of that of its rivals.

In the October 2009 issue of Business Week, Edwards explains why. In those five years, the centre of the IT industry has shifted from the personal computer to the internet. Hewlett-Packard, IBM and other rivals have adapted by acquiring new companies and capabilities, but Dell has stuck to producing PCs as efficiently as possible and distributing them directly to the customer.

That is about to change. Michael Dell, who in 2007 returned to the chief-executive role at the company he founded in his college dormitory more than a quarter of a century ago, has an all-encompassing strategy for reform.

A new management team has been installed. The company has been restructured to focus more clearly on its customers. Innovation and design are being given a higher priority. New smartphones and tablet-like devices are being developed. And the firm is branching out into services such as managing other companies" computers and data centres, offering technology consulting and delivering cloud-computing services.

Dell once drove IBM out of the personal-computer business and humbled Hewlett Packard by selling PCs directly to customers at prices its rivals simply could not match. Today, Dell's competitors have the upper hand and it is Dell that faces the challenge of how to maintain a legacy business while trying to move into more profitable areas.
"Can they do it?" asks Edwards. "Michael Dell thinks so. But it looks like he'll have his hands full over the next two or three years remaking the company."
Like the information-technology sector, the waste industry is moving fast. The modern emphasis on environmentalism means that old lines of business, such as landfill, are shrinking as new ones, which emphasise reduction, reuse and recycling, open up. Cable describes one company that is in tune with these trends in Volume 258, Issue 11 of Industry Week.

Mohawk Industries, in Georgia, USA, converts 3 billion plastic bottles a year into recycled fibre for carpets. It also reprocesses old carpets to make new ones. It even operates a carpet-recycling hotline through which consumers can arrange to have their old carpets collected.

The company views sustainability on three levels: product sustainability, which means ensuring that the recycled material is made into efficient and reliable goods that will last; process sustainability, which involves making products in a way that minimizes the consumption of energy, water and other natural resources; and financial sustainability, which essentially means ensuring that the whole operation is profitable.

Mohawk, like most floor-covering manufacturers, has been hard hit by the economic downturn. But Cable reports that most of the company's "momentum" during the recession has come from its environmental initiatives.

It stands to reason. As the costs of raw materials and energy rise, and as governments around the world seek to refine their taxation systems to ensure that the polluter pays, any firm that can make the same product with fewer raw materials, lower energy consumption and fewer emissions will have a head start over its competitors.