Dell 2005 Annual Report Download - page 8

Table of Contents
Financial Services
Dell offers various financing alternatives, asset management services, and other customer financial services for its business and consumer
customers in the U.S. through Dell Financial Services L.P. ("DFS"), a joint venture between Dell and CIT Group, Inc. ("CIT"). Financing through
DFS is one of many sources of funding that Dell's customers may select. For additional information about Dell's financing arrangements, see
"Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations — Off-Balance Sheet Arrangements" and
Note 6 of Notes to Consolidated Financial Statements included in "Item 8 — Financial Statements and Supplementary Data." Also see "Item 1A
— Risk Factors" for information about the risks associated with DFS.
Sales and Marketing
Dell sells its products and services directly to its customers through dedicated sales representatives, telephone-based sales, and online sales
through www.dell.com. Dell's customers include large corporate, government, healthcare, and education accounts, as well as small-to-medium
businesses and individual consumers. Within each of Dell's geographic regions, Dell has divided its sales and marketing resources among
these various customer groups. No single customer accounted for more than 10% of Dell's consolidated net revenue during any of the last
three fiscal years. Dell experiences seasonal sales trends. See "Item 1A — Risk Factors" for information about the effect of seasonality on
Dell's business and the risk associated with government contracts.
Dell's sales and marketing efforts are organized around the needs, trends, and characteristics of Dell's customers. Dell's direct business model
provides direct and continuous feedback from its customers, thereby allowing Dell to develop and refine its products and marketing programs
for specific customer groups. This constant flow of communication, which is unique to the direct business model, also allows Dell to rapidly
gauge customer satisfaction and target new or existing products.
For large business and institutional customers, Dell maintains 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 marketing programs for these customers. For large, multinational customers, Dell offers several programs designed to
provide single points of contact and accountability with global account specialists, special global pricing, consistent service and support
programs across global regions, and access to central purchasing facilities. Dell also maintains specific sales and marketing programs targeted
at federal, state, and local governmental agencies as well as specific healthcare and educational markets.
Dell markets its 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 by mailing a broad range of direct marketing publications, such as promotional pieces, catalogs, and
customer newsletters. In certain states and non-U.S. locations, Dell also operates Dell Direct Stores, which are kiosks typically located within
shopping centers that allow customers to view Dell products in person and purchase online from Dell with the assistance of a Dell expert.
Competition
Dell faces intense price competition when selling its products and services. Price declines continued to hold strong in fiscal 2006, especially for
lower-priced products and services. In addition to several large branded companies, there are other branded and generic competitors. Dell
competes primarily based on its technology, direct customer relationships, value, performance, customer service, quality, and reliability. Dell's
general practice is to aggressively pass on cost declines to its customers in order to enhance customer value while increasing global market
share. Dell expects that the competitive pricing environment will continue to be challenging, and Dell expects to continue to reduce its pricing as
necessary in response to future competitive and economic conditions. 5