Dell 2004 Annual Report Download - page 5

Table of Contents
• Customers can purchase custom-built products and custom-tailored services. Dell believes the direct business model is the most effective model for
providing solutions that address customer needs. In addition, Dell's flexible, build-to-order manufacturing process enables Dell to turn over inventory every
four days on average, and reduce inventory levels. This allows Dell to rapidly introduce the latest relevant technology more quickly than companies with
slow-moving, indirect distribution channels, and to rapidly pass on component cost savings directly to customers.
• Dell is the low-cost leader. Dell's highly efficient supply chain management and manufacturing organization, efficient direct business model, and
concentration on standards-based technologies allow Dell to maintain the lowest cost structure among its major competitors, and to pass those savings to its
customers. Dell's relentless focus on reducing its costs allows it to consistently provide customers with superior value.
• Dell provides a single point of accountability for its customers. Dell recognizes that as technology needs become more complex, it becomes more
challenging for customers to efficiently address their information technology needs. Dell therefore strives to be the single point of accountability for
customers with complex technological challenges. Dell offers an array of services designed to provide customers the ability to maximize system
performance, efficiency, and return on investment.
• Non-proprietary standards-based technologies deliver the best value to customers. Dell believes that non-proprietary standards-based technologies are
critical to providing customers with relevant, high-value products and services. Focusing on standards gives customers the benefit of extensive research and
development from Dell and its entire supply chain, rather than a single company. Unlike proprietary technologies, standards provide customers with
flexibility and choice while allowing their purchasing decisions to be based on performance, cost, and customer service.
Product Development
Dell is focused on developing standards-based technologies that incorporate highly desirable features and capabilities at competitive prices.
Management believes that Dell employs a unique and inherently better collaborative approach to product design and development. With direct
customer input, Dell's engineers work with a global network of technology companies to architect new system designs, influence the direction of
future development, and integrate new technologies into Dell's products. This collaborative approach enables Dell to quickly and efficiently
deliver new products and services to the market. During fiscal 2005, Dell's research, development, and engineering expenses were
$463 million, compared with $464 million for fiscal 2004 and $455 million for fiscal 2003.
Products
Dell designs, develops, manufactures, markets, sells, and supports a wide range of products that are customized to customer requirements.
These include enterprise systems, client systems, printing and imaging systems, software and peripherals.
• Servers. Dell's standards-based PowerEdge line of servers is designed to provide customers affordable performance, reliability, and scalability. Options
include high performance rack and tower servers for enterprise customers and aggressively priced tower servers for small organizations and networks. Dell
ranks number one in the U.S. and number two worldwide in shipments of x86 servers (based on standard Intel architecture). During calendar 2004, Dell
increased its share of worldwide x86 server sales by 1.5 percentage points and maintained its number two position in that category at 24.8%.
• Storage. Dell/ EMC and Dell's PowerVault lines of storage products offer customers a comprehensive portfolio of cost-effective hardware and software
products to store, serve, and protect 2