mputer in 2002, had staged an impressive comeback. In 2006, HP overtook IBM to become the world’s largest technology company (with sprawling operations in imaging and printing, software and services, and data storage); it also surpassed Dell as the world’s leading PC maker. Under CEO Mark Hurd, HP rebuilt its PC business around the company’s strong presence in retail channels (where sales via 110,000 outlets worldwide made up 40% to 45% of its PC revenue) and around a “decommoditization” strategy. That strategy (exemplified by the slogan “The Computer Is Personal Again”) emphasized product design, stepped-up R&D spending, and aggressive consumer marketing.59 Dell, meanwhile, had stumbled. In the early 2000s, it had been the leading PC vendor, in terms of both market share and profitability. Its distinctive business model, which combined direct sales and build-to-order manufacturing, made for significant cost savings and enabled its products to become the favorite of corporate IT managers. In 2007, more than 80% of its revenues came from the corporate market. Yet Dell did not adapt quickly to the changing needs of the PC marketplace. In January 2007, three years after handing control of the company to a successor, founder Michael Dell returned as CEO and initiated a far-reaching transformation plan. “The direct model has been a revolution but is not a religion,” Dell said. Under his new strategy, the company doubled its
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investment in design and began releasing consumer-friendly products, including a notebook PC that came in eight colors. More important, it moved into retail distribution for the first time since 1994. By January 2008, Dell had made deals to sell its PCs through Wal-Mart, Best Buy, and Staples, as well as through major chains in Europe, China, and Japan. Boosting international sales was another…