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Bidness As Unusual

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by Paul Flemming

Michael Dell is 33 years old. So am I.

There the similarities end.

Dell is the chairman and chief executive officer of Dell Computer Corp. The Austin, Texas, company had revenues of $7.8 billion in its fiscal 1997 year. That's just the beginning. The company has had greater than 50 percent growth in revenues for the past three years. Revenues will be up again in 1998.

The company Dell began in 1987 is now the fifth largest computer maker. It sells directly to business, government and individuals. Dell's beginnings are legendary among tech folks.

It's said he began the business out of his University of Texas dorm room. I remember what I was doing out of my University of Missouri dorm room in 1987. Suffice it to say my actions have not resulted in multibillion-dollar revenues.

A few weeks ago, I was in the same room with Mr. Dell in Austin as part of a conference sponsored by the Society of American Business Editors and Writers. We were within spitting distance of each other, though I think I can speak for both of us in saying no one was tempted to spit.

I mention the contrasts between Dell and myself not out of envy, but to establish the credibility of what I am about to write. I will tell you what he said. It's of much greater import than what I might say.

Despite the uproar in equity markets both here and abroad the technology-heavy NASDAQ index took a dive on the day I heard him speak Dell was full of optimism. His rosy projections included 29 percent unit-sale growth for his company in China through 2002, matched with 23 percent sales growth projections in Latin America for the same period.

The reasons behind Dell's predictions are interesting and apply to the domestic computer market as well. It holds as much interest for me, a PC consumer, as it does for computer sellers and manufacturers.

Dell said continued growth of his company and others in the industry rest on three factors.

First is rapid technological advances. Dell said the "massive functionality increases and huge reduction in prices equals strong replacement cycles."

That factor is related to another one. Dell pointed specifically to the introduction of Windows NT 5.0 as a driver for increased sales. As software and operating systems arrive that reveal the advantages of improved hardware technology, the benefits of buying new increase.

Finally, Dell pointed to the Internet.

"The Internet is the ultimate catalyst for growth. It's Nirvana," Dell said.

Not just for his business, but for business in general, Dell said the Internet will continue to revolutionize the world. Physical location will become less and less important to conducting business. Price transparency will become the norm for consumers it won't matter where they get a product, only how much it costs them.

"The same things are happening (in business) as they always have; it's just happening faster," Dell said, certainly not the first to observe that fact.

Beyond generalities, Dell pointed out how developments in the online world affect his business directly.

The escalating tangle for supremacy in broadband communications is a war Dell wins either way. With telephone wires or with cable, the bigger electronic pipelines spell more sales for Dell. He said that more than 50 percent of people who get a cable modem, which can move information up to 600 times faster than the standard telephone-line hookups, get a new PC within the year.

And here we enter issues that involve Springfield. TCI of Springfield is on the verge of offering cable modem access to parts of the city. The fiber-optic lines of more and more companies are crisscrossing the city.

Another panel at the conference I attended also chock full of folks more expert than I discussed these issues.

Royce Caldwell, president of SBC Inc.'s operations, said that his company expects data usage of the telephone network will exceed voice usage in 2001. It is in this arena that the telecommunications war will be fought, he said.

(By the by, Caldwell said that SBC, with its Pacific Telesis merger last year and its proposed Ameritech merger, "intends to be the first nonregional Bell." Data business is what is driving the Ameritech merger, he said.)

Robert Stewart, vice president of communications for Teligent, said the issues of telecommunications competition will not be resolved with an increasing number of competitive companies, but with an increasing number of competitive networks.

Springfield, with the growing number of companies (and municipally owned utilities) building networks in town, seems in a position to take advantage of this fact.

As always, it bears watching. In the meantime, I'll try not to brood too much on the differences between me and Michael Dell in the last 11 years.

In a staff note, allow me to bid farewell to Susan Pope. Susan and I began working full time at the Springfield Business Journal within days of each other at the end of 1995. Susan has worked, often tirelessly, always efficiently, and sometimes even miraculously, in her duties producing this paper each week.

During my entire tenure here, and particularly since I became managing editor in 1997, I can say with certainty that I could not have done my job without her. Susan's life is leading her to Dallas where we all wish her the greatest happiness. After all, they do everything bigger in Texas.

Susan, you will be sorely missed.

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