Michael Dell (3)

"Bright. Driven. Focused."

Those are the three simple words Microsoft CEO Steve Ballmer uses to describe fellow high-tech billionaire Michael Dell, the longest tenured CEO in the computer hardware business. But try asking other industry denizens for insight into Dell's management style or personal life, and the cone of silence descends like an iron curtain. Phone calls to his executive team are forwarded to stern public relations representatives, and attempts to reach former Dell employees are met, for the most part, with silence. It is quickly obvious that Michael Dell prizes his privacy, and his friends and family are happy to help.

When former Dell marketing executive Ray Holley found himself in need of a lawyer to negotiate a better severance package when he left Dell Computer in 1992, he found the task next to impossible. No local lawyer in his or her right mind, it seemed, wanted to take on the most famous resident of Austin, Texas. "He's God here," Holley explains.

It's easy to see why. Dell Computer, the region's largest private employer, recently told analysts it was boosting its sales guidance for the third quarter of fiscal 2003, ended Nov. 1. It now expects revenue of $9.1 billion, up slightly from its previous forecast and a 22 percent increase over the year-earlier period.

During the year, Dell Computer played the financial challenges faced by many other high-tech companies to its best advantage, snapping up market share in servers and storage and moving into new product areas such as network switches and printers, while parting ways with partners Hewlett-Packard and Cisco Systems along the way. More recently, the vendor extended its first public olive branch to the channel in the form of a new system and program for white-box builders, and it tapped a new technology partner in printers, Lexmark. And then there's its growing aspirations in services. In short, Dell Computer wants to be everything to everybody at any cost, preferably the lowest cost possible.

Cutting costs out of the process is, after all, one of Michael Dell's favorite management mantras. Dell recently told a gathering of top corporate executives that his company has cut prices for certain break-fix and warranty services by 40 percent to 50 percent over the past year. "We don't want to see customers charged exorbitant rates for these things," he said. "And we know how to drive the costs down."

At the same conference, Cisco President and CEO John Chambers said if he could ask Michael Dell one question, it would center on how the PC maker has built a culture and internal systems that have allowed it to execute well in periods of both growth and contraction. "The value of sharing that with the audience would be very key," said Chambers, addressing the attendees. "That is what all of us are going through. How do you manage during periods of rapid contraction and growth?"

There's little doubt that Michael Dell himself sanctions the 18-year-old company's most strategic decisions. Steve Papermaster, a longtime high-tech entrepreneur and fellow Austin resident who serves with Dell on the U.S. President's Council of Advisors on Science and Technology, says one of Dell's greatest strengths as a manager is his ability to listen, assimilate information and make decisions quickly.

"Michael is, on the one hand, with his business hat on, an extremely focused, driven competitor, and you can look at the broken splinters of the companies in his wake to see the result," Papermaster says. "Michael is not ruthless. Michael is very purposeful in his action and activities. He's tough, but he's fair-minded."

How else could you explain Dell Computer's recent outreach to the channel in the form of a white box that can be sold by solution providers, after years of publicly downplaying the value of the channel? Rick Hamada, president of Avnet Computer Marketing, says the decision represents almost a "crossing of religious lines" for Dell and his company. "It's big because of their history and their legacy," he says. "They are an organization of very deliberate action. They studied the market, did the math and economics, and determined that to get to a certain segment of the market, the channel is now desirable. They have come to the conclusion that the direct model cannot get them there. This is not an experiment."

Dell is adept at hiring the right managers to help him get the job done, says Michael Dunn, the former CTO of Dell Computer's online division, now CTO and executive vice president at Encoda Systems, Stamford, Conn. Nor should anyone underestimate the depth of his technical knowledge. After all, this is the same Michael Dell who got into the business by taking apart an Apple computer in a bedroom of his parents' Houston home.

"At every meeting, he would be the one to ask the best questions that would drill right to the point. . . . For a very busy guy, he is pretty much in touch with every aspect of the business. It was refreshing," Dunn says.

Indeed, Michael Dell's presence is palpable across the corporate campus, say former employees. "Michael casts a very broad and positive influence across the company," says Ben Bentzin, a Dell Computer online division executive who left the company last April to run as a Republican candidate for the Texas State Senate. "There are two priorities in his life: his family and Dell. He makes liberal use of his time to ensure that he has a physical and emotional presence."

In some ways, Michael Dell and his wife, Susan, who owns a local couture fashion boutique, are to Austin what Bill and Melinda Gates are to Redmond, Wash. With an estimated net worth of $16.5 billion, Dell doesn't have quite as much money as Gates, but he still has more money than the collective wealth of the rest of the people on Fortune magazine's 2002 listing of the 40 richest Americans under the age of 40. Both Gates and Dell also have drawn media attention for the size and grandeur of their private estates,in Dell's case, a 33,000-square-foot mansion on a local hilltop. Designed with privacy in mind, it has extensive fitness facilities so that the tall, trim, sometimes-triathlete can run off his stress beyond prying eyes. Even the health-conscious CEO's personal chef had to sign a nondisclosure agreement.

At the same time, however, he's the sort of person who has a candid answer ready for the right audience. Michael Dell had this advice for young entrepreneurs who gathered in Texas last summer: "First of all, don't start a business just because everybody else is doing it or it looks like it's a way to make a lot of money. Start a business because you found something you really love doing and have a passion for. Start a business because you found something unique that you can do better than anyone else. And start a business because you really want to make a big contribution to society over a long period of time."

In other words, try to think like Michael Dell.

"They are talking to us about what kind of service we provide for Dell clients today, and we do a substantial amount of reporting to them," says Tony Pellegrini, senior vice president of marketing and engagement services at CompuCom. "At least they have good services people that understand the services business."

Although CompuCom still works with Dell on a case-by-case basis, it recently applied to receive a blanket authorization to provide a complete suite of equipment and desktop services for Dell,an authorization that has already been granted to companies such as Unisys, NCR, DecisionOne, Getronics, QualxServe and TEKsystems.