How Michael Dell got started: When you opened up a $2,000 PC, you'd find only about $600 worth of parts inside.
I realized that the industry was incredibly inefficient. There were dealers like the now-defunct ComputerLand that bought from manufacturers or distributors and then sold the machines to the public. When you opened up a $2,000 PC, you'd find only about $600 worth of parts inside of it.
And it took about a year from the time the part was available till the time it actually got to the customer. That meant that your computer, to put it kindly, wasn't the latest technology -- if you want to be extreme, you could say it was obsolete. I would read in the industry publications that Intel had this new superfast processor, but the best one that I could buy in the store was only half that speed. It was just gross inefficiency in the inventory and supply chain.
That's one hell of a profit margin!
