Review of Direct from Dell by Michael Dell

There were a couple key takeaways from the book for me:

1) Michael Dell showed incredible vision and entrepreneurial drive in turning a business out of his college dorm room into the world's largest computer company. It should give shareholders great comfort to know that he is only 40 years old and will be leading the company as Chairman for several years to come.

2) Dell had several short-term stumbles including the excess inventory problem (1989), canceling of Olympic product line (1990), and the first quarterly loss posted in 1993 due to notebook market withdrawal, exit from retail stores, and restructuring of European operations. If a shareholder became nervous during one of these events and sold they would have missed out on on the stock's 2,000%+ return since the early 1990's.

3) The advantages of the Direct Model allow Dell to earn an incredible ROIC in a highly competitive industry. By doing business directly with customers Dell only has to carry 4-5 days of inventory compared to their competitors at 30-40 days. This frees up working capital investments, allows the company to better react to customers' changing technological needs, and lessens the impact of inventory component price decreases. In addition, since Dell outsources the expensive R&D activities of software and microprocessor development (Microsoft & Intel) the company is able to generate $6 of profit for every $1 spent on R&D.