Jim Vanderslice Vice Chairman

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Jim VandersliceVice Chairman
Boston College
November 6, 2002
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Dell The Facts

• Pioneer and leader in direct business
• Leader in e-business
• Fortune 50 Company -- 32 Billion in Global
  Revenue
• Global Company gt Operating in 190 Countries
• Worlds 2 Computer Systems Company (temporarily)
• 1 in Customer Satisfaction
• Approximately 38,000 Employees Worldwide
• Market Capitalization of 70 Billion

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Foundation in Direct ModelFundamentally
Advantaged

• Ownership of value chain/information
• Structural costs
• OPEX
• Manufacturing
• Warranty
• Customer
• Experience

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Executing the Direct ModelQ2FY03 Performance

• Delivered 0.19 EPS and 8.5 billion in revenues
• Repurchased 14 million shares of stock
• Shipped record number of units during quarter

Value ties or sets company record
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Take Risks
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1 in Servers (U.S.) 2 in Servers
(Worldwide) 1 in Workstations (Worldwide)
Storage revenues grew 72 percent year-over-year
in Q2 Dell EMC and PowerConnect Ahead of
Expectations
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Market Share -- WW Corporate
20

• Continue to gain share in all products
  segments
• 1 in WW Corporate
• 1 in WW SMB
• 1 in WW Public
• 3 in WW Consumer
• 1 in WW Desktops
• 1 in WW Notebooks
• 2 in WW Servers
• Continue to grow profitable 3.5 billion software
  peripherals business

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12
8
4
0
1995
1997
1999
2001
Source IDC
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Efficiency Wins
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Executing the Direct ModelSignificant Cost
Advantage
Operating Expense Over Time ( sales)

• Competitor OPEX greater than 2x Dell
• Dell focused on maintaining advantage
• Translated cost adv. into profitable share gains
• WW share incr. from 9.7 in Q100 to 15 in Q202
• 55 increase in 10 quarters

HPQ
Source Company Financial Statements
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FY03 Initiatives Warranty Cost Reduction
A key focus area for the company is to reduce
cost by 1B in FY03. Warranty cost reduction is
a major component of this initiative. At the end
of Q2 FY03, Dells warranty cost reduction
projection for FY03 consisted of the following

• Service Labor rates
• Product Quality
• Improvements
• Global Site Optimization
• Inventory management

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Speed is Life
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Hewlett Packard
Sun
Compaq
IBM
Dell
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Grow or Die
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Dell Gaining Share in All Regions
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Extending the Direct Model Method for Extension
Direct Model extends into new markets, we

• Selectively identify markets

• Fit our economics large, profitable,
  standardizing
• Leverage our capabilities

Enter with low investment

• Partnership with existing player
• Brand 3rd party products

Layer in new capabilities/offerings over time

• Take ownership of the value chain
• Improve margins

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Opportunities for GrowthExternal Storage

• Standardizing, adjacent to core, leverage
  existing channel
• Addressable market now 30 billion
• EMC Partnership
• Continues to progress revenues up 65 Q/Q
• Introduction of the co-branded CX600

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Exceed Expectations
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The Customer Experience
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Be Relevant to Customers
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1994 4B
Large Customers
Small Customers (Business and Consumer)
Large Companies
Midsize Companies
Government
Small Customers
1996 8B
Education Healthcare
1998 18B
Global Enterprise Accounts
Large Companies
Midsize Companies
K-12
Healthcare
Higher Ed.
Small Companies
Consumers
Civilian
Dept. of Defense Intelligence
State Local
2001 32B
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Companies that Work in Isolation Continue to
Overspend
Server RD as Percent of Revenues
19
Sun RD Inefficiency 8
3rd Party RD
11
3rd Party RD
In-house RD
In-house RD
Source Dell, Company Financials
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Listen
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Customers Told Us
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Differentiated Performance

• Dell performance among upper echelon of
  enterprise companies

Operating Income
Revenue Growth Y/Y - Q2'02
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Build Strong Relationships
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Believe in Yourself
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Dell Market Share
0
12
Unit Growth
Market Share
WW Market Unit Growth
-25
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Q4 FY00
Q4 FY01
Q4 FY02
Dell Growth Premium
18
16
11
7
2
35
23
23
21
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Customers Prefer DellMarket Share Up 158
Worldwide Unit Market Share All Products Last 5
Years
HPQ down -23
WW Market Share
DELL up 158
IBM down -19
Source IDC
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Questions Answers