Michael Dell’s venture into computers began long before he entered college, when he was just a teenager in Houston, Texas. His interest in business eventually led him to start a computer venture while attending the University of Texas in Austin. Founded in 1984, PC’s Limited recorded approximately $6 million in sales during its first year of operations, according to the Handbook of Texas from the Texas State Historical Association.
Dell was 18 when he registered PC’s Limited in January 1984, while he was a freshman at the University of Texas at Austin. He had started by selling computer components and assembling customized systems, an early venture that later grew into a company competing with established computer manufacturers. His business model focused on selling directly to consumers, allowing them to buy computers at lower prices.
From youth entrepreneurship to founding a college business
Dell was born on February 23, 1965, in Houston. The Texas State Historical Association’s account describes his early interest in business. At 13, he was trading stamps through mail order. At 16, he was selling subscriptions for the Houston Post through phone calls. Within a year, he was salesman of the month and earned $18,000 a year through direct-mail marketing to couples.
In his biography for the Academy of Achievement, Dell recalled that at age 15, he bought an Apple computer and disassembled it to see how the parts were connected. His parents encouraged him to study medicine, and he initially intended to pursue that field when he enrolled at the University of Texas at Austin. But his growing interest in computers made him abandon his previous plans for education.
As a freshman, Dell started selling computer disk drives and memory upgrades from his dorm room. The Academy of Achievement’s biography explains that he bought unsold IBM personal computers from retailers, installed memory and disk drives in them, and sold them at prices that were 10% to 15% less than the retail prices. His initial capital was $1,000.
As orders increased, Dell moved from his dorm room to assembling computers in an apartment. Dell saw the chance to give customers the freedom to choose the configuration for their computers at competitive rates.
Growth of PC’s Limited to become a computer company
The Texas State Historical Association records that Dell founded PC’s Limited in 1984. It sold computer parts and kits through telephone orders and trade-magazine advertising. Its direct sales approach ensured customers could talk to computer-savvy sales representatives and choose the products according to their needs.
Additionally, the model provided financial benefits. IBM and Compaq were established computer manufacturers that relied on retail sales. By contrast, Dell built computers to order, so the company held little inventory and could operate at lower cost while remaining competitive.
The company grew very fast during its initial years. Its sales reached approximately $6 million in fiscal 1985, followed by $34 million in fiscal 1986. By fiscal 1987, annual sales had increased to $69.5 million. The company had 100 employees in 1986 and moved production to another factory in North Austin.
An article in the University of Texas at Austin Computer Science department discussed Dell’s early business activities during his 2011 visit to the campus. It reported that he had started selling computer upgrades from his Dobie dorm room in 1983. At the end of his freshman year, he decided to leave the university because demand had increased and he wanted to focus on the company.
In 1987, PC’s Limited changed its name to Dell Computer Corporation, taking the founder’s surname. During the same period, the company continued expanding its activities by opening international offices and producing more products. A few years later, a company that began with a modest investment and computer sales in the founder’s university dorm had grown into an established computer manufacturer.