2004–2008 · Hardware

Dell in the 2000s: the direct-sales giant that had to change

Last reviewed 5 October 2026

Dell built the world’s biggest PC business by selling straight to customers. In the mid-2000s, customer-service anger, a battery recall, criticism of its advertising and a resurgent HP forced it to rethink.

Build to order

Michael Dell started selling upgraded PCs from his university dorm room in Austin, Texas, in 1984. The company’s model was simple: take orders by phone, and later on the web, build each machine to the customer’s specification and ship it directly, with no shops in between.

Selling direct meant low stock, fast cash flow and keen prices. By the early 2000s Dell was the world’s largest PC maker and the company others measured themselves against.

Cracks appear

The same cost focus that made Dell cheap also made it a target. In 2005 the journalist Jeff Jarvis wrote a series of blog posts about his poor customer-service experience under the heading “Dell Hell”. They spread widely and became an early case study of how blogs could damage a brand.

In 2006 Dell recalled around four million laptop batteries made by Sony after reports of overheating and fires, at the time the largest such recall in consumer electronics. The same year HP overtook Dell as the biggest PC maker by shipments.

Dell’s advertising also drew complaints. Its UK press and web adverts were dense with headline prices, limited-time offers and optional extras. The Advertising Standards Authority upheld complaints about some of its PC and laptop adverts in the late 2000s, typically over how prices, delivery charges or specifications were presented.

Michael Dell returns

In January 2007 Michael Dell came back as chief executive. The company launched IdeaStorm, a site where customers could suggest and vote on ideas, started selling PCs with Ubuntu Linux pre-installed after that was one of the most-voted requests, and paid more attention to design and colour options for consumer laptops.

Most significantly, Dell abandoned direct-only selling. From 2007 its PCs appeared in Walmart in the US and in high-street chains elsewhere, including Carphone Warehouse and PC World in the UK. It also entered the netbook market with the Inspiron Mini in 2008.

What happened next

As PC sales slowed, Dell moved further towards servers, storage and services. In 2013 Michael Dell and the investment firm Silver Lake took the company private, and in 2016 Dell bought the storage company EMC, one of the largest technology acquisitions ever. Dell returned to the stock market in 2018.