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After the math department at the University of Texas noticed some of its Dell computers failing, Dell examined the machines. The company came up with an unusual reason for the computers' demise: The school had overtaxed the machines by making them perform difficult math calculations.
Dell, however, had actually sent the university, in Austin, desktop PCs riddled with faulty electrical components that were leaking chemicals. Dell sold millions of these computers from 2003 to 2005 to major companies like Wal-Mart and Wells Fargo, institutions like the Mayo Clinic and small businesses.
"The funny thing was that every one of them went bad at the same time," said Greg Barry, president of PointSolve, a technology services company near Philadelphia that had bought dozens. "It's unheard-of, but Dell didn't seem to recognise this as a problem at the time."
Documents recently unsealed in a 3-year-old lawsuit against Dell show that the company's employees were actually aware that the computers were likely to break.
Still, the employees tried to play down the problem to customers and allowed customers to rely on trouble-prone machines, putting their businesses at risk. Even the firm defending Dell in the lawsuit was affected when Dell balked at fixing 1,000 suspect computers, according to e-mail messages revealed in the dispute.
The documents chronicling the failure of the PCs also help explain the decline of one of America's most celebrated and admired companies. Perhaps more than any other company, Dell fought to lower the price of computers.
Its "Dell model" became synonymous with efficiency, outsourcing and tight inventories, and was taught at the Harvard Business School and other top-notch management schools as a paragon of business smarts and outthinking the competition.
"Dell, as a company, was the model everyone focused on 10 years ago," said David B Yoffie, a professor of international business administration at the Harvard. "But when you combine missing a variety of shifts in the industry with management turmoil, it's hard not to have the shine come off your reputation."
For the last seven years, the company has been plagued by serious problems, including misreading the desires of its customers, poor customer service, suspect product quality and improper accounting.
Dell, however, had actually sent the university, in Austin, desktop PCs riddled with faulty electrical components that were leaking chemicals. Dell sold millions of these computers from 2003 to 2005 to major companies like Wal-Mart and Wells Fargo, institutions like the Mayo Clinic and small businesses.
"The funny thing was that every one of them went bad at the same time," said Greg Barry, president of PointSolve, a technology services company near Philadelphia that had bought dozens. "It's unheard-of, but Dell didn't seem to recognise this as a problem at the time."
Documents recently unsealed in a 3-year-old lawsuit against Dell show that the company's employees were actually aware that the computers were likely to break.
Still, the employees tried to play down the problem to customers and allowed customers to rely on trouble-prone machines, putting their businesses at risk. Even the firm defending Dell in the lawsuit was affected when Dell balked at fixing 1,000 suspect computers, according to e-mail messages revealed in the dispute.
The documents chronicling the failure of the PCs also help explain the decline of one of America's most celebrated and admired companies. Perhaps more than any other company, Dell fought to lower the price of computers.
Its "Dell model" became synonymous with efficiency, outsourcing and tight inventories, and was taught at the Harvard Business School and other top-notch management schools as a paragon of business smarts and outthinking the competition.
"Dell, as a company, was the model everyone focused on 10 years ago," said David B Yoffie, a professor of international business administration at the Harvard. "But when you combine missing a variety of shifts in the industry with management turmoil, it's hard not to have the shine come off your reputation."
For the last seven years, the company has been plagued by serious problems, including misreading the desires of its customers, poor customer service, suspect product quality and improper accounting.
