WHERE THEY CAME FROM
Michael Dell was that kid who took electronic devices apart and put them back together. When he turned his attention to computers in the mid-1980s, he came up with a design for a P.C. and decided to sell it directly to customers by mail order. The strategy worked, and thus he became yet another college-dropout billionaire. The company was incorporated in 1984, and in 1988 it had an I.P.O. worth $30 million—which is peanuts today but was enough to launch Dell on an international scale.

WHAT THEY DO
Dell does more than just sell computers. It also makes servers, network switches, networking products, printers, handheld devices, and other gadgets, as well as offer business and support services. But selling desktop computers directly to consumers has always been its bread and butter, which is why it’s scary for the company that this approach has recently yielded disappointing results.

WHAT THEY GOT RIGHT
Dell's success didn’t happen overnight. It took more than 15 years, but the company became the No. 1 seller of personal computers in 2001 and remained the leader until the beginning of 2007. Dell's approach wasn't just about the machines but about the way they were sold. Customers bought into the whole direct-selling approach, and Dell became a respected brand: In 2005, Fortune named Dell its most admired company. In 2003, Dell opened up an online storefront selling MP3 players, handhelds, an L.C.D. TV, and other non-P.C. devices.

WHAT THEY GOT WRONG
Lately, Dell has faced difficulties, including a huge recall in 2006 involving 4.1 million computers after faulty batteries caused some laptops to catch fire. While the computer market is expanding—especially the laptop market—Dell's market share is shrinking, so much so that Hewlett-Packard overtook Dell as the No. 1 personal-computer seller as of the fourth-quarter of 2006.

Dell's 2006 fourth-quarter earnings marked a turning point for the company in other ways as well. Its net income fell by a third, marking the first time revenue had dropped since 2001. And most troubling for the company, Dell's operating margins eroded dramatically, suggesting that its model of removing the middleman and selling directly to consumers is no longer working as well.

The company faces other long-term troubles, including an ongoing Securities and Exchange Commission investigation into the company's accounting practices. And the computer maker can't seem to get its management structure straight: Michael Dell stepped down as C.E.O. in 2004 and was replaced by Kevin Rollins, who stayed until the end of January 2007. Then Dell returned just in time to oversee the release of the company's dire earnings report in March 2007.

WHAT'S NEXT
Dell wants to regain its No. 1 spot, so it's taking its computers back to the people—the people of China, that is. In China's fast-growing P.C. market, Dell’s sales have increased, and in March 2007 the company announced that it will release a low-cost P.C. for the Asian market, its fastest-growing sector. Dell is particularly bullish on India, where its sales more than doubled in the past year and should approach $1 billion for 2007. That still doesn’t solve Dell's laptop crisis in the West, but at least it will help keep the company afloat while it rethinks its products and marketing. -Beth Pinsker