Dell reboots to ‘start-up’ mode


Announces new tech innovations and four customer imperatives to surge ahead into the enterprise IT solutions market

What would Dell as a company be like after going private? How much would change? What would be its go-to-market strategy for 2014? How would Dell absorb and integrate all the companies and technologies it had acquired, into its product mix? What are the hot profit segments that Dell will pursue in 2014 and beyond? Will it continue to make and sell PCs in a shrinking market? These were questions on everyone’s mind at Dell World 2013 (December 11- 13) in Austin Texas.

IMG_0425Listening to the highly charged keynote speeches, meeting with Dell leadership and technologists, listening to customer panels, and walking around the glitzy solutions expo floor, it became obvious that, as a private company, Dell is raring to go — and wants to put the fun element back in work. It has a longer-term strategy, new technology innovations like Dell PowerEdge VRTX, Fluid Cache for SAN, 12th generation PowerEdge servers, and Dell Mobile Workspace (more on these later), aggressive pricing, and more delight for customers and channel partners. It’s more committed to entrepreneurship and innovation, and open to industry partnerships.

IMG_0422At Dell World on December 12, a visibly relieved and ecstatic Michael Dell (Founder & CEO) said, “It feels like I am a part of the world’s largest start-up company. As a private company, we have the freedom to make the bold moves that are necessary, investing in emerging markets, in PCs, tablets, software, solutions, and in data centres.”

You can watch the keynote video on demand here: http://dellworld.com/liveonline

Michael Dell

Michael Dell

Dell World is an annual event that’s attended by Dell customers, ecosystem partners, media professionals, technologists and analysts, who get to see and experience Dell’s solutions, and hear about its plans for the coming year. Last year, Dell World had a footfall of 3,000 people; a similar number was expected this year. Dell World 2013 was held at the sprawling, multi-level Austin Convention Center, spanning over 881,400 square feet, or six blocks long.

IMG_0390Dell may be running neck-to-neck with giants like HP, IBM, and Lenovo, but at heart, it was always a company driven by innovation and entrepreneurship – something it can readily get back to, post-privatization. Those tracking Dell’s origins will recall how Michael Dell started the company in his dorm room in 1984, with seed capital of $1,000 at the age of 20. At 18, while studying at the University of Texas, he took apart IBM PCs, studied them and then built and sold customized PCs with better performance specs, yet priced far lower (at that time IBM PCs sold in retail stores for $3,000).

“I realized that the components in those (IBM) computers were all made by somebody else, yet they were charging four times the cost of those components. It just didn’t seem fair,” said Michael Dell.

CUSTOMER FOCUS

Dell as a company is known for identifying technologies and products that make fat profits for its competitors, and then reengineering the same, to offer better performance at lower costs, yet embracing open industry standards. And it tops that with fantastic customer support, although it has received criticism for telephonic support in recent times. In the days of selling PCs, savings for Dell came in by eliminating the middle man (channel and retail), to sell directly to customers through the Internet and phone. Of course, Dell no longer sells direct today, yet the spirit of innovation and aggressive pricing continues within Dell, as it sells enterprise IT solutions: servers, PCs, tablets, thin clients, storage, networking, software and services.

Dell also continues that close engagement with its customers and partners; Michael Dell spends 40 percent of his time with customers and personally conducts “platinum councils” with CIOs around the world. He’s now doing the same with other entities like universities, where a lot of tech talent exists.

With the exception of direct selling, nothing else changes, inform Dell executives.

While Dell’s successes came from selling PCs and servers in the earlier years, it has now repositioned itself as an end-to-end enterprise IT solutions company, that wants to work closely with customers, to solve business problems and understand the opportunities.

“We are disrupting and democratising software, services and solutions the way we did with PCs and servers,” said Michael Dell during the keynote address.

FOUR IMPERATIVES

Dell is known to be a very customer-centric company, and it has aligned its business groups to better address customer challenges. To that effect, it identified four customer imperatives: Transform, Connect, Inform, and Protect.

‘Transform’ is about helping customers migrate from legacy infrastructure (mainframes, minis) to a new technology environment (with virtualization, cloud computing and data centres).  In migrating, customers will have access to flexible, scalable and agile architectures.

‘Connect’ focuses on increasing productivity by enabling the next generation workforce to work securely from anywhere, anytime and on any device (BYOD).

‘Inform’ helps customers gain control of their big data and to use it to drive insights, to gain a competitive advantage.

‘Protect’ refers to the protection from organised attacks to everyday behaviours of employees that unknowingly enable cyber theft.

FUTURE OF THE PC

Market research reports show a shrinking PC market, yet Dell continues to believe in, and sell  thousands of PCs to large customers such as Boeing. Industry observers say that PCs are a way for Dell to get its foot in the door — to sell other enterprise solutions to corporations.

“Customers tell me that these devices are extremely important and relevant. PCs help get business done. So we’re investing, innovating , and differentiating in this space,” said Michael Dell.

IMG_0372The flood of tablet brands in the market does not deter Dell from making its own. We checked out the Dell Venue range of tablets at Dell World, and were surprised by their form factor and unique features like full Windows 8.1 (not RT), IMG_0373USB ports, wide HD screens, large memory, good battery life, and smart accessories. Aggressive low pricing, security, and management features make the Venue tablets a worthy consideration. However, these tablets are configured mainly for business applications, and ideal for use by a sales force or on the shop floor, for instance. We’ll have to see how home users take to the Dell Venue tablets, this holiday season.

The other area where Dell sees huge potential is virtual PCs or thin clients. It offers a product called Dell Wyse — an integrated hardware and software solution. As organizations increasingly take to the cloud, there is demand for front-end devices like virtual PCs to access back-end applications and data residing in data centers. And this is what Dell Wyse offers.

TECH INNOVATIONS

Dell has always been known for its disruptive tech innovations. In 1996, Dell surprised audiences at the Comdex IT exhibition (the major industry show back then) with the launch of a 12 Mhz PC (the fastest PC until then was clocked at 6 Mhz). Dell knew that if it did 8 Mhz, the competition would soon catch up, so why not 12 Mhz (although it also had a 16 Mhz unit in its lab)?

IMG_0368That spirit of disruptive innovation continues even today. For instance, Dell proudly showed its Fluid Cache for SAN breaking the IOPS record (Input/Output Operations Per Second) and clocking in at 5 million IOPS (its competitor did 3 million IOPS). This is a flexible enterprise application acceleration solution that integrates servers, networking and storage. With that kind of performance, enterprises will be able to handle a greater number of transactions, and experience faster response times. And that’s good for business especially during peak periods.

The other tech innovation on display at Dell World was the 4K x 2K ultra HD, UltraSharp monitors. These monitors are aimed at professionals in the creative and design space. Of course, the natural progression for Dell in this area is smart TVs and Internet TVs with ultra high resolution displays. In fact Dell currently sells smart TVs from Samsung and Sharp.

We’ve mentioned the innovations in the tablet space, but there was another mobility innovation that caught our attention at Dell World. It’s called the Dell Enterprise Mobility Management (EMM) solution. The mobility solution is currently in the beta testing phase. The unified mobility solution can manage both consumer-owned and company-owned mobile devices, through policies. For enterprise devices, it offers the usual end-point management. But for consumer-owned devices it builds a secure container in the device, and holds all corporate data and applications in a ‘container’. The user’s personal data and applications (outside the container) are not compromised or governed by the corporate policies — nor can they intrude on corporate data. This technology comes from its acquisition of KACE last year.

Unlike traditional EMM platforms, which typically include separate tools for managing mobile devices, apps, content and users, Dell has consolidated the capabilities organizations need in an end-to-end mobile enablement solution.

Dell VRTX servers and 12th generation PowerEdge servers have also been acclaimed for their engineering innovations and performance. The former is a shared infrastructure platform with simplified management features, making it ideal for small to mid-sized businesses — or remote/branch offices.

INNOVATION VENTURE FUND

As we mentioned earlier, Dell fosters the spirit of entrepreneurship and innovation. Dell Ventures, Dell’s strategic investment arm, announced an expanded commitment to entrepreneurship and innovation with a $300 million Strategic Innovation Venture Fund. The fund will enable Dell to invest in early-to-growth-stage companies in emerging technology areas including storage, cloud computing, big data, next-generation data center, security and mobility.

The Strategic Innovation Venture Fund is Dell’s second major investment fund and builds on the $60 million Dell Fluid Data Storage Fund announced last year. Since then, Dell has completed road shows to meet with entrepreneurs and VCs in Silicon Valley, Boston and Israel, reviewed hundreds of companies and invested in numerous start-ups that have contributed to Dell’s storage and end-to-end solutions innovation. As the global business environment evolves and customers are increasingly challenged by the pace of change with virtualization, cloud computing, big data and mobility, Dell is expanding its venture investments to new areas of IT innovation.

INDUSTRY PARTNERSHIPS

Dell is also known for its affable industry partnerships and is a long-time ally with Microsoft. At Dell world it also announced partnerships with Red Hat and Accenture.

Dell and Red Hat will jointly engineer enterprise-grade, private cloud solutions based on OpenStack to help customers move to, and deploy highly-scalable cloud computing models. As part of the expanded relationship, Dell becomes the first company to OEM Red Hat Enterprise Linux OpenStack Platform. The co-engineered solution will be built on Dell infrastructure and Red Hat Enterprise Linux OpenStack Platform. The solution will be delivered by a Red Hat Enterprise Linux OpenStack Platform practice within Dell Cloud Services.

At Dell WorldDell announced that it is expanding its worldwide agreement with Accenture to address some of the most pressing technology challenges businesses face today, particularly during business transformation. To accomplish this, Dell and Accenture have signed a four-year global go-to-market agreement to jointly develop and sell a new set of offerings designed to deliver improved enterprise efficiency, higher security, and better business outcomes.

Under the go-to-market agreement, the companies will work together to build, implement and manage data center solutions for mid-market and select enterprise customers who want to drive business innovation while controlling costs and reducing risk. The agreement will bring together Dell’s end-to-end portfolio of infrastructure, software, and services with Accenture’s capabilities as well as Avanade’s, which was created in 2000 as a joint venture between Accenture and Microsoft. This agreement augments Dell’s existing cloud capabilities in hardware, software and services.

And Dell announced it is building on its strategic alliance with Microsoft to deliver Windows Azure to Dell customers worldwide through the Dell Cloud Partner Program. This expands upon the previously announced alliance providing Application Development Services on Windows Azure.

With the evolving Dell-Microsoft relationship, current and future customers will have even more choice and flexibility when pursuing and planning public cloud infrastructures. Acting as a single-source supplier through the Dell Cloud Partner Program, Dell will offer customers a central point of solution integration, control and direct support, lessening the complexity and challenges of deploying cloud environments.

THE NEW DELL

As a private company, analysts says Dell will move at a faster pace, making faster strategic decisions, introducing new products, moving to new markets, making strategic acquisitions (particularly for Cloud and data center), and continuing to invest in start-ups. Now it can also take a longer term view, as against a quarter-to-quarter review and realignment, as public company.

At a customer panel discussion, Kevin Dunn, VP Business Information Services, First Command Financial Services was asked how he sees the new privatised Dell. “I see more engineering and collaboration coming out of Dell, in a private way,” he said.

Another customer on the panel said, “A lot of innovation comes from (start-up) companies that have ideas, so it is great to see that Dell is going to fund and work closely with a lot of start-ups.”

And yet another customer said, “The days of doing generic boxes are done. Now it is all about technology innovation. It is also about building an ecosystem and working with trusted partners.”

We think that Dell has all these ingredients that will ensure its success. As a privatised entity it will move towards market leadership more quickly. What we are unsure about is how it will continue to get its funding to invest in R&D and market expansion. What happens once the funding from Silver Lake Partners dries up?

To keep going, Dell will need to pursue new areas of profitability such as Analytics, Business Intelligence, Security, automated tools, and network or data center management software. And that’s where its one-year old software division (headed by former CA CEO John Swainson) will have to chip in, with engineering effort and new products. Software defined networks and data centers are the future.

Services (led by Suresh Vaswani) also holds a lot of potential, with Dell currently playing in sectors like Healthcare, BFSI, Education and Government/PSU.

Mobility and devices is another area that Dell is hotly pursuing. And solutions that help companies get on the cloud will bring in significant revenue.

But to sell all this, Dell will need to revitalize its sales force and channel (see box, Dell revamps channel program). Presently, channel confidence is at an all-time low in India.

To know Dell’s destiny you need to watch its performance closely in 2014, as this will be its inflection point.

The next Dell World will be conducted in Austin, TX in November 2014.

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