Michael Dell told Oracle OpenWorld attendees this morning that “Dell is not a PC company.” Instead, he described Dell as an “end-to-end solutions company,” including a firm commitment to PC endpoints. Without mentioning Hewlett-Packard by name, Dell said end-to-end solutions will beat the point-product approach. Dell also said cloud computing is erasing the line between business and IT. Here’s a recap.
Among the key points Dell raised:
1. Changing Role of CIO: Dell said the reality is technology is always changing. “But we are seeing a paradigm shift,” he said. And cloud is erasing the line between business and IT, Dell added.
2. We Still Love Hardware: Without mentioning Hewlett-Packard by name, Dell took a few shots at HP’s potential PC division spin-out. Dell said his company has rapidly evolved from PCs to servers to cloud solutions.
“There are many reasons to stay committed to the PC, he said. “There will be two billion PCs in a few years.” Dell estimated that 95 percent of disk drives are in PCs, and five percent are in servers. A company without PCs can’t gain volume pricing advantages for server components, Dell asserted. “The client offers enormous scale,” said Dell. “Give up that scale and you need to raise your prices.”
3. Total Picture: “Dell is not a PC company,” he said. “Dell is an end-to-end solutions company, and we understand the endpoint is a huge part of the solution. We are more than just hardware.”
4. Services: Dell mentioned that Dell Services — which expanded through the Perot Systems acquisition — is now 45,000 people strong and the number one provider of healthcare IT services. Of course, Michael Dell was addressing customers primarily, rather than partners. Hang out with Dell Channel Chief Greg Davis, and you’ll hear how Dell partners with VARs — but Dell’s services strategy is undeniable.
5. Acquisitions: Dell mentioned multiple deals — EqualLogic, Compellent, Force10 Networks, KACE, Boomi and SecureWorks — that are pushing Dell into storage, security, networking and cloud integration solutions. Dell noted that Force10 is widely deployed in major IT environments and certified with Oracle Enterprise Manager 12c, a new management platform.
On the cloud front, Mike Gregoire, CEO of Taleo, described how Boomi allows his company to integrate multiple cloud solutions. Next, Dell shifted the conversation to SecureWorks, noting that Dell monitors 15 billion security events every day for several thousand customers worldwide. Dell said the company protects $14 trillion in assets in the financial services market. Kent Polzin, director of IT at Racetrac Petroleum, joined Dell onstage to describe his company’s use of SecureWorks. Polzin said Racetrac also is a Dell managed services customer.
6. The Dell-Oracle Relationship: JP Sarkis, VP of packaged applications for Dell Services, joined Dell on stage. Sarkis said Dell had been spending 70 percent of its IT budget on maintenance on 30 percent on innovation. More recently, 52 percent of Dell’s IT budget focuses on innovation, with 48 percent focused on maintenance. What drove the shift? Standardized business processes that leverage Oracle on Dell, plus a service oriented architecture (SOA), Sarkis claimed.
7. Dell PowerEdge Servers: Dell said his company is preparing the 12th generation of its PowerEdge servers. Dell asserted that the company will continue to offer the most comprehensive family of x86 servers. Dell said the PowerEdge systems will benefit from the little-watched acquisition of RNA Networks.
Bottom Line
Michael Dell was on-message. Instead of attacking HP at length, Dell quickly covered his commitment to PCs before shifting the conversation to Dell’s end-to-end solutions strategy.
Dell’s decision to share the stage with two customers — Taleo and RaceTrac — was effective. No long PowerPoints. No major product demonstrations. Just a conversation between Dell and two prime customers. Smart.
Heck, The VAR Guy realizes Dell continues to face margin and growth challenges. And some channel partners will worry about Dell’s services statements. But Dell’s overall tone and message was on target today.
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Tags: Boomi | Cloud Security | Compellent | Dell vs. HP | EqualLogic | Force 10 | KACE | managed services | Michael Dell | Oracle OpenWorld | PowerEdge Servers | RaceTrac | SecureWorks | Taleo
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“Not a PC company” … yeah, right. Another tacit admission that the PC business has hit a dead-end, just like HP has also conceded. A hollow claim, when your “end-to-end solutions” are so heavily built on your own PCs.
Lawrence: Some thoughts…
Hardware: Yup, a huge portion of Dell depends on PC revenues. Not exactly a high-margin opportunity these days. But doesn’t Dell also deserve credit for its server business?
New Markets: Yup, Dell hasn’t exactly moved “organically” into new markets. But doesn’t Dell deserve a little credit for growing the EqualLogic business since acquisition? And that lengthy list of acquisitions Dell mentioned certainly sounded interesting, no?
-TVG
[...] The VAR Guy [...]
[...] The VAR Guy [...]
Dell deserves no credit for their server business. What was the big announcement, “tier 0″ (Flash) storage in the server. IBM has had Flash in x86 servers for years. Michael Dell says “you can’t get any closer to the CPU than that [Flash in server].” You definitely can get closer to the CPU with eDRAM, but that would require actual engineering instead of packaging.
Dell’s server business has the same model as their original PC business. Watch the leaders and try to copy their stuff at a lower price without doing any work. It is a generic brand.
EqualLogic is weak SMB gear. Deadly slow iSCSI arrays. Their customers like it because it is cheap and easy as it runs over ethernet.
All their other acquisitions are poor man’s products that Dell could buy because they were cheap. They lost 3PAR, solid arrays, to HP, so they snapped up Compellent as a lower cost option which overlaps with EqualLogic. Force10 has no market share. They have pretty solid products, but they require continued development. Dell doesn’t develop, they distribute.
Sam@5: Really good points. But isn’t this Dell’s business strategy? You let everybody else do the work and then sell it with marketing. You do not have to pay for R&D and you just sell things that work ok. They may not be best of breed, but it cost less and your customer is happy because he thinks he got the best for his dollar.
I do not like this model, but it seems that more businesses are using it. I worry as things get more complex that people believe marketing over the work it would take to get the facts.
Thanks for shining some light.
VAR Guy,
What is the deal with 3 & 4? Are they trying to do some type of reciprocal linking for search engines? Starting to see more in your comments like this.
Just curious.
Victor,
Thanks for the comments. Yes, I think it is Dell’s strategy. Basically HP copies IBM, Dell copies HP. The real shame of the IT hardware world is HP following Dell down the x86 low margin business path instead of trying to compete with IBM in the IP value added hardware with coupled software business. As a result, their HP-UX business is a dead man walking. They killed it the day they axed PA-RISC, all the good stuff they fell into from DEC, and became reliant on the tender mercies of Oracle and MS. I am not an Oracle fan, but I will give them some credit for trying to take on microprocessors with Sparc instead of bowing to Intel.
Yes, the x86 business is absurdly complex for the end user. There have been several generations of “I know this isn’t as good as [insert previous generation], but it works and it costs less.” Minicomputers did this to mainframe, Unix did this to minicomputers (and mainframe), now x86 is doing it to Unix. The problem is that all of these slightly worse value propositions add up and now end users need to figure out how to integrate 12 pieces of software from different vendors in harmony to get a stable working environment. Even if they can manage to keep all of those plates spinning, they still have a server environment that runs, fully optimized and virtualized, at maybe 30% capacity.