PC major Dell bought SonicWALL, a company that provides security solutions to enterprises earlier last year.
According to industry watchers, Dell is in the process of transforming itself as a services company going forward and this acquisition would strengthen its services portfolio.
Marvin Blough, Executive Director, Worldwide Sales, Dell SonicWALL, spoke to Business Line on the logic of this acquisition, integration and how it would pan out in the future.
After the acquisition of Dell, SonicWALL is increasingly trying to become a services company. Why this change?
First, the profusion of devices inside a company is a major move towards this push to be more service oriented. Michael Dell says that we are going to become a services company and we are committed. The challenge here is that we are manufacturing the hardware, like the intrabus chips and Microsoft is coming up with the software. So where is the value addition? It’s a matter of how the world is changing and what is the value addition, since the supply chain and everything else has changed.
What impact would the SonicWALL acquisition have on Dell?
From a financial perspective, I think some of the things that we struggled with as a smaller company was we were always making choices because until you get to a certain size, you have to achieve the scale.
So, investment challenges were there. The impact Dell has made immediately is that it has taken care of the branding and other requirements. We still have to make sure that the world notes that Dell is in the security business now. If we start taking advantage of the infrastructure which Dell has in place, it will immediately translate into sales growth for SonicWALL without doing anything different on the products. By adding capability, we are looking at 40 per cent growth rate in the security business, higher than competitors.
How would the supply chain of SonicWALL fit with the supply chain of Dell?
We can take advantage of the purchasing power and negotiating power of Dell. It’s less about the supply chain and more about the solution and network coming together. Dell had the advantage as they did everything less expensively than others. But the customers are looking for end-to-end solution rather than supply chain. We are coming up with economic models that are more efficient than the products available.
After the acquisition, any change in strategy?
Dell serves all the markets for our business. Earlier, for SonicWall, majority of business came through SMB but over the past few years, we had expanded our product line where prior to the Dell acquisition we were even getting somewhere 25-30 per cent of our business coming from enterprise customers. So, we had begun to try to diversify, because at the end of 2008, when the first financial crisis arrived, SMB customers decided cut spending.
The good and bad parts of the SMB is there is lots of opportunity out there we cannot be dependent on one sector that can turn thing on very quickly.
So that’s why we starting trying to expand more into mid-market and enterprise class customers.