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Just a few miles away from the Austin Convention Centre, the venue for this year’s Dell World 2012 is the Texas University where Michael Dell first got the idea for making computing devices. Many years later, the promoter of the now $60-billion company is executing a new idea - to take Dell beyond PC into services and solutions space.
INTEGRATING SOLUTIONS
What this means is that instead of just selling boxes, Dell is now integrating storage, servers, networking solutions along with a wide portfolio of services to become a full-fledged IT company.
“We have travelled millions of miles from where we started. But what we do today is very different from what we did even five years ago. We have invested $5 billion in just one year to build this transformation,” Michael Dell said at his keynote address at the Dell World 2012.
The transformation strategy comes even as the Round Rock-based company is facing stiff competition in its traditional PC business. The company still gets half its sales from PCs but global PC shipments for all vendors put together tumbled 8.3 per cent in the third quarter from a year earlier, according to market researcher Gartner Inc. The decline primarily is due to the growing popularity of smartphones and mobile devices such as iPhone and tablets.
On its part, Dell is trying hard to stay relevant in the computing market by doing a number of things. First, it has re-entered the tablet space using the Microsoft Windows platform. Second, it has come out with a range of PC devices including the all-in-one device that offer the touch feature of the tablet combined with power and efficiency of a PC. “We strongly believe that PC is still important. We are on the cusp of a PC revolution,” Dell said.
But analysts said that Dell may have left it too late to make a comeback into the tablet segment with Samsung and Apple ruling the roost. Dell had earlier entered the tablet space with its Android-based Streak range, which didn’t too well.
Not having a smartphone product when that’s where the growth is happening is another missing link in Dell’s gameplan.
Product managers at Dell, however, downplay these concerns. “We want to pick areas where we can bring a differentiation. That’s why we aren’t making washing machines and that why we don’t make smartphones. At the end of the day, users are looking for multiple devices and we will play in areas like tablet where we think we have great products,” said Samuel Burd, Vice-President, Personal Computing Product Group, Dell.
“I am optimistic with our Windows 8 device because with Android and iOS operating systems, customers have to rewrite a lot of their applications whereas the Microsoft Windows platform is light years ahead making our products plug and play,” Burd added.
Dell is not worried about Microsoft’s own attempts to make a break into the tablet space with the Surface tablet. “Surface is a competitor but we collaborate with Microsoft to make sure that we design our product differently. They also realise that not every tablet sold in the world will be a Surface,” said Burd.
While Dell continues to spend big R&D bucks on developing PC products, it is the new focus on services and solutions which is grabbing all the attention. Dell is pushing new technologies such as cloud and virtualisation products to integrate its server hardware business to new areas such as networking, storage, services and software. Dell spent $5 billion on buying seven companies this year to strengthen its enterprise portfolio. But with global giants such as Cisco and HP dominating this space Dell has its work cut out. The company is working on innovative technologies to stay ahead of the pack. For example it has developed servers that can work with fresh air cooling. This can be huge savings for companies who spend millions of dollars on energy to keep their data centres cool enough for the servers to function. Michael Dell reckons that his company will become the number one in the server space in the next few quarters. If that happens then Dell would have taken his dreams from Texas University days to a whole new level.
Chennai to be the next Bangalore for Dell
Dell’s India operations has a significant role in the transformation undertaken by the company. With 27,000 employees, India is Dell's biggest employee base outside the United States.
“India is crucial from the service delivery point of view. Already about 50 per cent of Dell’s global service’ application is being handled out of India,” Suresh Vasvani, the newly appointed President of Dell Services told Business Line on the sidelines of Dell World 2012. Vaswani who previously led Dell Services’ application and business process outsourcing line of business was elevated to the leadership role in May.
While most of Dell’s employees in India are based in Bangalore, the company is looking at other centres like Chennai to expand its presence. Recently it ramped up its R&D centre in Chennai with an eye on business opportunities in the networking space. “Bangalore has become saturated in terms of its dynamic which are now comparable with the Silicon Valley in terms of employee retention and salary package. Therefore, Chennai has a great opportunity for the next 5 years,” Dario Zamarian, Vice President, Networking Business Unit, Enterprise Product Group, Dell, said.
(The writer is in Austin at the invitation of Dell.)
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