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Dell looking for server growth

Dell shares hopes of a turnaround on the server front over the coming year

Dell is looking for a solid year in the server market as the vendor aims to firmly position itself as the main player in the “data decade”.

The firm has been talking about the growth of customer data and the positive consequences for its business for the past few months, and it was again a main topic of discussion as the vendor talked to analysts about its fourth-quarter and full year results.

Although Dell delivered solid numbers with fourth-quarter revenue up 1% to $24bn year-on-year, and for the full year a 2% improvement to $92.2bn, the performance of the infrastructure group was the fly in the ointment.

On that side of the business, the vendor saw a 7% revenue drop with servers and networking revenues down by 14%. Storage was flat and the client services group saw 6% growth.

Jeffrey Clarke, vice chairman and chief operating officer (COO) of Dell Technologies, said there were several reasons why the server business was down and it was hopeful that those trends would not continue.

“Investments in China slowed. Server and networking revenue declined in FY [financial year] 2020, but profitability was up as we didn’t chase unprofitable server deals in a down market. Our long-term server share trajectory remains strong,” he said.

“In FY 2021, we’re planning for both the overall server market and our server revenue to return to growth, driven by higher value workload servers, increasingly more robust AI [artificial intelligence] and machine-learning solutions and distributed IT requirements at the edge.

“According to IDC, mainstream server revenue is expected to grow at 3.3% in calendar year 2020, and we plan to grow at a premium to the IDC forecast,” he added.

Clarke pointed to the recent decision to unify its sales operation as something that would also benefit the vendor. “Earlier this month, we combined into one sales organisation, and we will realise the next level of synergies and cross-sell opportunities, like selling more storage and data protection to our server customers,” he said.

Dell has already alerted the channel to its plans to make servers one of its key technology areas this year, using its kick-off event at the start of February to outline its plans.

Speaking earlier in February, Darren Sullivan, senior vice-president of global partner strategy programmes and operations at Dell, indicated that the vendor would be building on some of the schemes it has been running to incentivise partners around selling storage products and the rewards would be there for those that landed fresh customers.

“We’re investing in new business acquisition with [partners], expanding our partner preferred programme by adding new target customers for server acquisition to the existing storage accounts. We’ve seen great momentum with this programme, driven by the collaboration of Dell Technologies core sales and our partners,” said Sullivan.

Dell is keen to get partners selling across its portfolio to make sure it can fulfil its pitch to customers as the ideal choice in the “data decade”.

“We’ve never been better positioned to help our customers unlock the potential of all of the data coming their way. No one stores, processes, moves and protects more data than we do across any environment. No competitor enjoys our advantaged positions across physical and virtual infrastructure,” said Clarke.

“Our investment in talent, innovation and breadth of capabilities gives us an advantaged starting position as we head into the data decade. I am optimistic, yet I know we have some hills to climb, that is evident in our FY 2020 results,” he added.

On the PC front, the Microsoft Windows 10 refresh helped matters, and Dell managed to navigate through the CPU shortages without it hitting the numbers too hard. Clarke did warn, however, that the PC market is forecast to decline in the second half of this year.

“Our job is clear, ignite ISG growth, manage the Windows 10 transition and drive Dell Technologies’ synergies. Dell Technologies has no ceiling on the potential in the data era,” he added.

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