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As a private company Dell is well positioned to defy the industry norm, according to its CEO Michael Dell.
The acquisition of EMC puts Dell at odds with the rest of the industry. $67bn is a big punt and its CEO cannot afford to fail.
At a recent briefing prior to his visit to the company’s Emea Solutions Conference in Vienna, Dell said: “We have had 11 quarters gaining share in the client business and we are gaining share in the server business.”
According to Dell, customer loyalty is at record levels. He claimed the company filed 27% more patents this year than in 2014.
IBM sold off its PC server business to Lenovo in 2014, and Hewlett-Packard recently split into HP Inc and Hewlett Packard Enterprise (HPE). At the same time, businesses have less of an appetite for large-scale IT contracts, with contracts split across multiple suppliers now popular. The challenge for Dell is to convince such organisations that buying from a single source is the better option, compared with multi-supplier contracts.
“We have never been afraid to do things in a different way. We believe that scale matters. The software-defined datacentre (SDDC) is coming and our new company is well positioned. Our customers like to buy these things together,” he said.
According to Dell, converged infrastructure is blurring the lines that separate the silos in the datacentre, which creates an opportunity for the company.
Buying EMC elevates the company to the level where it becomes a premier IT provider for the largest enterprises, breaking free of its heritage as a supplier of PCs and servers for small and mid-sized organisations.
Digitisation is among the top areas the big IT firms are trying to address – it is where IBM, HPE and Dell want to be.
Given that the cost of sensors, bandwidth and computing keeps decreasing, Dell said it becomes possible to re-invent a business with digital technology. Those that do not re-invent inevitably fail, he warned.
“Whether they are making products or services, businesses are realising they have to use information to improve,” said Dell.
Fitting in EMC
The big question for the CEO is where the $67bn acquisition of EMC fits.
“We are excited about the specialist company we are creating in PCs, storage and servers, giving us unmatched reach to customers, from the largest to the smallest in the world,” said Dell.
For the traditional EMC customer there will be concerns about Dell’s strategy for large enterprises.
As Computer Weekly previously reported, while EMC is characterised by having its own product offerings, Dell resells someone else’s kit. For instance, EMC has ScaleIO in software-defined storage while EVO:Rail from VMware is used by Dell; Atmos and ViPR/ECS are EMC’s object storage product, while Scality is Dell’s system; and in hyper-converged, EMC has ScaleIO Node, while Dell resells Nutanix.
When asked if he would sell off EMC assets where there was found to be comparable Dell products, Dell said: “The portfolios of products are highly complementary. There are some overlaps in storage, but Dell product lines and EMC storage product lines are somewhat different. We are going from seven to nine [product lines], which is not a problem, and we’ll continue to enhance them.”
“Whether they are making products or services, businesses are realising they have to use information to improve”
Michael Dell, Dell
The proverbial elephant in the room is VMware. Dell confirmed that the company has no plans to tie in VMware with Dell.
“We believe in choice and openness. VMware will remain an independent public company. We are not going to disadvantage VMware partners in respect to their relationship with VMware,” he said.
While Dell was adamant the company would not be divesting any EMC assets, Reuters reported that the company could sell off $10bn of assets to reduce the $49.5bn of debt it will be taking on to fund the acquisition.
Divestitures could include Perot Systems, Dell’s own service arm, acquired for $3.9bn in 2009; Quest, which it bought for $2.7bn in 2012; and SonicWall, which it reportedly acquired in 2012 for $1.2bn. In spite of Dell’s comments to the contrary, the future of Equalogic in Dell will clearly be under scrutiny, given it overlaps with EMC’s SAN portfolio.
Dell once had a world-class supply chain. Its founder speaks of doing things differently, but it is hard to see where a combined Dell/EMC will go without a big focus on software, which is a missing piece in its strategy if the company truly wants to address the digitisation opportunity.
Will Dell make a major acquisition in the business intelligence space? Not likely. Dell’s Toad is a database monitor tool, while it acquired Statsoft in 2014, providing it with a big data analytics capability. Plus with EMC, Dell gets Pivotal, which provides custom analytics. However, Michael Dell does not feel it is necessary to make a major software acquisition.
Read more about Dell EMC
- Two years after his audacious bid to re-invent the company he founded by re-privatising it, Michael Dell has put in a bid for storage giant EMC.
- Dell-EMC deal: In the wake of the largest technology acquisition ever, CIOs ponder their digital strategies, supplier relationships and the future of IT.