Dell the man, on Dell the company

By Gabey Goh April 3, 2014

Company intends to roll out its end-to-end solutions to every country in the world
Big focus on enabling emerging companies with affordable products and services

IN the early days of the microprocessor age, a young Michael Dell felt compelled to join the technology revolution while at the University of Texas undertaking a major in biology.

He had always had an interest in electronics, and had been tinkering and taking apart computers since a young age, after getting his first microprocessor-based calculator at the age of seven.

“While I was in freshman year, I saw an opportunity that was so compelling that I had to go for it. So I did,” he told Digital News Asia (DNA) during a brief visit to Malaysia this week.

That opportunity grew to become Dell Inc, one of the largest technology corporations in the world, recording US$ 56.94 billion in revenue in 2013 and employing more than 103,300 people worldwide.

In 2007, after stepping down as chief executive officer (CEO) four years earlier to become chairman, Michael returned to the post with a distinct mission in mind.

“The primary thing I set out to do was to build a whole new part of the company that extended beyond the PC ... and we finished last year,” he said.

He said that the company has managed to build that "whole new part," generating US$21 billion in revenue with very substantial growth offering end-to-end solutions.

Michael said that this expansion of offerings was part of the motivation to go private as well, to accelerate the continued development of the new parts of the company.

During the Dell World conference which took place earlier this year in Austin, Texas, the company’s approach to enterprise solutions was outlined under the pillars "Transform, Connect, Inform and Protect," intended to illustrate how Dell intends to position itself as a total solutions provider, with a consultative approach to working with clients.

Sweet spot for emerging companies

Key to Dell’s mission to gain new market share is how well it can connect with and serve the needs of not just public sector entities and major corporations, but also the mid-market segment globally.

“What we see happening is a real opportunity to bring IT to all sorts of growing companies,” said Michael (pic), adding that in most countries, 60% to 70% of growth is centred on emerging companies.

“I’ve had discussions with the Malaysian Government and that’s the case here as well, that growth in jobs and employment is coming from SMEs (small and medium enterprises) and emerging companies,” he said.

That being said, he noted that the question then becomes how you bring the benefits of IT that only large companies used to be able to afford to these companies.

“IT is more than just Microsoft Office and printers, there’s so much more that IT can do and we’re building solutions that are easily implemented across organisations of all sizes.

“We’re helping customers embrace new technologies and it’s already happening with the cloud. We’re providing infrastructure for all kinds of cloud service providers and allowing all kinds of use cases for companies,” he added.

Michael also pointed out that increasingly, SMEs are operating across geographical boundaries, enabled by IT systems that do not required high levels of expertise and internal resources to manage, something that was impossible to do previously.

Dell's commitment and increased investment in emerging markets hinge on being able to deliver on the unique needs of different markets at different points in the spectrum of IT maturity.

“What’s interesting is that if you look at the global IT industry, it’s essentially three parts: Services, software and hardware. You can’t actually be successful in the industry unless you have all three parts,” he said.

In mature markets such as the United States, the services component dominates over the other two, whilst in a market such as Nigeria, the hardware component is more dominant.

Michael said that he recently visited Nigeria, where he had meetings with local banks. They shared that what they really want is hardware with mission-critical support.

“There are many worlds when it comes to IT needs and adoption, the ‘tip of the spear’ in the terms of gaining entry to new markets or increasing your share is essentially whatever the customer is buying. The instinct for a global company when approaching an emerging market is to just let the distributor guys handle it.

“Sometimes that works great but for a bank, that’s not good enough. So you can have partners but you have to make investments to put in mission-critical infrastructure so that banks, utilities, retail and government can function at a high level even if it is an emerging market.

“That’s going to be the thing that defines success,” he said.

Michael said that Dell has accelerated its rollout of enterprise-class services in the last six months, with 10 new countries in Africa in addition to its longstanding and expanding presence in Asia.

“We’re extending out into every country in the world, and from there you keep going in terms of software, and more value-added services,” he said.

A future for the PC?

According to research firm Gartner Inc, worldwide PC shipments totalled 82.6 million units in the fourth quarter of 2013, a 6.9% drop from the fourth quarter of 2012, marking the seventh consecutive quarter of decline.

When asked about his take on the future of PCs, Michael pointed out that globally one million units are sold a day, a still significant number.

“Our share of that space is going up but it is also an evolving space; we’re seeing more virtual PCs and the addition of tablet and convertible-type form factor designs and those are growing.

“One of the reasons that there has been a surge in demand for PCs recently is that some of this over-neglect of the PC is catching up with people. They’re waking up and going ‘wait a second, we have five-year-old PCs, this is nuts’.

“In addition, there’s no more support for Windows XP, which forms a large population of older systems. Companies are figuring out that the cost of a new PC is not very much compared with the productivity that they get ... it’s a great investment,” he added.

Dell currently holds 12% of the global PC market, with two times more share in the commercial segment versus the consumer.

According to Gartner, alongside Lenovo, Dell shipped more units in the last quarter of 2012 compared with the same quarter in 2013. During the final quarter of 2012, Dell shipped 9,205,892 PCs, with that count rising to 9,773,821 during Q4 of 2013, an increase of 6.2%.

Up next: Building out beyond the PC