Michael Dell Revels in IT Industry Disruption
A few years ago no would have predicted Dell would be the only end-to-end supplier of IT systems in the market, much less the fact that 40 percent of its revenues are now generated by its channel partners.
At the Dell World 2014 conference this week Michael Dell made it clear that as the CEO of a privately held entity he is now reveling in not only those two facts, but also the level of disruption now occurring across the server market.
With IBM (IBM) selling off its server division to Lenovo and Hewlett-Packard (HPQ) announcing that it is splitting into two companies, Dell said he sees no upper limit to the amount of growth Dell can drive through its channel partners.
To that end, Dell announced this week it is making additional investments in the channel, including:
- Programs to accelerate storage sales
- Sales tools for enabling upgrades to Windows Server 2003 platforms that are nearly end of life
- Additional rewards for partners that grow Dell PC and enterprise sales
- Greater access to demo equipment
- A doubling of the company’s investment in lead generation campaigns for the channel; and
- Better financing terms.
At the same time Dell is also moving to transform how IT is actually consumed in the age of the cloud. Dell announced the beta of a Dell Cloud Marketplace through which it will allow customers to buy cloud services from infrastructure-as-a-service (IaaS) providers. Once that marketplace goes live Dell also plans to resell software-as-a-service (SaaS) applications through that online market.
Dell also announced new Core Client Solutions and Workstation Competencies and plans to make advanced competencies in Storage and Identity and Access Management available in the coming months. Finally, Dell is investing millions of dollars to beef up its internal IT systems and provide additional tools for lead management, deal registration, training, certification that will all be mobile-enabled. As part of that effort, Dell committed to reducing cycle times for deal registration approvals, quotes and orders; adding business to business capabilities; and automating rebates and marketing development funds management and incentive payments.
Coupled with a new innovative converged server aimed specifically at taking blade server market share away from Cisco Systems (CSCO), Dell said recent moves by both HP and IBM have more to do with artificially trying to shore up shareholder value than they do with anything to do with the interests of customers or solution providers. As a private company, Dell is no longer beholden to a “90-day shot clock” that is based on the quarterly expectations of Wall Street analysts.
Dell declined to release any financial statements, but the company did claim that Dell was the No. 1 storage supplier in the first half of 2014 based on total terabytes sold for internal and external storage, according to industry analyst firm International Data Corporation (IDC) data, and for the second straight quarter Dell was the only major vendor to generate year-over-year growth in both rack and blade servers, according to IDC data.
Dell Software also registered double-digit revenue growth and the company’s PC business just recorded its seventh consecutive quarter of year-over-year (YoY) gains in global share. According to IDC, Dell’s U.S. PC share is now 24 percent, a 3.1 percentage-point increase over last year and that in the last quarter Dell grew PC shipments by nearly 10 percent.
Dell conceded the company is also taking advantage of its status as a private company to aggressively price products in specific target segments where it wants to gain share. In addition, since establishing relationships with distributors, Dell is now being invited into more deals than when it manages relationships with partners directly.
By any measure, Dell claims that Dell is now growing faster than any of its tier one competitors. And given the current level of disruption in the market and latest product announcement, Dell said he doesn’t see that changing anytime soon.