Dell: Big Buyers Are Big Winners

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Integrated solutions and the cloud

Dell’s own acquisitions indicate that the company is moving in two directions. The first is towards providing a consolidated data centre solution, to compete with Cisco’s Unified Computing System (UCS) and HP’s BladeSystem Matrix. The other is towards software, services and the cloud.

“As customers move to deal with complexity, one of the things that they’re doing is looking for suppliers to do a level of integration that they historically did themselves,” explained Johnson. “If you put our unified system in place it can communicate within your enterprise across anybody’s network, it can work seamlessly with anybody else’s services, so you can import and export information across your infrastructure because it’s all open.

“That’s not true with the other two large competitors that are in this space,” he added. “They have elements that they say will work better if they’re homogeneous.”

Johnson said that, while Dell has made acquisitions in the software space, it does not want to just be in software or just be in services. Customers are looking for integrated solutions, he said, like the company’s Virtual Integrated System (VIS) offering.

“VIS is a unified piece of hardware that’s got in it storage, networking and compute, which used to be in three different boxes. But it’s not just the hardware that’s been integrated, it’s all the software that’s in there too,” he said. “That’s the kind of stuff customers want today.”

VIS can also act as staging post between on-premise infrastructures and the cloud, according to Johnson. While Dell does build its own public cloud infrastructures, based on VMware, Microsoft Azure and OpenStack technology, Johnson said the most valuable service Dell offers is helping customers migrate to the cloud.

“If you have a lot of vertical domain expertise, there’s a lot of benchmarking you can do, there’s a lot of value-add selling you can do,” he said. “It’s really these two ends – helping customers migrate to the cloud and then what do you do once they’re in the cloud – that are the most interesting parts, and that’s how you differentiate.”

Retaining a strong baseline

One of Dell’s main competitors, HP, recently announced plans to spin off its PC business and buy UK software firm Autonomy. The news was widely interpreted as a move to transform the longtime hardware maker into a software and services company for the 21st century – and proved so unpopular it led to the downfall of HP CEO Leo Apotheker, while the spin-off of PCs is being reconsidered.

Dell’s chief executive Michael Dell has also been notoriously critical of the move – and eWEEK Europe asked Johnson if there was any sense in dumping hardware in favour of software and cloud services.

“Dell is firmly entrenched in its history, and yet we’re reaching over off of that strong baseline to help our customers in the new world as well,” said Johnson. “That’s a strong base of capability. It gives us tremendous purchasing powers, a great supply chain, a great base off of which to do financing, a great services base to distribute service people around the globe to be local to our customers.

“So that scale enables everything from the sales force to our service capability, and it would be dramatically impacted if we didn’t have that infrastructure to build everything on,” he said.

While Dell is keen to make acquisitions to fill the gaps in its offerings, the company is also working to consolidate its core business through internal investments. The company currently employs 1,600 data centre specialists, 2,400 engineers working on enterprise solutions, and 1,000 security consultants. (Dell bought security firm SecureWorks earlier this year). The company also has eight research and development locations around the world.

According to Johnson, the company will continue to build on these core capabilities, while expanding its reach through acquisitions.

“The beauty of the IT industry is it grows faster than any other industry, and it innovates at a rate much faster than any other industry,” he said. “So you have to ask yourself the question, can I do everything organically, at the rate and pace that these things are evolving? And the answer is you can’t. You have to be open and receptive to doing several acquisitions and knowing how to do them and do them well.”