Sunday 25 June 2017

Michael Dell's head is in the cloud

Michael Dell, founder and chief executive officer of Dell Inc., waves while arriving on stage during the 2015 Dell World Conference in Austin, Texas, U.S., on Wednesday, Oct. 21, 2015. Dell said trimming debt for the massive deal to combine his namesake company with EMC Corp. should progress relatively quickly in the next couple of years. Photographer: Matthew Busch/Bloomberg
Michael Dell, founder and chief executive officer of Dell Inc., waves while arriving on stage during the 2015 Dell World Conference in Austin, Texas, U.S., on Wednesday, Oct. 21, 2015. Dell said trimming debt for the massive deal to combine his namesake company with EMC Corp. should progress relatively quickly in the next couple of years. Photographer: Matthew Busch/Bloomberg

Gavin McLoughin

A friend of mine used to work as a teacher and one morning he plonked a junior infant in front of a desktop computer.

The child ignored the keyboard and instead began jabbing the icons on the screen with his finger. When nothing happened, he turned to my friend and said the machine was broken.

That story encapsulates the turmoil going on in the computer manufacturing industry. PCs and even laptops look to be on the way out as punters migrate towards smartphones.

The way people use the internet now creates vast amounts of information that's housed on servers in massive sheds of the kind that are now springing up all over this country.

It's all about the cloud - and that's where Michael Dell's head is.

The amiable Texan - who began his multi-billion business in his college dorm room - has agreed a deal to buy data storage giant EMC for $67bn as he looks to right-size his company for the challenge ahead.

It's a massive bet, the biggest technology merger ever, and it's really put the wind up Mr Dell's rival Hewlett Packard (HP).

While the Texan is adding scale, HP is splitting its business in two - one arm focusing on PCs and printers, the other on the brave new world.

Here's the remarkable statement it issued after the mega-merger was announced.

"This is a real opportunity for HP. Two of our largest competitors are attempting a highly distracting, multi-year merger, just as we are launching two new, focused companies.

"The massive debt burden Dell and EMC are taking on undoubtedly means that they will have to radically reduce R&D, and integration inevitably will create disruption as they rationalise product portfolios, channel programs, and leadership.

"While Dell and EMC are sorting out their future, Hewlett Packard Enterprise and HP Inc will be working to take share and advance our technology leadership in key areas like converged infrastructure, private cloud, all-flash storage, personal systems and printing."

Mr Dell seems like the type who'd probably have a chuckle at that. My colleague Adrian Weckler bumped into him at a conference in Texas earlier this week and found Mr Dell a laid-back sort.

But staff at Dell and EMC probably won't be so laid-back at the moment.

Dell and EMC are among the biggest employers in this country - with over 5,000 staff here between them.

When the deal was announced there was the usual talk of how coming together would create lots of opportunities for "synergies", a term that usually means that some people, somewhere, are going to be collecting a P45.

But Mr Dell - as one would expect - was upbeat when Adrian asked him about Ireland.

"We'll all be one big happy family there," he said, adding that he was coming over next month to have a look around Dell's facilities here.

"We're not actually going to move a whole lot of people around," he said on a recent conference call, adding that Dell has "great teams" at many sites in the United States and around the world.

"This is the way global companies operate today and this business is going to get a whole lot larger as we close the transaction," he said. EMC boss Joe Tucci said nothing that happens between now and the deal being closed next year "will have anything to do with this combination".

He said it would not be until the middle of next year that any impact on jobs would emerge.

Furthermore, Mr Dell's top Irish lieutenant Aongus Hegarty - the company's president for Europe, the Middle East and Africa - said the company would proceed with plans to hire more staff here.

"We're hiring 500 additional sales people both in Dublin and out in the field," he said. "These are investments for the medium to long term," he said.

For the Irish, it looks like there's nothing to do but wait and see.

Irish Independent

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