Sunday 17 December 2017

Dell still holding all the cards as he predicts bigger things for tech giant

Despite presiding over a mega-merger and seeing constant innovation, the PCs he made his name with are still a vital part of Michael Dell's future, he tells Adrian Weckler

Michael Dell, seen here on stage with magician David Blaine, gets ready to pull off his next trick following Dell’s multi-billion dollar merger with EMC
Michael Dell, seen here on stage with magician David Blaine, gets ready to pull off his next trick following Dell’s multi-billion dollar merger with EMC
Adrian Weckler

Adrian Weckler

Michael Dell still has a bit of a grá for Limerick.

"I remember that time well," he says when asked about the company's move into Ireland. "It was 1990. Buddy Griffin, what a guy."

Griffin was the Irishman who set up and ran what became one of the tech industry's model manufacturing plants. The Limerick facility's 'just in time' supply chain system went on to influence everyone from future Chinese electronics giants to Apple's Tim Cook in how to organise a manufacturing process efficiently and profitably.

Eventually the IT industry moved on and Dell changed the nature of its relationship with Ireland. However, Michael Dell still says that Ireland is one of the company's more important bases and that the corporation's recent $60bn mega-merger with EMC, which has traditionally has a large presence in Cork, has gone well.

"We have around 6,000 people there now," he says. "I love Ireland."

Dell's history here hasn't been plane sailing. In 2009, Limerick and the wider Midwest region was left reeling when the company cut 1,900 from its flagship European factory in Raheen, in the city.

The manufacturing facility employed 5,000 at its peak. Manufacturing is now gone, but Dell remains a major employer in Limerick.

Dell is reminiscing on this after a day addressing 13,000 delegates to his company's annual Dell EMC World.

The event this week has seen a raft of product launches, including the company's 14th generation of PowerEdge servers, new Flash memory systems and a new PC-as-a-service option for business customers.

It has also seen the combined Dell EMC group's most senior executives talk quite openly about the company's strategy and, to a limited extent, its continued plans for integrating the two huge tech companies into one seamless unit.

In Ireland, Dell EMC has large facilities in Dublin, Cork and Limerick. There have been questions as to whether the merged company would move facilities from Cork or Limerick to Dublin or vice versa.

One of the company's most senior global executives, the services and IT president Howard Elias, says that there are no immediate plans to do this.

"No, we're pretty much set," he says. "I mean, I think we're going to go through some consolidation over a period of time of sites and facilities. Built there's nothing earmarked at this point. There'll be a bit of movement. But the levels of investment there will be similar to, if not greater, over time to what they have been before."

Elias said that the legacy units of Dell and EMC continue to be integrated relatively smoothly.

"It has come together nicely," he says. "The teams are well aligned and it's all gone very well. There has been no change in the footprint. If anything I think we're going to get bigger."

As a mega-corporation, Dell EMC has its finger in a lot of IT infrastructure businesses. Storage, cloud, virtualisation and security are some of the areas it is focusing a lot of its energy on.

But one of the more universal questions it faces is where the company stands in relation to the future of the PC business among a gradual decline in PC sales across the industry.

Michael Dell still refers to desktops and laptops as "core" to Dell.

"What Dell Technologies does is far beyond just the PC," he says. "But the PC is still very important to our customers and to us. Don't forget that this is still a $170bn market. For us, the average selling price for PCs has been going up, not down. So too have the revenues. And our share in the PC business is going up as well for the last 17 quarters. And even though we're in the middle of the 18th quarter, I can tell you that yes, our share will rise again. So we've invested in innovation, in research and development. Clearly there's some market consolidation. But we're number one in revenue for PCs and number one for profits too. We're not number one in units sold, but the units that we sell are more valuable than those sold by the other guys."

Dell's relative candour in discussing his company's plans and strategies is partially derived from the confidence of not having to answer to anyone.

Since the company returned to private ownership in 2014, it has been able to focus on tactics that aren't second-guessed every three months by hedge-fund managers that own large blocks of shares in the firm.

Dell says that it's an "advantageous" position that lets him and other executives think about longer-term outcomes for its product lines rather than focusing on crowd-pleasing statements aimed purely for quarterly conference calls.

Currently, the company is launching new pay-as-you-go services aimed at businesses that find technology services too expensive. It has also announced new cloud services for its customers to streamline their cloud storage plans.

Dell says that IT infrastructure is proving to be too expensive for some companies and that customers have been asking for a pay-as-you-use system.

This strategy will pit Dell more aggressively in its cloud services against Amazon, Microsoft and Google, all of which are active in the sector.

Cloud services are among the IT industry's most profitable segments, with Amazon's most recent set of accounts showing its AWS division to be the standout performer.

Microsoft has also repositioned itself in the last year as a cloud services provider.

Dell's new PC-as-a-service system will cover hardware, software and other facets of owning and running corporate PCs.

The tech giant also made a number of product announcements at the event, including the launch of a new PowerEdge server.

The new 14th-generation servers are designed to be embedded in storage and data centre appliances, hyper-converged appliances and racks, ready nodes, bundles and other Dell EMC systems.

"The next transition in enterprise architecture will increasingly be built on flexible hyper-converged infrastructures," said Michelle Bailey, chief research officer with analyst firm 451 Research.

"They'll be built on those that simplify procurement and ongoing operations with a single supplier, lowering risks of implementation while helping speed time to delivery. Dell EMC's new generation servers are geared toward addressing many of these issues with intelligent management and automation capabilities."

Meanwhile, Dell says that 5G mobile networks will bring about new markets for computers in ways yet to be seen.

"There's something coming just around the corner which is this fifth generation mobile network," he says.

"This will connect hundreds of billions of devices together and create a new kind of distributed computing. That will be kind of amazing. That's going to create enormous amounts of data and not all of it will sit in one place. You'll have an even more distributed computing environment. So if you look across what we regard as client computing, the business is now different. But the PC is the parent of internet-of-things devices."

Asked what he would advise startups and young companies, Dell said that people need to take more risks.

"My observation is that there are too many people who are afraid to fail and, as a result, they don't reach their potential," he said. "I've taken risks in my life and I needed to. So take risks."

Dell said that his role as an entrepreneur was against the wishes of his family.

"I was supposed to be a doctor," he said. "My mother and father were doctors. So I'm kind of the black sheep of the family."

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