Now private, Dell revels in newfound freedom
By Gabey Goh December 26, 2013
- Free from 90-day revenue reporting cycle, promises bolder moves and offerings
- Key partnerships, products and consolidated channel partner programme
IT was the first conference hosted by a 'new,' privatised Dell.
In October, chief executive officer Michael Dell (pic) completed the US$24.9-billion buyout of the company he founded with technology firm Silver Lake Partners after a high profile battle with billionaire investor Carl Icahn.
Taking to the stage at Dell World, which took place from Dec 11-13 at the Austin Convention Centre in Texas, relief and excitement was palpable from Dell, as he wasted no time in broaching the subject of privatisation in his opening keynote address.
“I feel like I’m part of the world's largest startup! We’re really unleashing the entrepreneurial spirit and creativity and innovation that have always been the hallmarks of Dell [Inc],” he quipped to conference attendees, adding that privatisation has created a renewed sense of excitement about the company.
He also said that sales were up double-digits and that the company is growing “faster than the industry,” with much emphasis placed on the freedom the technology player now enjoys as a privately held entity.
"We are really excited about this, we have the financial strength and capital structure and scale to lead our industry. And now as a private company, we have the freedom to make the bold moves that are necessary,” said Dell.
What can an established technology player accomplish when freed from the shackles of a 90-day earnings report cycle? Everything, if one was to accept the main mood and message coming out of Dell World this year.
Dell Inc’s chief financial officer Brian Gladden echoed that sentiment of freedom when he took to the stage during a press conference, addressing what changes there would be with the 'new' Dell Inc.
“What’s going to change? For many it’s going to be the same, it’s the same strategy we’ve been committed to. What’s different is our capital structure, which will enable us to accelerate our strategy, taking out a lot of the churn and time.
“We can now be longer-term oriented, and less distracted by quarterly rhythms,” he added.
Gladden (pic) was referring to a five-year transformation programme the company has embarked on to shift its focus from being mainly a PC and server vendor into a full-range software, services, storage and devices provider.
He said that the company may take a short-term hit to its bottom-line from the raft of new programmes and measures announced at Dell World, but added that it was able to generate US$22 billion in cash flow over the past five years and that the new debt load would be under US$20 billion, giving the company plenty of room to manoeuvre.
The much-touted bold moves include accelerating its strategy to achieve its mission of being an integrated end-to-end solutions partner and taking a long-term view of innovation.
Firstly, the company plans to increase its investment to expand solution offerings via organic research and development that will have a long-term focus, and seek to collaborate with leading research institutions to bring innovations to market.
A significant announcement as Dell Inc traditionally spends US$1 billion on research and development, about 2% of total sales, annually. A smaller amount compared with Hewlett-Packard, which who spends three times as much, or Cisco which spends five times as much.
Dell Inc will also continue its efforts to boost its technology portfolio via mergers and acquisitions.
In the last five quarters, it has spent US$5 billion on mergers and has paid more than US$13.7 billion on acquisitions, since 2007 when Michael Dell returned as CEO.
The company also announced an expanded commitment to entrepreneurship and innovation with a US$300-million 'Strategic Innovation Venture Fund.'
Managed by Dell Ventures, the company’s strategic investment arm, the fund will invest in early-to-growth-stage companies in emerging technology areas including storage, cloud computing, big data, next-generation data centre, security and mobility.
The company will also seek to enhance and simplify the customer experience and grow its PC, tablets and virtual computing services.
It is clear that Dell, is spiritually taking the company back to its roots as the affordable option in the consumer PC market, and intends to offer that same value proposition to the enterprise market, touting complete and cost-effective solutions.
More partners, consolidated channel programme
The company will also be expanding its sales force and channel relationships to better serve and support customers.
Dell Inc has approximately 140,000 channel partners worldwide, who account for US$16 billion of the company’s nearly US$60 billion annual revenue. In the last four years, it has also increased its number of sales specialists with technical training to a total of 7,000.
To better enable its channel partner ecosystem, Dell has consolidated its channel and a direct sale teams into a single organisation to drive collaborations and deliver expanded profit and coverage opportunity for partners, with the new changes to take effect on Feb 1, 2014.
A 20% compensation accelerator to incentivise the direct sales force to work with channel partners on seven solution areas was also announced, alongside plans to grow channel business above industry average rates in the coming months.
Seeking to quickly recast Dell Inc in a new, more nimble role within the industry, a slew of partnership announcements were also made at Dell World.
With Red Hat, both companies will jointly engineer enterprise-grade, private cloud solutions based on OpenStack to help customers move to and deploy highly scalable cloud computing models. As part of the expanded relationship, Dell Inc is the first company to act as an OEM (original equipment manufactruer) of the Red Hat Enterprise Linux OpenStack Platform.
The company also expanded its worldwide agreement with Accenture to address some of the most pressing technology challenges businesses face today, particularly during business transformation.
In a four-year global go-to-market agreement, the companies will work together to build, implement and manage data centre solutions for mid-market and select enterprise customers which want to drive business innovation while controlling costs and reducing risk.
The agreement will bring together Dell Inc’s end-to-end portfolio of infrastructure, software, and services with Accenture’s capabilities as well as Avanade’s, which was created in 2000 as a joint venture between Accenture and Microsoft.
This agreement augments Dell Inc’s existing cloud capabilities in hardware, software and services, the company claimed.
It also announced that it is expanding the Dell Cloud Partner Programme to include CenturyLink and its new CenturyLink Cloud, giving customers added choice and flexibility in their cloud computing pursuits.
Through the alliance, Dell Inc customers globally now have access to a slate of public cloud services, including Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS), which can be deployed across CenturyLink’s global data centre footprint.
With Dropbox, the company announced a strategic partnership to help commercial customers meet the needs of today’s evolving workplace and employees’ expectations for easy anywhere, anytime access to data.
Dell Inc will be offering Dropbox for Business via its global sales organisation, allowing customers to provide their employees with a secure enterprise file-sharing and collaboration solution, along with their new Dell products.
Next page: Will Dell deliver? Industry analysts weigh in