Dell Is Done? Just a Little Premature
Last week PandoDaily ran a piece by Farhad Manjoo which concluded that Dell is a company on a rapid downward spiral to oblivion. I’ve had a little bit to do with Dell over the years (see disclosure) and have written about them before but haven’t really had any inside view other than a few discussion with their ex SVP marketing Andy Lark, some chats with Barton George who spearheads their Project Sputnik initiative, and some thoughts around their OpenStack strategy. So this counter is very much from the outside looking in.
The original article is, I believe, flawed from the outset, in that it characterizes Dell as a “large American personal computer company that has no conceivable way of combating an existential threat to its business." This classification would be fine coming from a middle-American soccer Mom. After all, it's what 90 percent of the population sees from Dell. But looking more closely, the reality is very different.
Dell has so many non-PC initiatives that give me lots of hope for its future. The failings of looking at them merely through the PC lens were summed up by one commenter perfectly who suggested that being known for one thing, doesn't mean that other parts of the business don't exist.
It is important to not focus on the fact that Dell has been blindsided by the rise of the iPad and “situational computing” (my term for the modern trend of computing being very situationally contextual – across smart phones, tablets, laptops, ultrabooks, and other less “hard” pieces of hardware). It fails to understand that while hardware is indeed the delivery device for technology, it is not the only part of the puzzle – this simplistic view ignores content, infrastructure, new software offerings, and service platforms that are all still valid business models in the post-PC era.
It’s a mistake that all too often gets made by writers that focus on consumer tech. When you’re completely blinded by the latest iThing, it’s hard to look deeply into where the dollars revolve in enterprise – while services, storage, and integration might be boring, they’re what provide the bread and butter to most tech companies.
So… if the analysis of Dell as a pure PC company in a death spiral is wrong, where do the opportunities lie for the company I this “post PC” era?
Tech writers may not realize it, but the fact that they can see their calendar schedules on their iPhones, iPads, and Macbook Pros is all thanks to the cloud – that ephemeral and oft-maligned move to doing everything on the Web. The very fact that Apple, Microsoft, Amazon and a host of other vendors are pouring billions of dollars into building massive scale cloud data centers is testimony to their belief that tech, both consumer and enterprise, will be delivered via the cloud. That then opens a host of opportunities for companies.
There will be those who provide hardware, cloud operating systems, systems management software, and other services to the public cloud vendors. There will be those who offer similar services to enterprise. And guess what? Dell is spending a lot of time working in this area. It’s a part of the OpenStack foundation, an industry consortium that has created, and continues to develop, the OpenStack cloud computing operating system. Dell has in fact released to the wild an OpenStack powered cloud solution that leverages OpenStack, and delivers it with some tailored hardware and (most importantly) a bunch of consulting services for design, deployment, and service of cloud infrastructure.
While the cloud market is nascent and Dell may well get it wrong and not be able to leverage its investment in the cloud, given the massive scale of cloud investment, it seems a little careless to not mention their cloud forays when talking about Dell’s prospects.
Most years I make the trek to Broomfield, Col. to take part in the amazing Glue conference. Glue is an event that explores the “space between” – focused on looking at the Web application integration problem space. Its very existence is a hat tip to the fact that down on the ground, where Mom and Pop businesses are trying and juggle their busy-ness, it’s still way too hard to tie together discrete services and applications. It’s an area I spend lots of time talking about with businesses that haven’t got either the resource or the scale to build their own integrated solutions. While many would laud the API as delivering the end of integration pain, it’s clearly much more complex than that.
A number of vendors are trying to solve the integration problem – companies like CastIron, like SnapLogic and, yes, like Boomi, an application integration vendor that Dell acquired a couple of years ago. Since that time Dell has been tailoring packaged software that leverages the economies of scale it enjoys alongside some tight integrations that Boomi brings to the table.
I’ve written about this initiative of delivering SMB packaged software before – essentially Dell buys software in bulk from companies like Salesforce, Pardot, EchoSign, and others and ties them together with pre-built application integrations from Boomi. It then offer specialized vertical offerings to customers, all invoiced centrally (kind of like an appstore in the consumer world).
Another interesting space to watch is that of open source. The theory goes that we live in a time of incredibly fast innovation in technology. Further, the theory goes that open source helps innovation to occur by lowering the costs involved in experimenting. In comments on the article in question, people contend that much of Dell’s peril comes from the fact that it tightly tied itself to Microsoft and, hence, a closed and proprietary way of doing technology. While Dell and Microsoft have traditionally been close friends and allies, there is much going on within Dell that suggests Dell sees a future that, at least in part, is enabled by embracing open source, and commercializing around it.
Some specific examples include, as I’ve mentioned before, the fact Dell has invested in OpenStack and is building out a product and service business based on the cloud operating system. An entire business opportunity which is independent, at least to some extent, on hardware sales
Witness also that Dell has released its Project Sputnik, a developer focused solution that includes a laptop running the open source operating system Ubuntu. Sputnik is also tied in with developer service GitHub allowing the project to extend beyond simply a shiny laptop for developers. As I suggested in a previous post, as developer tools like GitHub start to extend beyond being simply about code repositories, and move further into the space of application deployment, I can imagine Dell offering a stronger developer product mix.
At the moment there is a distinction between code repository solutions and PaaS solutions but vendors like CollabNet are blurring these lines. Indeed Dell already has their Crowbar open source product – designed to deploy OpenStack. It also has add-ons that can support other, higher-level tools such as CloudFoundry and Zenoss – I wouldn't be surprised to see an acquisition or extension in this general area to really continue the story to developers.
Dell is reinventing itself pretty fast for such a large company – while the general public only sees hardware, and hence much of the reinvention is invisible to the world, it is moving away from low margin commoditized business lines and instead toward an area that traditionally involves higher margins. Yes, we are entering the post-PC era, but to write Dell off simply because its traditional business has been in PC hardware would be short sighted and very premature.