Reinventing Dell: Home Alone And OEM ‘R Us

Now that the struggling PC giant that Michael Dell built is private, where does the world’s biggest start-up go? Clearly the commodity hardware business – PCs and servers – is not the answer, but changing into a mini-IBM/HP/Oracle enterprise powerhouse won’t happen overnight.

In a recent interview Michael Dell made it clear that the PC era is far from over. “The obituary of the PC has been written 25 times. The term ‘post-PC era’ was first coined in 1999 by IBM. At the time, there were about 120 million PCs sold per year. Now there are 450 million PCs sold per year. So the post-PC era has been better for the PC than the pre post-PC era,” he said. Rather than ditch PCs, the company wants to expand its presence in the data center and sell more products, software and services.

The company is split into four primary businesses – end user computing, enterprise solutions, software and services – that address the consumer, SMB and large enterprise markets. According to Dell’s last reported numbers as a public company, the enterprise solutions group business grew 8% year over year, with revenue of $3.3 billion in the second fiscal quarter, ended Aug. 2; services grew 2% to $2.1 billion; software reported $310 million in revenue and an operating loss of $62 million, a 20.1% drop YoY, while end user computing reported revenue of $9.1 billion, a 5% drop.

Over the last few months it’s made a number of announcements spanning everything from networking, i.e.  VMware NSX support, and storage, i.e. all-flash Compellent, to mobility, i.e. embedded Windows 8.1, and security, i.e. ChangeAuditor 6.0. More recently Dell has announced it wants more of its employees working from home, and a bigger chunk of the OEM business.

While other struggling companies like Yahoo and HP are attempting to hold back the waves of change with all-hands-on-deck (Titanic?) mandates to return to the cubicle jungle, Dell is going the other way. The company wants to increase the number of employees working outside the office from 20% to 50% by 2014.

Dell spokeswoman Colleen Ryan stressed that working remotely “remains a choice and for many of us, a perk. We’re seeing great productivity and getting great feedback from team members in locations where we’ve rolled this out.”

As for the OEM business, it’s been a contributor to the company’s bottom line for the last 15 years, but only became a global business unit a couple of years ago, said Joyce Mullen, VP and GM of Dell OEM Sales Solutions. “The reason we run OEM as separate business overlay is because our customers operate differently.”

The company said it has become the largest tier-one provider of solutions for OEMs worldwide – helping more than 2,000 customers in 40 vertical markets – with more than 500 dedicated employees. It delivers standards-based solutions built to order and customized for the specific needs of any industry, from gas pumps, ATMs, slot machines, and health monitors to educational tools.

Recently the OEM group rolled out a preconfigured video surveillance system called SecurePOD. It illustrates the collaboration with other companies (in this case, Intel, Axis Communications, Ingram Micro and Milestone Systems) that is at the heart of the unit, said Mullen. “We work in partnership with customers to create products.” SecurePOD is built upon Dell PowerEdge servers customized by the OEM unit and are powered by Intel’s Xeon chips, and integrates software and camera solutions from Axis, Ingram Micro and Milestone.

One area of growing interest – and opportunity – is the Internet of Things (IoT), and sensors. “We believe this market is over $100 billion and growing really fast,” said Mullen. “For Dell it’s a very real opportunity… how to build the gateways, aggregation… infrastructure to support that endpoint.” The company is already working with customers like GE, Emerson and Honeywell, but it’s still early days for the sensor business, she said.

Existing outside, but collaborating with the company’s four primary business units, makes for an interesting role for the OEM unit. “When you think about OEM, it’s not fast to revenue,” said Mullen. “It’s a different kind of sales cycle… (but) the benefit is once you’re designed in, you learn a lot about the customer. It’s a great business to be in as long as you continue to earn the business.”


Author: Steve Wexler

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