LAS VEGAS: The second Dell EMC World, coming just 6 months after the inaugural event, and a short 8 months after the historic $60 billion acquisition of EMC, offered the typical mix of new and old — new products and services, and the old (in this case falling somewhere between 6-8 months marination) — the combined PC, server and storage powerhouse’s continuing focus on digital transformation. DT is another cute phrase beloved of marketers and headline writers, but it’s also one that will change everything, and whether we’re talking about business, IT, workforce or security transformation, Dell wants to be a major part of it all.
“I say we’re going to be the trusted provider of essential infrastructure for the next industrial revolution,” said Michael Dell in his keynote last October. He reinforced that promise this week before 13,500 customers, partners and staff, the biggest event in the two companies’ history. From public-cloud bashing — it can be twice as expensive as on-prem — to new pricing options that change IT buying from CapEx to OpEx with the option to walk away after 12 months, Dell was his usual upbeat self, outlining the company’s string of successes in its multiple markets, while repeating their commitment to transformation.
“Making digital transformation happen, making it real is why we created Dell EMC,” he said. “Dell Technologies is a force multiplier to digital transformation.” And the company’s value proposition — “number one in everything, all in one place” — resonates with their customers, he added.
The company holds third place in PC sales, behind HP and Lenovo, respectively, but it grew 6.2% year-over-year, and has been increasing its marketshare for 17 straight quarters, while increasing its average selling price, said Dell. It also maintained its hold on second place in servers for the fourth quarter, with 17.6% of vendor revenue, while revenue increased 0.1% YoY to $2.6 billion. Dell was the clear leader in converged systems with 44.9% share of the market segment, and external enterprise storage, accounting for 32.9% of worldwide revenues.
Dell made a number of announcements this week (which will be covered in subsequent articles), including Hyper-Converged Infrastructure advancements and cloud-like consumption models for IT from the desktop to the datacenter, the 14th generation of PowerEdge servers, open networking products, appliance and cloud data protection additions, all-flash storage systems, Software-Defined Storage and Internet of Things news. However a week prior to the event the company made a sizeable commitment to Microsoft’s Azure cloud offering. It announced Dell EMC Cloud for Microsoft Azure Stack, a turnkey, hybrid cloud platform — due out later this year — that offers ‘a simple and fast path for implementing and sustaining a hybrid cloud’ based on Microsoft Azure Stack.
In addition to strengthening its play in the public/hybrid cloud market, this also supports the company’s DT focus, Peter Cutts, senior vice president and general manager, Hybrid Cloud Platforms, Dell EMC, told IT Trends & Analysis. “We do the integration… and the customer focuses on their business and transforming their digital experiences.”
According to an IDC study, (who also ranked Dell as the leader in worldwide cloud IT infrastructure market for revenue and market share for 2016), most large organizations (79.7%) have a hybrid cloud strategy and 51.4% already use both public and private cloud. Azure is a distant second to Amazon Web Services (AWS), but it’s growing quickly and represents a significant opportunity for Dell, said Cutt: “66% of all enterprise servers run on Microsoft”.
DT and the rest of the transformation posse are not just center-stage fodder for Dell EMC World 2017: worldwide spending on DT technologies will be more than $1.2 trillion in 2017, an increase of 17.8% over 2016, and spending growth will be consistent through 2020, reaching $2.0 trillion, according to IDC. That’s in sharp contrast to overall IT spending, which is expected to grow just 3.5%, albeit to nearly $2.4 trillion in 2017 and nearly $2.65 trillion in 2020.
A new Gartner study reports 42% of CEOs have begun digital business transformation, with IT-related changes the second most important business priority. “IT-related priorities, cited by 31% of CEOs, have never been this high in the history of the CEO survey,” said Mark Raskino, vice president and Gartner Fellow. “Almost twice as many CEOs are intent on building up in-house technology and digital capabilities as those plan on outsourcing it (57% and 29%, respectively).
The benefits of — and possibly lethal repercussions for not — jumping on the DT bandwagon are brutally clear: in addition to significant business performance improvements in speed to market, customer satisfaction and new business revenue, companies going digital can expect to increase annual revenues by 2.9% and reduce costs 3.6%. That’s just the average. For ‘first movers who combine high investment levels with advanced digitization’, are “gaining a nearly insurmountable advantage over competitors”, and ‘are far more likely to be forecasting both revenue gains of more than 30% and cost reduction of more than 30% at the same time.’ Businesses would do almost anything to achieve the average gains offered by digital transformation. The small segment that goes all-in are creating what I call an ‘extinction-level event’ where the business reality will be ‘go digital or die’.
Wrapping itself in DT is a good move by Dell, but the company still has a lot of work to do. At almost $80 billion in revenue, IBM is still the biggest enterprise IT vendor, but it has been doing a lot of navel-gazing recently, and third-place HPE has been spin-merging itself all over the place and appears to face an uphill battle to regain credibility. Dell saddled itself with $50 billion in debt picking up EMC, and with the bulk of its revenues coming from hardware, it also faces an uphill battle to continue to innovate while surviving race-to-the-bottom commodity pricing. It looks like it’s doing a solid job so far, but transforming itself into a DT swan from a commodity ugly duck remains a work in progress.
Speaking of ugly ducklings turning into swans, I literally almost ran over Joe Tucci, the former head of EMC, while racing down the hall to a meeting. I barely avoided a head-on collision with the co-architect of Dell EMC, but regret that I didn’t get the chance to ask him how he felt about how everything turned out and how he was doing.
DISCLAIMER: Dell EMC looked after airfare and hotel; and some of the companies mentioned in this article are in my investment portfolio.