Dell EMC: Laughing All The Way To The Bank

LAS VEGAS: The second Dell EMC World is over, a variety of products and services have been unveiled, 13,500 customers, partners and staff have gone home — including me, so ignore the address above — and now comes the $60-billion-plus question, what comes next? For the ‘nattering nabobs of negativism’ like HPE’s Meg Whitman, the company is struggling to stay afloat with $50 billion in debt, it’s mired in hardware-based, commodity hell and is quickly becoming obsolete as everything moves to the cloud and IT as a Service.

The reality is far different: Dell is a leader in 15 of Gartner’s Magic Quadrants; it is the largest enterprise storage vendor; it is the third largest PC vendor, but unlike many of its competitors, is growing market share and increasing ASPs. All told, the combined entity — including Dell Technologies, Dell EMC, RSA, , and — is bringing in $75 billion a year, which is not too shabby. “It’s all about show me the money,” said Forrester analyst Glenn O’Donnell, and the company is “laughing all the way to the bank,” posting solid numbers as it closes in on its first year following the EMC acquisition.

According to a recent interview with David Goulden, president of Dell EMC, the company’s focus is a long-term game, looking three to five years in the future, where they see an even more consolidated industry than today and where they are uniquely positioned as an essential infrastructure, broad-based platform. Organizations are looking to have fewer information technology suppliers, and they want the ones they retain to be strategic and more capable, he pointed out.

DEW17 was all about transformation — digital, IT, workforce and security — and I reached out to a number of analysts and asked them for their views on where Dell EMC is in its own transformation, and what it should focus on for the immediate future. Their responses follow:

, , the Enderle Group: The IT market is hell bent on transformation at the moment and thanks to the promise of lower taxes and a huge ramp in valuations firms are investing in capital projects at an impressive rate so the opportunity, to quote President Trump, is HUGE! Their performance is good, the merger set them back far less than most expected largely because the execution literally set the bar for efforts like this and their old VCE unit was on the forefront as the most successful converged and hyper-converged provider. And it is these concepts that appear to be having the biggest impact on firms that truly want to change. Jaguar/Land Rover was the poster child for this at the show effectively articulating how making the transformative move to a hyper-converged solution massively improved quality and production in the green field factories they installed it in.

Charles King, President and Principal Analyst, Pund-IT: On a scale of 1 to 10, Dell’s transformation progress rates an 8 though it would likely be higher if the company’s financial performance were more transparent. Since the EMC acquisition was completed last September, the company has maintained or grown its leadership in critical markets. It also looks likely to expand its position in dynamic markets, like banking/finance, healthcare, education and public sector, and areas, including hyperconverged infrastructure (HCI), virtual desktop infrastructures (VDI), original equipment manufacturing (OEM) and the Internet of Things (IoT).

, Principal Research Contributor, Wikibon: Dell EMC is doing great in the converged and hyperconverged infrastructure market. Dell EMC has the broadest set of offerings (ScaleIO + VMware vSAN + OEMed Nutanix) options in multiple flavors (fully baked VxRail and VxRack, ready nodes, software-only options), they are leading the market and being sure that everything can run on Dell EMC servers. I would agree that the messaging is very consistent from October. recently published an update to our True Private Cloud report: Dell EMC is top of the chart (CLICK HERE for Wikibon’s full coverage of DEW17).

Mark Peters, , Enterprise Strategy Group: I DO think that Dell EMC has done a good job on itself….not so much of transformation per se, but more of integration and streamlining. I suspect there’s a bit more to go but they seem to me to have turned the corner on internal “up-beat-edness”.

As far as their ability to drive transformation for and with its customers then the prospects are good – not because it has come up with the phrase (like ‘prime the pump’ I don’t think it was just invented at DEW!) but because of its ability to coalesce around any given message and approach. Dell EMC will tie everything to “transformation” and will be successful at that by sheer dint of will (well, plus a few million bucks!). (For ESG’s full coverage of DEW17, CLICK HERE).

Enderle: What should be Dell EMC’s primary focus for the next 12 months? To continue to optimize the company. Often when a merger is physically done the firm believes it is complete and steps away from the process (reminiscent of the unfortunate “Mission Complete” event after the initial Iraq war win) but entropy will drift in and synergy and efficiency will degrade if efforts aren’t focused on continued optimization.  If they want to get the full benefit of the merger they need to continue to optimize the result until the firm is working as a single unit and then put in place metrics to make sure this optimization process is institutionalized so that not only are the gains sustained but so that improvements in one part of the firm continue to benefit the whole.

King: Three things: 1) Keep doing what it does well, including developing innovative client devices and business solutions, 2) Further integrate and leverage the assets it acquired in the EMC deal and 3) Continue to increase the pressure on key competitors, particularly HP/HPE. In the case of the third point, that could be accomplished both by creating compelling new products and services, and through strategies, like the new “as a service” offerings for HCI and PCs that were announced at Dell EMC World.

Miniman: The merging of cultures will still take some time to bake — lots of changes have happened, and will continue to happen. Transformation is a big word — the current company is a mix of Dell and EMC pieces, let’s see what it looks like a year from now. Customers care about their channel (the updated plan rolled out in February was mostly well received by partners), and support. I don’t see any dramatic shift in customer sentiment.

Peters: For the next 12 months I think Dell EMC’s focus should be on execution – put another way it’s on keeping the plates spinning….not only because it is that that pays the bills, but because it is that (which includes innovation…some new plates so to speak) that will publicly convey the impression (which may be true, but that’s not the point) of a successful integration. Basically it has to prove that (as I said in one of my blogs) it is the exception that proves the rule when it comes to mega-mergers

And Now A Word From The Peanut Gallery

From the outside, it looks like Dell Technologies and Dell EMC are doing all the right things, which given Michael Dell’s track record, should come as no surprise. For the most part, the customers and partners in attendance at DEW17 were excited and involved, which are also very positive. Now all the company has to do is continue to innovate while increasing revenues and margins and decreasing debt.

DISCLAIMER: Dell EMC looked after airfare and hotel; and some of the companies mentioned in this article are in my investment portfolio.

Author: Steve Wexler

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