We have been lucky enough to meet with a number of Dell’s most senior people during the last six months, including Marius Haas, Brian Humphries, Tarkan Maner, Laurent Binnetti, Bill O’Shea and many others. We were always hoping that a meeting with the man himself would happen, and somewhat ahead of schedule I had the pleasure of dinner with Michael Dell last week.
What immediately strikes you is how happy and pleasant he is. The first question he was asked when he came to sit (next to me, thanks to Clodagh) at our table was “What do you do to relax?” To make the point that he didn’t have a special need to, he replied “Well, I don’t have a stressful job.” He was asked a series of questions, which he replied to without much hesitation or worry, about political correctness, Apple, Microsoft and on the potential for Dell in Russia, where he was due to visit next.
Michael talked about the key developments with Dell and how he expects to see VRTX to have a big impact on converged infrastructure; it may be a new category of product, but he can see this being very big very quickly. VRTX is likely to have competition from the usual players, but we can also expect to see an offering from CISCO as well.
Owning a data centre: Dell has pulled back from this completely. Why? There are already plenty of others doing this and more than a third are using Dell so they win anyway.
Dell’s consultancy number being small: $8bn of a $1Trillion market globally – so not even 1%, he recognises that Dell needs partners to win bigger here.
Partners generally: The buyout will bring about investment in partners; they need to be involved to broaden the Dell opportunity and he acknowledged that the partner channel is still in its infancy. He confirmed that better channel engagement is fundamental but that selling direct was ingrained in Dell’s DNA so it is going to take time.
The Dell story
Michael told a story about introducing Dell into the UK in 1987, three years after launch in the US and the second country for Dell. He sat on a panel with Tandem, Acorn and Amstrad (his description of Lord Alan Sugar’s behaviour was funny!) and he felt Dell offered better quality and value. However, all the UK press disagreed and wrote that Dell had no chance. As they had already launched three weeks earlier, he reluctantly decided to carry on and things took off in a big way, leading to similar success in the rest of Europe. He has personally overseen the introduction of Dell into 36 countries.
I had a signed (by me) image (thanks to Alice and Leon) of what Michael Dell’s second book might look like. This was framed and ready to present to Michael, but alas I didn’t get my briefcase past security. Though I did intend to give him this precious thing, I had been warned that there would be no photos and this rather took the sting out of the whole idea. I did suggest that when Dell is 30 years old next year that he should write his second book, as it would 15 years exactly after his first, and that I had a good idea for title for it. As the first was titled Direct from Dell, I suggested his next should be “Indirect from Dell”. He disagreed as he preferred to use the term “partnering” and everyone on the table agreed with this – damn! He did ask if I would be interested in writing the foreword – I said yes…for a fee!
Getting the partners’ perspectives
He asked what we would like to see Dell doing from a product and service viewpoint. I told him that there seemed to be no obvious gaps in Dell’s portfolio, integrating all the new products needed to happen quickly and smoothly. Mostly it is Dell’s approach that needs to change, engaging more with channel partners who get the challenge that Dell faces when it comes to being treated as a strategic option by many IT professionals. I think that Dell will deal with this challenge over time, though when I asked what we should do in the short-term to position Dell more strategically, Michaels’ point was that it was “just” perception and that Dell has a technology stack that can compete with anyone and that it scales significantly. He’s right, but the perception is a big problem and the “PC maker” will have to shrug off its legacy image if it’s to become a real force outside the mass commodity market.
There was perhaps another 15 or so partners there on the night. Many I spoke to from hardware.com, Upgrade Options, Kelway, Sofcat and others do things differently from us at FiT. They have a model that works for them; I believe our way works best and certainly works well for us.
On Dell the company and what the plans are, he of course talked about the leveraged buyout. He had addressed everyone on this earlier and he seems very confident that it will happen. Michael will have 51% of the newly formed private company and other Dell people comment on his energy and enthusiasm to make it happen. It’s a significant sized deal; some $24.4bn is involved, making this the second largest leveraged buyout since 2007. It’s not a done deal of course and the next two months will be very interesting. I haven’t met anyone within Dell that doesn’t hope that Michael’s buyout is a success; we wish Michael and everyone at Dell the very best of luck.
Author: Andy Sellers, Managing Director
Andy has worked in the IT industry for more than 20 years. Much of that time has been spent working with leading workflow and document management technologies such as Staffware (now Tibco), Lotus Notes, Documentum and Autonomy. Andy has spent much of his career running or helping other small innovative solutions businesses. He has a passion for go to market strategy, has instigated two management buyouts and been involved in raising funds, including an IPO. Outside work Andy is passionate about films and music and loves watching and listening with his wife Andrea, and children Max and Olivia.