Michael Dell has always had the foresight to skate where the puck is going. Year after year, the IT leader has discovered ways to reinvent the company he founded in 1984 inside his dorm room at the University of Texas in Austin.
Dell has made some of the most successful IT bets in history, turning this once-PC-only company into a US$92 billion powerhouse that is the worldwide leader in hyperconverged infrastructure, storage, servers and virtualization. However, Dell has never been more excited about the future of his company as he looks at the immense opportunities ahead around 5G, edge computing and customers seeking a single vendor like Dell Technologies that can support all of their IT needs.
In an interview with CRN US in mid-March as the full impact of the coronavirus was still playing out, Dell discussed the work-from-home movement and broke down his plans around R&D spending, making acquisitions and winning more market share in the networking space.
In terms of the IT impact of coronavirus, have you ever seen something quite like this?
Having done this for 35 years or so, I’ve seen a lot of things. There’s been nothing really like this. So the whole work-from-home movement is something our customers need a lot of help with. We are actively helping our customers and partners with solutions, not just products. Because it’s not just as simple as, ‘OK, here’s your computer, go work from home.’ There’s a lot more involved in how do you get teams to be collaborative, be productive, share information and re-create the incidental communications and collaboration that occurs when people are physically together. Customers and partners need us more than ever.
Turning to the Dell Technologies business more specifically, how do you expect to significantly grow market share?
If you look at the innovation that we’re driving and the capabilities that we have, we can go win more market share. The portfolio is super compelling. We are No. 1 in many areas and we’re all in one place. Some important areas: We’re No. 1 in public and private cloud IT infrastructure. No. 1 in external enterprise storage. No. 1 in software storage. No. 1 in all-ﬂ ash arrays. No. 1 in hyperconverged. No. 1 in server units and server revenue. No. 1 in clients. Those are just some examples. There’s actually about 20 of those. You look back and say, ‘What’s happened in the last few years?’ We’ve had seven consecutive years of gaining share in the client business. I feel pretty conﬁdent we’ll have another one of those this year. Likewise in servers, we gained 590 basis points in the last three years. We’ve maintained No. 1 in server revenues for the last seven quarters in the world. We gained over 300 basis points in storage share since 2017. We’ve got ambitious goals. Markets are consolidating. We’re in a very strong position.
Just how much traction are you seeing with joint technology innovation between VMware and Dell?
If you look at what we did with VxRail and VxRack, just as an interesting example, those two combined have generated more than USUS$4.5 billion in orders since inception. We’ve actually been exceeding the ambitious targets that we set for ourselves there. Those solutions continue to grow and get better. Now we have those with VMware Cloud Foundation, and we continue to enhance the combined solutions with the Dell Technologies Cloud, with Uniﬁ ed Workspace, with our SmartFabric Director— the innovation engine is on high. The partners [have been] extremely receptive over the last 12 months. Our global channel has delivered USUS$52 billion in orders. As I’ve been out meeting with channel partners, they love what we’re doing and want to do more with us.
In terms of gaining market share in the networking space, do you think Dell Technologies could eventually catch up to Cisco?
Catching up to Cisco in a couple of years would take an enormous amount of growth. Look, our networking business is growing quite rapidly. If you look at some of the new domains like SD-WAN, we already have No. 1 market share there with VMware SD-WAN by VeloCloud. NSX is growing very rapidly. I believe NSX bookings grew over 20 percent in [VMware’s fourth ﬁ scal quarter 2020]. Our networking switch business is growing nicely, certainly much faster than the industry and market. Part of this is we are building out these more designed solutions like PowerOne that include server, storage and networking. Look, customers and partners don’t want to put together a disparate set of products from companies who are No. 3, No. 4 or No. 7 [in market share] in all these diﬀ erent categories. So as we build solutions like PowerOne that bring together all the best capabilities and it’s built on VMware—which is doing incredibly well with enterprise customers around the world as they build out their multi-cloud architecture—we have a great amount of momentum in networking.
How much do you plan to spend this year on R&D?
We have been investing between US$4 billion and US$5 billion a year in R&D, and we’ll certainly have more than US$4 billion in our current ﬁ scal year 2021. The entire portfolio is being refreshed under the Power brand. Markets are consolidating. We are putting channel incentives in place to drive cross-selling and specifically focusing on storage. Our storage capabilities are strong. We have very ambitious goals.
Why should partners sell more lines of business within Dell Technologies?
Partners who sell storage, server and client generate approximately 13 times the revenue per partner as compared to partners who are selling just two LOBs [lines of business], and approximately 40 times the revenue per partner who just sells one line of business. The partners who are selling VMware are doing even better. Dell Financial Services is continuing to grow rapidly as partners are utilizing that. More and more partners are selling more multi-lines of business. We’re feeling good.
Hewlett Packard Enterprise CEO Antonio Neri (pictured) recently said his company’s consumption-based oﬀerings are better than Dell Technologies’ oﬀerings. Any thoughts?
I think the facts tell a little bit of a different story. The company you mentioned had revenues of a couple hundred million from [HPE’s GreenLake oﬀering]. Our deferred revenues on our balance sheet—this is all in our ﬁnancial statement, it’s not like we’re making up numbers—our deferred revenue at the end of last quarter was US$27.8 billion. That’s billion with a ‘b’—up 16 percent year over year. If you go ﬁnd the comparable number for the other company you mentioned, I think you’ll ﬁnd they’re not even comparable.
Can you talk about your acquisition strategy?
If you look at the last couple of years, we’ve done US$5.5 billion in M&A, primarily through VMware since the EMC transaction. A lot of that is in areas like networking and security such as Carbon Black, bringing Pivotal into VMware, and the big VMware Tanzu [Kubernetes portfolio] that we launched. The combined power of those solutions is resonating. We’re bringing Kubernetes into vSphere, which is very powerful, and we’re creating an application development platform and an enterprise-grade Kubernetes solution and, of course, all the hardware solutions to make all this work.
What’s your message to channel partners?
It is the best time right now to be a Dell Technologies partner. Our portfolio has never been stronger. The market consolidation is happening. We have the No. 1 solutions across all aspects of infrastructure, hardware and software. ... Look at what we’ve done together with our partners in the last three years. Bill [Scannell, president of global sales and customer operations] has laid out an aggressive plan for the future. There is a ton of opportunity ahead. And again, the product line has never been stronger.