By going private, will Dell be as disruptive in the Corporate IT as it was 20 years ago in the PC market?
Dell aims to become a private company
The New Year is a time for change and at Dell there’s certainly an appetite for dramatic change in 2013. The breaking news is that Dell aims to become a private company with a $24.4 billion leveraged buy out.
So why is Dell doing it? But before I try to answer that and give my humble opinion, a more important question comes to my mind. There’s an old Jewish trait of asking, when anything happens, “Yes, But Is it good for the Jews?” and examining any event from that particular perspective. So my immediate reaction is to put on my proverbial ASP spectacles and ask myself “Yes, but is it good for ASP?”
Dell success then stress and transformation
Since Dell was started by Michael Dell in the late 80’s in his college dorm, it grew to be a global leader in the PC, notebook and even server market. Dell success was largely due to its innovative business model: phone/mail order and later online sales, with manufacturing and supply chain efficiency at competitive prices, and almost no R&D: innovation was provided by partner companies such as Microsoft and Intel. Dell has been changing in the last 2 or 3 years, moving upward in the the food chain to the Corporate IT and the mission critical Data center but the recent explosion of the Smartphone and the Tablet kept Dell under significant stress. The PC market is shrinking and additionally the Dell just-in-time lean manufacturing and low cost model has been adopted by competitors.
The Dell answer over the past years is to increase R&D and to buy innovative technology and to push into corporate IT products and services. Believe it or not Dell opened its 2 first dedicated R&D Centers only in 2011 (in Israel and Silicon valley). Dell spent more than $9 billion in the last 3 years buying companies with a big Intellectual property such as EqualLogic, Compellent, AppAssure, Quest, Boomi, Perot etc. It has been paying off and allowed Dell to make in-roads into the high-end server/storage and corporate IT market. This is a real company reinvention and we all know it takes time. Michael Dell wrote in late 2011 “Dell’s transformation is well underway… but we recognise it will take more time, investment and patience”.
The key advantage of the LBO: it buys Dell the time to change away from the unrelenting eye of the stock markets with its quarterly sales and revenue targets.
ASP Sun history and the move to Dell
So back to ASP, now a Premier Partner of Dell and, I’m proud to add, Dell partner of the Year in Belgium in 2011. But before we jumped on this partnership we had a long history with Sun Microsystems. As a Sun/Solaris partnersince the outset and later a Sun/Windows partner, we sold, installed and integrated Sun solutions in various enterprises environments and supported dozens of Solaris companies in Belgium. Despite a massive 25% investment in R&D and products like Solaris, Sparc, Java, Sun did not survive and was bought by Oracle in 2009. After struggling for more than 1 year waiting for the deal to be finalised and for Oracle to take over, my colleague and ASP partner of more than 20 years, Dany De Vleeschhauwer told me : “Doubi we need to move forward : Dell has just taken over EqualLogic, Lets partner with Dell”. We knew EqualLogic (the leading provider of high-performance iSCSI storage solutions) as we were one of their early partners back in 2008. Since then we have become committed to Dell and we believe strongly in Dell IDM (Intelligent Data Management) strategy with products like Compellent and Equallogic. We supply Dell datacenter equipment for the Belgian corporate and public Enterprise market next to our own offering of Managed Services within our Data center Infrastructure.
Is Dell going private good for ASP?
So back to the my very centric question, “is Dell going private good for ASP”? In short: Yes? What might happen in a private Dell is of course speculation. But as far as ASP is concerned my view is that we will benefit fully as long as we stay focused. Michael Dell can be as disruptive to the corporate IT Market as he was 25 years ago in the PC market. Dell with the help of System Integrators like us will shake the Enterprise IT market with innovative products and eventually with a new business model specifically targeted to answer the cloud challenges. Going private is taking the time to reinvent Dell without the stock market pressure, is taking the time to deliver more of what we’ve been getting from Dell recently, and is taking time to become an innovative powerhouse of Enterprise IT. For me a private Dell is only good news for Dell partner companies like us and our customers.