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Dell offers glimpse of its post-buyout life

Patrick Thibodeau | Feb. 8, 2013
There is a lot yet to be told about how going private will change Dell, but one thing it won't change is its enterprise strategy.

There is a lot yet to be told about how going private will change Dell, but one thing it won't change is its enterprise strategy.

With its $24.4 billion buyout, Dell's enterprise strategy "does not change," Jess Blackburn, a spokesman for the company said in an email. "And by becoming a private company, we can more effectively proceed executing that strategy."

There is little reason for Dell to say otherwise. Dell's enterprise software and services revenue is increasing as it expands its end-to-end offerings.

If anything, Hewlett-Packard indirectly validated Dell's enterprise abilities by calling attention to them. HP warned Dell's enterprise customers on Tuesday that "leveraged buyouts tend to leave existing customers and innovation at the curb."

One person who won't be waiting at the curb for a ride from HP is Tom Glaser, vice president for IT at Howard Community College in Columbia, Maryland. He's happy with the Dell.

The college, which has some 13,000 students, has a major investment in Dell products, which have "proven to provide quality and reliability," as well as good customer support. He expects Dell will strive to provide the same customer service levels post buy-out.

"Good business and customer partnerships are earned over time and experience, so their competitors would need to do more than just pick us up at the curb," said Glaser.

Dell has been working to win customers such as Glaser. Two years ago it held it first large user conference, which Glaser attended. These conferences, most recently in December, have been forums for Michael Dell to demonstrate how his firm is integrating its hardware with new services and software.

Dell's strategy appears to be succeeding. Dell's enterprise services and software business now comprise over a third of its revenue, and over 50% of its gross margin, an increase from last year, said David Mehok, executive director of investor relations, at a conference last month. Dell is scheduled to hold a conference on Feb. 19 to discuss the fourth quarter and full year.

Dell's strategy is apparent in its acquisitions. Just last year it bought thin client maker Wyse, and is set to launch a thumb drive-like computing device with multiple uses. It also bought the mainframe migration firm Clerity Solutions and the security firm SonicWall, among others.

Dell's new ownership structure may create some uncertainty about the vendor's direction, but one Dell customer, James Bottum, the CIO of Clemson University, said that's something they've been dealing with for a long time.

"Dell is in transition, and the transition has been going on for some time," Bottum said. The company is far from being the PC maker it once was, he said. They are working, for instance, with Dell on a cloud-based HPC system.


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