Disclaimer: I recently attended Dell EMC World 2017. My flights, accommodation and conference pass were paid for by Dell EMC via the Dell EMC Elect program. There is no requirement for me to blog about any of the content presented and I am not compensated in any way for my time at the event. Some materials presented were discussed under NDA and don’t form part of my blog posts, but could influence future discussions.
These are my notes from a press / media / influencer session I attended today. I went because I enjoy hearing Michael Dell and David Goulden speak. They’re pretty rough notes, but I hope they give some insight into the messaging.
Meet the Chairman
Michael Dell, Chairman and CEO, Dell Technologies
A range of industries are all trying to figure it out. A computer isn’t just something you carry around – the number of computers is exploding. You see this in many forms. The cost of making something intelligent is approaching zero dollars.
Opens the floor to questions
What is the main challenge working in IT sector? Is it human resources?
MD: the main challenge is reimagining their business in the context of these new technologies. Technology plus humans is the answer, not technology versus humans. It’s always been that way. All technology creates jobs and destroys them. Will enhance human capability and capacity.
What do you think about AR and VR and how Dell might embrace that?
MD: remembers Oculus in early stages. Video and visualisation – you can take in information with your eyes faster than any other way. Today’s VR and AR is “game-like”. As these technologies improve in resolution. Photo-realism starts to improve things. The amount of data required for this becomes huge. There’s enormous potential in not only entertainment, but training and business applications. We’re just at the beginning of this.
PCs are still at the core of the company, but margins are declining. Do you see them maintaining this importance?
MD: 17 quarters in a row of gaining share. Invested in R&D. The PC business gives them incredible scale. Parents of IoT are PCs. 5G cellular networks will create a new kind of distributed cloud. It’s all about data, not talking on the phone faster. It doesn’t always make sense to give employees cheap computers, you want to give them great tools. Average selling price for PCs is going up, not down. It’s a $170B market space. #1 in revenue and profits.
What’s your advice to small business trying to keep up with technology? And what do you tell entrepreneurs who want to be like Michael Dell?
MD: Technology is not just an IT function anymore. No matter what size, you can’t do anything very well anymore without technology. Small business has the ability to invent a new business using tech, or re-invent using technology. Best advice: embrace risk. Goes along with innovation and growth. Too many people have been afraid to fail.
Perspectives on processor strategies?
MD: There continue to be improvements in the “CPU and memory complex”. Memory and storage getting closer and closer to the processor all the time. There are increasingly specialised forms of compute and processing (CPU, GPU, deep learning, machine intelligence). No doubt that innovation there will continue. Dell need to understand what that means and how to deliver to their customers
If you were not in technology, what would you be doing today?
MD: I was supposed to be a doctor (like my father, brother, father-in-law, cousins). “Black sheep of the family”. Incredible time in medicine because of technology. Genomics, epigenetic expression. Dell make cool stuff that empowers doctors and scientists
Over the last few years, Dell and EMC have moved to less direct businesses. Will the merger accelerate that?
MD: Business is both direct and partner. $35B in revenues are with and through partners. They want to grow them both. Partner reaction to Dell EMC combo has been tremendous. Partners are a big part of their success. OEM business is also pretty important.
What’s the pitch for hybrid versus public cloud? And you didn’t feel him slip that card in your sleeve [referring to a trick on stage with David Blaine earlier]?
MD: when they talk to customers, it’s a multi-cloud world. For a variety of reasons (cost, security, flexibility) the on-premises systems are still important. Boomerang effect – customers coming back to on-prem because of cost. Not anti-public cloud. But it’s not perfect or right for all workloads. It’s going to be a multi-cloud world. Pivotal has created a platform for cloud-native apps. Run them in the big public clouds or on-premises. Test and develop in public cloud, deploy on-premises.
Dell transformation – moving to addressing customer needs. Where are you in the journey? And what’s been the biggest challenge?
MD: On a path to evolve the business. How do you extend the conversation beyond IT? Digital transformation – It’s a CEO project, at the core of the company. 8 months since the merger, so they’re along the path pretty well now.
Dell Technologies Strategy
Tom Sweet, CFO, Dell
Only 8 months together. Still have a lot to do. Optimistic about the year. Reception from customers, employees is good.
Vision
To become the essential infrastructure company – from the edge to the DC to the cloud – not only for today’s applications, but for the cloud-native world we’re entering
Strategy
Digital transformation requires us to help customers succeed in three key areas:
- IT Transformation – modernise, automate and transform
- Security transformation – connect, automate and integrate
- Workforce transformation – attract, enable and protect
Enabling the strategy
Pre-integration – standalone product and solutions-specific vendors
September 2016 – Introduced Dell Technologies and its family of businesses
~8 months – Unified portfolio and GTM
- complete end-to-end offering
- integrated GTM function
- rapid time-to-market
- improved cost & scale
- flexible consumption through Dell Financial Services
~2 years – Vision of the essential infrastructure company
- clear leader in IT infrastructure & client solutions
- recognised expert in digital transformation
- strongest multi-cloud portfolio
- business-driven security products & services
- comprehensive array of solutions and consumption models
FY18 Financial Plan
1. Macro-environment
2. Market dynamics
3. Resources and offerings
Financial Framework
- Growth
- Margin $ generation
- Balanced cost framework
- Cross-sell family of businesses
Investing in growth
- Sales coverage
- Gaming, high-end notebooks and monitors
- 14G servers
- HCI
- Hybrid & multi-cloud
- Cloud-native application development platforms
- Financing / flexible consumption models
- SDDC
Infrastructure Solutions (FY18 Strategic Focus)
- Enhance and simplify storage and server businesses
- Drive customer IT transformation
- Optimise GTM and cross-sell between Dell, EMC & VMware
Client Solutions (FY18 Strategic Focus)
- Grow commercial share and premium offerings
- Scale across portfolio, attach financing, S&P and accessories
- Optimise GTM coverage, build velocity across all GTM teams (Enterprise, Commercial and CSB)
Our keys to win
- Grow at premium to market
- Generate margin $ growth
- Accelerate emerging growth opportunities
- Execute against cost and revenue synergies
- Drive innovative solutions
- Realise the vision of Dell Technologies
Q&A
Where are you investing in the sales coverage? A lot of EMC sales ppl seem to be leaving.
TS: Investment runs the gamut, more in specialists and sales specialists. Did see some churn before the transaction closed. Some of the attrition has now stabilised. #1 cause of customer dissatisfaction is relationship churn.
In terms of your partnerships, what impact does it have to have parts of the business (VMware and SecureWorks) publicly traded?
TS: You have be mindful of the whole constituency of shareholders. Hasn’t been a blocker in terms of getting things done. More coordinated than the federated model (legacy EMC).
MD said public cloud twice as expensive as on-premises computing – where did MD get that?
TS: There have been some analysis done that refer to that cost point. Public cloud is not always about complete flexibility. Public cloud is great for certain workloads, certain activities. Focussed on model of on-premises, off-premises and hybrid.
Can you talk to where cashflow fits in your priorities? What are you targeting for % revenue for R&D to fit?
TS: Cashflow fits in as part of gross revenue. Run the company from a cashflow perspective these days. Maximise profit dollars as you grow. R&D investment will fluctuate – not ready to give a longterm view of where it’s at yet.
What about Dell’s digital transformation? How’s that going?
TS: Using a lot of Dell stuff. Boomi, SecureWorks, big VMware shop. Opportunity to streamline capabilities from an automation perspective. All Dell client environment.
ISG Strategy Update
David Goulden, President, Dell EMC
“We have a winning portfolio”
Dell Technologies – a force multiplier
Infrastructure -> Cloud -> Applications -> Users -> Security
Q&A
Announcements today focussed on enterprise market. How can these be used by SMB market? And what about the challenges for SMB in this transformation?
DG: VxRail – taken enterprise in half to get it to a point where SMB can use it. The new Unity and SC systems are aimed at medium as well as large enterprise. The portfolio scales down (not all of it, of course). One team that deals with Enterprise, the other one deals with SMBs. Their advantage is they don’t have as much legacy. Move very quickly.
The only weak spot seems to be in networking. At some point do you think you need to get better in networking? Would you partner with Arista or Cisco?
DG: Big partner already with Cisco (think Vblock). Networking is changing. Open networking movement is growing rapidly.
Better together. How are you thinking about doing engineering? Are you doing the business bit first and then pulling in engineering resources?
DG: Servers (Dell), Storage and Data Protection (EMC), Networking (Dell)
VxRail is the first version of “better together”. In storage and data protection, a lot of appliances running on servers. 14G is a big catalyst for a lot of the better together stuff accelerating. Also a lot happening with VMware and Pivotal.
With Pivotal as the driver of digital transformation within Dell EMC – is that enough?
DG: It’s more than one company. It’s an ecosystem (e.g. CloudFoundry). A number of partners working with Pivotal to make the tech become more available. A number of customers doing their own thing that aren’t necessarily engaging with Pivotal, but Dell EMC are big on Pivotal when customers are telling them they want to be a software company. They have good experience with a bunch of web startups.
Servers. There’s a lot of creativity in servers (cartridge-size, flash-heavy) and then there’s Dell. Seems HPE are more adventurous. EMC have previously been adventurous as well. Are you concerned that being part of Dell that the server design philosophy is becoming cautious and constrained.
DG: Disagree respectfully. Dell has just become #1 in servers. The industry’s moving “our way”. There are all kinds of form factors. Including rack scale. This segment is growing at the expense of all other segments (tower, rack, blade). Rack scale reflective of what you’re seeing with web scale.
MD said Dell is looking at startups. What’s missing now that you need to buy more?
DG: Spending more time with Dell Technologies Ventures. Investing in early stage companies. AI, Machine learning, deep learning. Getting close to those companies, understanding how they work. Want to make sure they’re in front of and working well with the latest trends. Focus is on delivering results over a longer term. Customers, for example, want to buy and pay as they use. This is okay for a private company, harder for a public company to pull off.
Better together. Partnership with Cisco. Will Dell Networking be stepping up and displacing Cisco in Vblock and VXblock?
DG: Always going to Cisco. VXrack will have multiple technologies offered (Cisco, Dell, Arista).
It’s a multi-cloud world. Customers are struggling with where to go when.
DG: Focussed consulting organisation – application portfolio analysis and application rationalisation. “There’s no point having a great public / private / hybrid cloud strategy if you haven’t worked out what apps are going to go where”.
And that’s it. Interesting session. 4.5 stars.