Dell took the wraps off its post-privatization strategy last week, so now is as good a time as any to assess whether an “old guard” IT vendor can find success in the new mobile/cloud data environment.
The pointed question, of course, is whether, in an age of virtual, software-defined infrastructure, brand-name hardware platforms will find favor in the data center.
Dell CEO Michael Dell certainly seems to think so, although judging by the line-up at last week’s Dell World, the future of hardware will be bound tightly to the upper-level software and services it supports and in its ability to weather the transition from static, silo-based infrastructure to more fluid, dynamic and federated ones. To that end, the company showed off a new PowerEdge FX converged platform, the SC4020 Flash array and the PS4210 SMB storage system, along with the XC series of webscale converged appliances. All of these are aimed at helping the enterprise make the leap from today’s data environment to a world of Big Data, the Internet of Things and end-to-end infrastructure integration.
These are good intentions, but does Dell really have an edge when it comes to building 21st Century infrastructure? Tech author Dan Kusnetzky button-holed Matt Baker, Dell’s top enterprise strategist, during the show, who said Dell has no intention of providing all the pieces of the new data environment, most notably microprocessors, operating systems and application frameworks. Rather, the focus will be on enterprise solutions built around standard server, storage and desktop solutions, plus the expertise to bring it all together with third-party architecture and software contributions. Ultimately, it is the focus on workable solutions to real problems that Dell hopes to address, rather than “owning” the data ecosystem.
The decision to go private in order to launch this endeavor could be both a help and a hindrance. Cutting off the flow of public capital, of course, can put a real damper on R&D budgets, but it also allows management to pursue a singular vision, rather than be pulled in multiple directions by stakeholders who have strong, often conflicting, ideas as to what the future will bring. As well, it prevents minority shareholders from either waging proxy wars or otherwise forcing dramatic moves, such as HP’s decision to separate its PC/printer business from its enterprise/services side. And probably most importantly, it eliminates the need to publicly disclose operating results, allowing management to spin the tale of how its strategies are working any way it wants.
Also interesting amid all the chatter at Dell World is the company’s attitude toward the PC. Rather than view it as a dinosaur of an earlier age destined for a race to the bottom in the commodity hardware sphere, Dell views the PC as the new hub of the IoT. The thinking is that as smart devices start flooding the world with data, it won’t be smartphones or wearables that will do the heavy number-crunching, but powerful PC hardware. Despite its loss of cachet over the past few years, Dell sees the PC as an embedded component of the IT universe that will play a crucial role in turning Big Data into usable, actionable knowledge.
This is all well and true, but the real question for a company like Dell is whether you can make any money in the hardware/platform business anymore. If hyperscale infrastructure drives the cost of IT so low that even top enterprises overcome their fears of security and availability, then commodity hardware will certainly be in high demand, but it will most likely fuel the ODM side of the market rather than branded systems from Dell, HP or other familiar names.
In that case, a company like Dell could certainly join the party, but it will end up fighting over the crumbs of a high-volume, low-margin business while the real action, and profits, go to those who devise the high-order architectures that drive productivity. It would be a shame if a storied company like Dell makes significant headway in end-to-end infrastructure only to find that its IT customers are more interested in what is happening higher up the stack.
Arthur Cole writes about infrastructure for IT Business Edge. Cole has been covering the high-tech media and computing industries for more than 20 years, having served as editor of TV Technology, Video Technology News, Internet News and Multimedia Weekly. His contributions have appeared in Communications Today and Enterprise Networking Planet and as web content for numerous high-tech clients like TwinStrata, Carpathia and NetMagic.