Is that later in the year for Dell?
It's whenever Microsoft releases Windows 8. (Microsoft has launched a public beta test of Windows 8 and speculation is for a launch in August-September.What are the differences in Dell today compared with five years ago and what might it look like in five years? If you look at Dell now versus five years ago, we have a much broader capability in end-to-end IT solutions. This is an IT services and data centre capability.
The portion of our business in this area has in the last five or six years more than doubled in size to $US18.6bn in revenue last year and this area accounts for more than half the profit. A lot of that has come from acquisitions such as Perot Systems, Equalogica, Compellent.
We've bought 18 or so companies in the past three or four years and we've made organic investments in our own cloud data centres and solution centres, and we've invested in increasing the capability and capacity of our sales force. We've also changed the form of the discussion that we have with customers. It used to be about boxes, now it's much more about what problem are you trying to solve and what (are) the challenges in your business. These days it's much more a chief information officer discussion, or line-of-business discussion, than a product-led discussion.
What is your take on the future of the PC market in view of the surge in tablet sales during the past two years?
If you look at the device landscape it certainly has expanded. You have smartphones, you have tablets, you have PCs. There are still some 350 million to 400 million PCs sold a year, which is way more than the number of tablets. Tablets are great and very exciting, but what you see when people have a tablet is they are consuming lots of data from inside your company or over the internet and that's increasing demand for servers and storage. You'll see a lot of blurring of the lines in what is a notebook or what is a tablet. We have just introduced the XPS13, which is a super-thin, super-light ultrabook-style notebook, and with Windows 8 coming on you'll see some very exciting new tablets from Dell Vostro 1520 and probably others that make it a very interesting landscape.
And the next five years?
When we look at the industry now, we are not confined to a small space. This whole solutions focus opens up an enormous new set of opportunities. Today this is a $US3 trillion industry and we are a little over 2 per cent of that and, yes, we think we can continue to grow the enterprise solutions and data centre side. About one-third of Dell's revenue ($US18bn) comes from enterprise solutions and services. Are you happy with that as a percentage or do you want to see more coming from enterprise systems and services? Enterprise solutions and services will continue to grow as a percentage of the revenue, and likely the profits as well.
Is there an ideal, or goal, ratio that you are aiming for?
The challenge is that the various areas all operate very much independently. You don't want to limit one to have another achieve a certain goal. That's not the way we think about things. We think a particular area is this big, it's doing well, it's profitable, and how do we do more of it? Over five years the mix will probably continue to shift, but I don't subscribe to the notion there's an ideal.
Will your hiring momentum continue this year?
I think it will. Four years ago we had about 70,000 people in the company, now we have 110,000 so. We've added 40,000 people. We'll add quite a few more this year as well. Economic conditions in the US and Europe are tricky to call at the moment. What's your take on the economy and how it affects Dell Latitude e6400 ? Dell will be 28 years old in May and last year we had revenue of $US62bn. If at any time during the last 28 years we had looked at our business and said: how is the economy doing because that's what is going to define our future, that would have been the wrong thing to do.
We just don't do that. We look at the opportunities to grow and expand and, while it's better if the economy is growing, we don't really care. The market is so large, we can grow if the economy is going one way or the other. But the state of the economy would affect your finetuning somewhat. Certainly, when you look at opportunities, you say Asia is growing really fast, the Middle East and Africa are growing really fast. The amount of data that customers are storing is doubling every 18 months.
How far up the value chain do you intend to go with your services offerings? Do you see yourself competing over time with high-end consulting services provided by the likes of IBM? As we go further into verticals the range of capabilities continues to expand. If you look at healthcare, for example, that's one where Dell is No 1 in the world. We are bigger in infrastructure and helping customers to manage all the data and make sense of the data. If you look at the very consulting-oriented things, the sort of thing that Accenture does, that's not really what we are doing a lot of.
But within a $US trillion market you don't have to be all things to all people to be a very successful company, so we tend to look at the things that (are) most readily and closely linked to the things we already do, as those are the most obvious areas of expansion for us. We had a strong server business, which made it logical to extend into storage. Then storage was growing, so we extended into networking. It was logical to do it a piece at a time. We just acquired a company last week called AppAssure (which specialises in back-up and recovery for virtualised systems), and so we continue to add intellectual property through acquisitions and organic investment to build out more and more solutions capability.
I notice you have announced a new Starter Data Warehouse Appliance. What sort of an opportunity is there in the mid and departmental business intelligence appliance market?
I think it's an enormous opportunity. Here's the way to think about it. Most companies in the world store their data, which seems like a good idea. Ask them why they store their data and they'll give you answers like, we did it at the last company or we have to because of regulations or what else would we do with it. Among the top answers is usually not: because we use the data to get information to make better decisions. But that is actually why you should store data. You should store data so that you can in real time make better decisions and get better outcomes for whatever it is you are trying to do.
Very few companies can do that today. It's only the biggest companies in the world that have been able to make the investments to do that. Companies that have 1000 people or even 10,000 people, they don't know how to do that -- it's like a dream, they wish they could do that. Think about the productive force that gets unleashed in the economy when companies can use their data to make better decisions, and we are just at the very beginning of that. I would guess that less than 1 per cent of companies with less than 10,000 people actually use their information in real time to make better decisions.
Is this shaping as a major push for Dell?
I think it's a major push for us and you see a lot of efforts around this in the industry. The power of the kinds of servers we are creating today enables you to do these things in real time. You can have terabytes of DRAM and terabytes of flash memory right inside the server, you can put the whole database in the server and get the information very, very quickly. This is very different from what was considered to be avant garde just a year or two ago. You know with Greenplum and Netezza and others, that was actually an offline thing.
Now you can do it in memory much, much better and there's a raft of new companies batteryshops.com.au popping up and helping customers gain access to their data so they can make better decisions.
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