Once upon a time, Dell was the technology company you could hang your hat on. It had a clear, consistent message about selling PCs and servers direct; costs were kept low because there was no intermediary channel and the firm had an excellent command of customer relationships. To the delight of its share owners it grew and grew on the back of two trends: the shift to ‘commodity’ hardware typically running Windows and using Intel processors, and the boom in mail-order and then internet selling. It’s not that company anymore: I’ve had a few meetings with the company this year and the emerging message is, to paraphrase the old ad, ‘Dude, you’re getting a new Dell’.
Speaking by phone yesterday, Dell VP for large enterprise Stephen Murdoch summarised three “change pillars”.
First, “re-energising leadership online”. Dell has always had a very close relationship with customers thanks to things like Premier Pages that provided individual web portals for buyers. Now it wants to get into the virtual pants of those customers by extensive use of social media tools like Twitter, Facebook, blogs and IdeaStorm.
Second is what Murdoch calls a “complete re-engineering of the supply chain”, designed to suck out $4bn in cost. This includes what at first sight might appear to be the anathema of limiting menu options. Dell has always been synonymous with the idea of assembling your own PC in the same way that Burger King offered you meat patties “your way”, but now it is getting rid of options where they make no sense (small hard drives and RAM configurations on gaming PCs, for example) to make the buying process more streamlined, to cut costs and to make new designs come to market faster. There will be fixed configurations for retail stores to better compete with “the Acers of this world”.
The associated marketing message is to combat the “somewhat alarming trend back to proprietary architectures”, namely pre-integrated Oracle stacks, Cisco’s UCS and HP’s Matrix. “We think proprietary has always been the wrong answer,” says Murdoch.
An interesting spin on this is that, rather than going to market exclusively with the usual gang of enterprise die-hards, Dell appears to be assembling an army of small partners, many of them open-source concerns. This could open up the opportunity of low-cost, highly differentiated stacks.
Thirdly, there is the push towards offering “solutions”. Even in the wake of the deal to buy Perot Systems, Dell doesn’t want us to think of it as a services company of the consulting blather and billable-hours ilk, but rather as a company that can fix problems and help customers address opportunities. One aspect of that effort sees Dell pushing to build cloud systems for enterprises having developed best practices from work in mammoth projects with customers such as Facebook, Microsoft and Ask.com.
You might add to this list the fact that Michael Dell seems to have unloosed the collier’s grip on wallet and become much more interested in M&A activity in recent times. A new Dell then: quite distinct from the first version but still very interesting and persuasive for companies not obsessed with the one-stop shops of IBM, HP and Oracle.