CRN Interview: Dell Chairman & CEO Michael Dell

DELL: What we've seen from our partners is they are actually quite interested in taking on a number of the services capabilities or services innovations that Dell brought and extending them all the way through to their customers. Not all of them. Certainly, it's the partner's choice. But many of them are adding their value well on top of what Dell has traditionally done.

CRN: What's on your road map with that? It seems like you've spent a lot of time in developing some expertise in service delivery. What's down the line with that?

DELL: We're really working hard to help customers simplify IT. And the way to think about this is, today, Dell and some other companies have really helped to make the PC inexpensive. That's a good thing. But if you think about all the other costs that go into using computers and managing them, it's still pretty expensive. It's complicated. A lot of organizations are spending 70 percent or more of their IT budget on just maintaining old systems. They don't have enough money to go and innovate, change their business model and do new things, add new functionality, new competitive enablement. The reason for this is often because they are sort of locked into some over-proprietary products that come with software you have to rent that is so complicated you have to have armies of people to make it all work.

So what we're trying to do is look at all these dollars that are spent on this stuff and say, 'Can we really simplify these architectures and push some of that into the product and make it easier to deploy, easier to use, easier to deploy a new solution on top of?' And then [we can] begin to turn this equation around where more of your budget is actually going to new functionality, new applications, new innovation, which is what people want anyway.

CRN: Some of Dell's OEM partners have made disclosures about their OEM business that suggest Dell's printer business is declining dramatically. What's Dell's commitment to that business, where does it stand now and is there the potential to show good growth in printers?

DELL: We've sold 20 million to 25 million printers, something like that. So we're not getting out of the printer business, if that's your question. We're going to expand our participation in printing. Perhaps what you're seeing is a shift as we grow the range of technologies we have. So we don't just have one partner there in terms of ingredient technologies; we have multiple [partners]. You'll see new, fairly exciting color laser printers coming from us in the next several weeks that are industry-leading in terms of features, performance, cost and capability. There is still an opportunity there to grow a sizable business. It is a scale business for us today and one that we'll keep investing in.

CRN: Last week, the president of Acer, one of Dell's competitors, said he expects to overtake Dell in terms of market share.

DELL: Good luck with that. I think he has to look at revenue. You might want to go do the math on that. Dell's revenue in Europe is greater than [the revenue of] that whole company.

CRN: You mentioned Europe. What about growth outside the U.S.? Dell has an aggressive growth plan. Today, Dell is opening a new facility in Brazil. Are you learning anything in other geographies that you could apply in the U.S.?

DELL: We are a global company, and there's a good transfer of information we've been discussing around the world about what the best practices are in channel solution partner relationships. We've learned some things from what we've done in other companies that we certainly can incorporate here in the U.S. and vice versa. So there's active [information] sharing. We're opening plants in India, Brazil and Poland so we can support solution providers anywhere in the world.

CRN: Dell's last quarter was the first where sales outside the U.S. outpaced sales inside the U.S. ...

DELL: ... Not sales, units.

CRN: Units. Is that part of weakness in the U.S. or part of the way things have developed in the global economy?

DELL: Actually, we would be unique among computer companies to have more of our sales in the U.S. Part of it is a function of the fact that we sell more computers than anyone else. Part of it is a function of the fact that our businesses outside the U.S. have been growing and developing nicely in the past four or five years " it has doubled in size. So we'll continue to expand everywhere in the world.

CRN: Dell doesn't have a lot of inventory, which has been one of the company's hallmarks over the years.

DELL: But we can deliver very quickly.

CRN: Can you walk me through that?

DELL: [The Morton L. Topfer Manufacturing Center] will produce, let's say, roughly 50,000 computers. In the morning when we start, there are roughly 10,000 orders available to be built. But the fact is that we ship 50,000 computers. Where do those 40,000 orders come from? Those are orders we take during the day. They get shipped today. Nobody else in the world does that. Actually, we have a lot of inventory; it just moves very fast. So it's a very different model than you typically see in a manufacturing environment.

CRN: You still believe that Dell can grow sales with partners, just as you grow sales directly, without building up an inventory of replacement parts?

DELL: No, replacement parts we have. We have about 350 locations all over the world with spare parts for our products, around all the major cities all over the world to support our product. That's not counted in the inventory that you're referring to.

CRN: Last year was a significant in that for the first time Dell began shipping systems with AMD processors. It's still a relatively new business for Dell. Can you give us an idea of how that's been going and how it looks down the road?

DELL: It's been going pretty well. We've introduced AMD into, really, all of our product lines now. We started with our Dimension desktops and moved into Insprion notebooks and PowerEdge servers, and now we have OptiPlex desktops " a lot of products with both Intel and AMD processors, giving our customers a broad range of choices across all of our product lines.

*Editor's Note: Photos by Kim Kulish, CRN