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Dell also said his company is moving in the direction of adding more solutions and services to help customers simplify their IT.
Dell's services strategy is focused on supporting Dell products, because talking to a customer about a portfolio of products is no longer interesting, Dell said.
"But it's not as if we're going into all services," he said. "We're going into the services in the infrastructure area. Already, services for us is about a $6 billion business. So when you think about the client lifecycle, infrastructure services, how to simplify the infrastructure, how to make IT a service, how to implement managed services, how to do the next generation support, we have been doing some acquisitions of tools and technology to help us accelerate our progress as we move down that path."
Dell said a company cannot look at the same profit and loss percentages for software and services as it does for hardware. "So as we move up the stack, certainly we have a different P&L mindset and a different matrix to measure our progress."
Dell also said he is seeing Linux adoption on the server side growing quickly. "We continue to see more Linux moving into the critical type of applications," he said. "And Unix-to-Linux migrations are continuing. I don't see that slowing down. Linux is on a long gestation cycle, adding all the capabilities of a robust operating system."
While Dell has offered Linux as an option to scientific and technical users for eight or nine years, it is harder to estimate demand on the consumer side, Dell said.
"We created a pretty interesting site at Dell called Idea Storm where a customer goes on and puts in an idea, and then other customers vote on the idea," he said. "One customer suggested we should buy Cuba. That was pretty interesting. They had pictures, and wrote why it was a good idea. But not all the ideas are whacky. And actually, about 40 percent of the ideas are related to the enterprise. One of the top ideas was, hey, we want Linux on Dell client products. Usually when you develop a new product, it takes you a while to do it, maybe nine months, 12 months. We did it in two months. We picked Ubuntu."
The great thing about Dell's model is that it can respond quickly to changing customers' needs, Dell said. "As we're building computers, we don't know if (the customer is) going to get Ubuntu or Windows," he said. "The computers don't care. So if a lot of customers want Windows, we can do that. They want Windows Vista, Windows XP, and a lot want Windows XP, we can do that."
The real big opportunity is around simplifying, Dell said.
"Our competitors live on the honey train of complexity," he said. "Their business basically thrives on all of the complexity of all these different architectures. You have hardware companies selling hardware, software companies selling software, integration companies selling labor. I think the opportunity is to say, how do we de-complex the IT environment to create a standardized environment to drive costs down. It's hard to do across everything. But there are some key simple steps that we as a company, and our customers, can take to do it."
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