7 Insights From Michael Dell

It's been more than three years since Dell launched its formal channel program in the U.S. and more than three years since CEO Michael Dell spoke to CRN.

Assistant News Editor Scott Campbell recently spoke with Dell to talk about the progress the company has made with solution providers and what's next for the company. The following are excerpts from the conversation.

On Three Years Of PartnerDirect

"We've had great growth with channel partners. The reason is we've had a consistent and relatively simple to understand program. We've taken the necessary steps to not only eliminate conflict but make the connection that Dell has with customers a positive one. Our own teams have comp neutrality, whether they sell direct or with a partner.

"What's happening is we're developing partners that really understand our products and solutions and deliver those. Our internal teams are figuring out who those partners are -- it's a great combination. We have almost a quarter of commercial business with partners now, globally. That's a pretty substantial change. I've been out meeting with partners on a regular basis, sometimes three or four a week. I think the areas we're focused on, with data center, EqualLogic, PowerEdge, PowerConnect, Kace, those are areas that resonate with partners. But there's still a lot of room to grow in those areas."

Reasons Behind Channel Success

"We put some foundational elements in place: the comp neutrality, the great response on deal registration. Some partners have been moved to account level registration. The feedback I get is we have a program that is easy to understand, contrasted to some other folks out there. It's reliable, consistent. That's why it's growing quite fast. We're growing in the Americas at a 40 to 50 percent range. Europe is faster, probably 80 percent growth, but Europe is a lot smaller.

"We've had lots of great wins, great successes with numerous hundreds, thousands of customer end accounts where partners add meaningful value. Customers like to self-select whether they use an integrator, VAR, solution provider or go direct. Those direct customers have already self selected, but most of the market prefers a VAR, integrator of some kind or another."

On Server Opportunities In The Channely

"One of the biggest parts of the industry is servers. In the U.S., we have 41 percent share of servers. In the last 10 years, we've sold 15 million servers. It's pretty hard to find somebody who isn't using a [Dell] server. But if you go in the channel, where we've got 41 percent of the total server opportunity, it's actually a single digit number. We are massively underrepresented in the channel. That's changing quickly with the growth rates we're stacking up. It's just a huge opportunity. We're having some great visits with partners on this. "

On Open-Platform Strategy To Differentiate From Competitors

"Customers today are looking for best of breed answers. They like competition. They don’t want to be beholden to one vendor. The reality is the data center is a heterogeneous world. You have legacy stuff. You have old stuff, new stuff. You have Brand D, Brand H and Brand I. To assume everybody is buying everything from one company is just not realistic.

"We've done broad market studies, we hear the vast majority of customers saying they don't want to buy everything from one company. Our virtual integrated system is a data center provisioning framework tool that incorporates network, storage, server and accepts the reality that it's a heterogeneous install base out there. And that's resonating with partners."

On Pulling The Plug When Price Gets Too High

"When we announced the acquisition of 3Par at $18 per share, it was an 87 percent premium on the then-current price of the company. If you go back and look what people were saying, that was a big premium to the price. And it was. HP bought the company for $33 per share. The winning bid before that was $30. And that was HP. Both bids were from the same bidder. The height of irrationality is when you outbid yourself at auction. This reached an emotional fever pitch.

"We are disciplined about how we use our capital. And we got $72 million [as a severance fee from 3Par]. Thank you very much. We'll take that. The second thing is HP paid $1.5 billion more than they otherwise would have... We're very comfortable with our portfolio. We're not going to buy something at [too high a price] just to [buy it]."

On The EqualLogic Platform

"If you look at the storage market, it's changed pretty rapidly. It used to be about the fabric and host bus interfaces and things like that. The conversation has moved to what you are doing with storage. What job are you trying to do? It's about virtualization, snapshots, auto tiering, data deduplication, those kinds of things, with 10-gig Ethernet, and especially with DCB or data center bridging which brings to Ethernet a lot of characteristics of fibre channel.

"EqualLogic is fantastic platform to grow. We're seeing a lot of NetApp partners move to EqualLogic. It's easier to sell, it has an all-in-one feel, it scales."

On What Technologies, Vertical Markets VARs Should Target

"There's still an enormous amount of server virtualization, storage virtualization going on. VARs have their unique specialties in whatever vertical they're in. I see opportunity across a variety of solutions from medical to video, with all kinds of video surveillance systems. We see a wide range of applications here.

"The mega theme is virtualization and that extends to client virtualization. Client virtualization is a nascent opportunity that really is just starting. We have our new XBS array that combines solid state and spinning disks. You can put many more virtual machines in an array. Any Citrix VARs or VARs helping customers deploy VMware, that's one place to be."