The 10 Biggest Dell Stories of 2009

With the economy sinking to levels not seen since the Great Depression, nearly every company had its share of lows in 2009, and Dell was no exception. But it had a few highs too. Amidst a background of declining hardware sales, the Round Rock, Tex.-based computer manufacturer focused on a major acquisition, enhanced partnerships and vastly expanded offerings for its channel program -- including a hard push into the data center and services arena -- to help keep the company moving forward into 2010. Here's a look at Dell's ups and downs over the past year.

Dell shocked some of its solution provider partners and competitors when the company in March revealed that it would begin offering products through distribution with Tech Data and Ingram Micro. The initial line of preconfigured products sold through distribution included Vostro desktops and notebooks, which are now able to be turned around to partners within a 24- to 48-hour period.

At the time, one analyst wrote that Dell's distribution deal marked a "significant change of psychology" for the notoriously direct-focused vendor. Solution providers took a cautiously optimistic approach when the curtain was lifted on the deal, with one noting that Dell's decision was "a big step toward being channel friendly."

But this is still Dell, after all, and some solution providers said they would proceed with caution. One solution provider noted that it will be important for Dell, Tech Data and Ingram Micro to provide competitive prices to resellers while ensuring good margin.

Dell in September made a huge splash in the mergers and acquisitions arena with plans to scoop up Perot Systems for $3.9 billion. The computer maker plans to pay $30 a share for the service provider in a deal that is expected to close by January. According to Chairman and CEO Michael Dell, the acquisition is aimed at helping the computer maker grow its portfolio of enterprise solutions while expanding Dell's global reach. The move may have also been a somewhat delayed counter offense against HP's 2008 acquisition of EDS.

How and if the acquisition of Perot will impact the channel is not really known yet. Still, most solution providers are taking a cautiously optimistic approach to Perot, noting that the company represents an expansion of services that can eventually be offered to end users -- assuming, of course, Dell makes the services available through partners.

The declining hardware sales that hurt Dell's balance sheet so tremendously also took its toll on the computer maker's pride as well. Dell in October tumbled from the No. 2 worldwide PC maker to No. 3 when it was surpassed by Acer. The move, while likely lamented at Dell, shouldn't have been a surprise in Round Rock.

News that the hardware market was going to be decimated in 2009 surfaced as early as March of this year. IDC predicted plummeting shipments as well as sinking hardware prices. For a company like Dell, still transitioning away from hardware to services, those numbers hurt and were reflected in its financial results. Then Acer in May surpassed Dell as the No. 2 notebook maker in the U.S., a grim foreshadowing of what would happen later in the year. In June, Gartner called the decline in server sales the "worst ever." That same month, iSuppli reported that the first-quarter plunge in PC shipments was led by Dell.

Finally in October, Acer surpassed Dell as the No. 2 hardware marker in the world.

It's no secret that 2009 has been tough on nearly every company. Dell took particularly hard hits throughout the entire calendar year, as well as the company's fiscal year. Dell in February reported that sales for fiscal 2009 (ended January 30) were flat compared to 2008. The vendor then took a downward revenue march, coupled with earnings losses, through the rest of the year. Michael Dell (shown) and CFO Brian Gladden pointed to declining hardware sales as the prime culprit for the vendor's drooping performance. Still, the single bright spot for Dell continued to be its EqualLogic storage products, which showed continued growth over the course of the year.

The company last year embarked on a cost cutting strategy designed to remove $3 billion for its operational expenses. That initiative resulted in the closing of a Dell plant in Limerick, Ireland, as well as a plant closure in North Carolina. Earlier this year Gladden said the company would expand its cost cutting initiative to $4 billion.

The year 2009 was the year that the data center became the battle ground for major technology companies. Cisco Systems entered the fray, aiming directly at Hewlett-Packard, with the introduction of blade servers. Dell, not to be left behind, formed an OEM agreement with Brocade that would allow the computer maker to stamp its brand on a developing data center solution focused on unified fabric and storage networking. The two companies expanded an existing 10-year partnership to provide unified end-to-end management for data center fabrics, covering everything from storage ports on networked storage systems to host-bus adapters attached to physical or virtual servers.

Solution providers seemed to be pleased with the move, noting that it would allow them to target the enterprise data center space. Working with Brocade allows Dell partners to offer an enterprise data center solution, something that vendor traditionally hasn't had in its arsenal. Paired with growing emphasis on services as a major source of revenue, one analyst rightly called the partnership between Dell and Brocade a "game changer," as it allows solution providers to follow the money and increase their business.

The past year marked a major milestone for Dell's channel program: the one-year anniversary of the acquisition of EqualLogic. A year -- and now almost two years -- into the partnership, some of the solution providers who were initially skeptical about EqualLogic being consumed by Dell have been won over. The storage and server products that EqualLogic brought to the table, along with its robust channel program, have been a bright spot for Dell in a consistently flagging economy. In fact, Michael Dell himself has said as much.

The company also made several moves in the beginning of 2009 that helped position the program to make necessary changes. Starting the year right, Dell promoted Greg Davis (shown) to vice president and general manager of global channels. That move, making Davis the de facto global channel chief, led him to implement a program in the middle of the year aimed at making Dell a channel leader in 1,000 days.

Shortly after Davis' ascension, Dell reorganized its channel team, with Bob Skelley, formerly of EqualLogic, becoming the director of enterprise architecture. Meanwhile Jim De Foe became area vice president, America channels, leading a team dedicated to focusing on channel partners and channel account managers. Finally, Paul Schaeffer took over as director of global channel marketing, North America programs and operations.

Dell in July continued to build a strong channel team, scooping up channel stalwart Nancy Reynolds to recruit new enterprise solution providers, grow the vendor's global channel business and strengthen Dell's channel-partner relationships. Reynolds is working on a global scale to strengthen partner relationships and increase revenue for everyone involved.

Greg Davis and his team are working hard to make Dell's channel offerings more robust while eliminating as much conflict as is possible, but issues might still slip through the cracks. In the past it seemed to be a rite of passage for a solution provider to get burned by Dell. But since Davis took over and Round Rock got serious about the channel, those instances, while not disappearing entirely, did seem to become fewer.

Dell gave solution providers working with SMB customers a long-awaited break, dropping the threshold for deal registration from $50,000 to $15,000, potentially opening a new avenue for solution providers who had previously been on the fence when it comes to embrace Dell.

Dell launched a number of new products throughout 2009 including business-focused notebooks, desktops, netbooks and other devices for consumers and professionals, all rolled out in grand fashion. But two product lines made the biggest waves.

In the beginning of the year the company wowed potential customers with the Adamo notebook, an ultrathin device with a heavy emphasis placed on design -- and a heavy price tag to match. It was followed by the Adamo XPS, another high-fashion, thin device with a curious hinge that doubles as a stand.

One Dell product story that refused to go away was rumors of a smartphone running Google's Android operating system. In fact, looking back into 2008, rumors swirled that the computer maker would roll something out. Eventually those rumors did come to fruition, just not in the U.S. Instead it appears the Dell Mini 3 smartphone could be sold in China and Brazil before the end of the year. Speculation is still strong, however, that the Mini 3 will land in the U.S. sometime in 2010.

In October, Dell revealed a partnership with designed to offer cloud-based CRM for SMB customers. The move brings an enterprise-class offering to small business customers starting at $9 per user, per month. The deal is the crown jewel in Dell's year-long push toward embracing the cloud. At the OpenSource World conference in August, Dell revealed that the company is moving quickly toward embracing the cloud. The company said it was trying to dispel the notion that the computer maker is, in fact, just a computer maker but instead is a computer maker that provides the software and services that make the cloud at large work.

As evidence, Dell pointed toward its advancements in virtualization. In 2009 Dell rolled out its most comprehensive virtualization hardware lineup since it acquired EqualLogic. The June roll out included the EqualLogic PS4000 storage array, PowerVault NX3000 SAN device and the PowerEdge R410, T410 and T710 servers with Intel Xeon 5500 processors. The rollout was designed to provide customers with the necessary equipment to embrace virtualization. One day after the product roll out, Dell revealed it also make a host of virtualization services available to solution providers to take to customers.

Dell has said consistently over the past year that it would bring additional hardware and services to bear on the data center as it transitions from being strictly a hardware manufacturer into more of a service-oriented company. This is a big change for Dell whose traditionally strength has been in marketing products, assembling them quickly and cheaply before rolling them out the door. But, looking back at the vendor's poor balance sheet, it has become clear that in order to keep making money there needs to be an influx of low overhead products and services that can help revitalize the company. To that end, Dell's partnership with Egenera brings the Marlboro, Mass-based company's PAN Manger to the data center, allowing solution providers to go to market with ammo similar to what HP and Cisco are already offering.