14 Tough Questions For Michael Dell At Dell World 2014

Tough Questions

Michael Dell, chairman and CEO of Dell, took the Q&A hot seat at Dell World 2014 this week fielding questions on everything from managing channel growth, Dell headcount reductions and what the company wants from the channel partner community in the year ahead.

The backdrop for this year's confab was Dell's transformation back to a private company and its robust channel growth. Executives said at last year's Dell World the channel represented about 33 percent of overall revenue compared to today's 40 percent.

Here are 14 channel-centric questions and answers from Michael Dell.

The industry has seen the proposed splits of HP and Symantec. You've said this has nothing to do with the customers, rather shareholder value. What is Dell's plan to bring Dell closer to partners and customers?

One of the beauties of going private is we can focus 100 percent on customers and partners and their success. You are seeing these moves that are driven by shareholder interest, particularly short term shareholder interest. We have a long-term focus. We know we succeed when our customers and partners succeed. We are no longer subject to this short-term turmoil.

Going private has allowed us to direct our energy toward our partners and customers. I'm proud to say it has given us the freedom and flexibility to grow. Take a look at the level of innovation here [at Dell World] and the capabilities of our solutions. Going private is absolutely working.

Every region is growing and we are gratified by the response and we could not have done it without the help of our partners. There is no upper limit on the growth. We think we can absolutely still keep growing and we have ambitious share gain plans to keep that growth going at an aggressive rate.

Why do you think HP, Symantec and IBM have chosen to split or sell off major chunks of their business?

It's an interesting question. If you are one those companies you have to sit back and ask yourself this. Does this actually help the customers? Second question is, If you own all of the business you are running, is this something you would do? We are privileged to be private and to be able to ask those questions. We are going to start there -- as an end-to-end IT company -- and that's how we are forming our decisions. So far, it's working.

I can tell you [breaking apart] is not something we would have ever done.

With the disruption in the traditional IT infrastructure inside the datacenter environment and with intelligent software running so many appliances, how do partners get ahead of this trend?

There is clearly a lot of momentum in converged infrastructure and we have been attacking this very heavily. Last year it was with VRTX. This year it's with something called FX2 which is a revolutionary product that Dell has been developing.

I do think that within the software-defined shift in IT there isn't going to be just one winner. So we are working with Microsoft, VMware, Red Hat and lots of other companies out there such as Nutanix and Nexenta. These solutions handle software-defined workloads. From Dell's perspective, we are seeing all these workloads come to us and we are building finely tuned appliances to address the needs of the market.

Can you give us an update on Dell Ventures and your investments that include startups and small companies developing technologies around storage, cloud computing, big data, next‐generation data center, security and mobility.

We have been making seed investments in a number of startups that are important to our future. You have probably seen them in areas such as storage, networking and security. This is not a new activity for Dell.

Dell was one of the early investors in VMware. Dell was an early investor in Red Hat. We have a long history of helping out these new companies as they move along. We also have a big effort around entrepreneurship. I've taken a special role in the United Nations around that.

We continue to make those investments. It gives us a great window into those technologies. The companies come from all over the world and they are great partners to us as we evolve our business. Some of them will go on to be independent companies. Some of them, we may acquire. It's a great way for use to extend our reach and not just acquire companies, rather make small investments. You are going to continue to see us continue with alliances and partnerships with these companies.

As a private company are you able to target your margins by business unit as a competitive weapon?

Yes. We don't have this 90-day shot clock that we are operating to. We are running the business for long-term success. If our customers and partners succeed we succeed.

A customer told me he is blown away by the level of innovation that we have injected into this business over the past year. We are really excited about what we are doing. We have been able to elevate the growth rate and certainly having the freedom to operate as we do. And that's a wonderful thing.

Has Dell grown? And will you tell us how much Dell has grown in terms of percentages?

Yes, by quite a bit. But we are not releasing by how much. We are growing faster than any other large, integrated IT company. But you don't have to take our word for it. You can see it in the share data. You don't need our financial statements. You can see from IDC, from Gartner and from other folks that track such things. We have seen enormous growth around the world.

Given the fact that Dell is an end-to-end solutions provider and client PCs still account for 60 to 70 percent of revenue, are you happy with the growth within the enterprise solutions group?

To be in the end-to-end solutions business you have to have both ends. Or else it is the end.

We think it's very important to have the entire solution. We have seen growth in our storage business. We are very excited and pleased with the growth we are seeing in the overall enterprise business. We have had double-digit growth in our software business. We are seeing very strong growth in the datacenter business.

You are going to hear about, yet again, very aggressive products in the datacenter with our storage offerings with our 13th Generation PowerEdge, the FX architecture and networking. Our services business continues to grow. During that growth we have been able to invest in the business and accelerate growth.

Dell has made deals with companies such as VMware and Nutanix. So it might make sense for Dell to build its own software box and stacks. Is that something you intend to do?

Our view with the whole entire software-defined sector is that there are going to be a very large number of potential solutions. Clearly when it comes to private cloud the major ones are going to be Microsoft, VMware and Red Hat OpenStack. There are others such as Nutanix and other types of specialized software-defined workloads for converged infrastructure.

In networking we have been the first to embrace Big Switch and Cumulus. So we think the trend is actively in our favor. We are actively building our own software capability ourselves. But we think giving customers choice is the answer. As a leading provider of converged infrastructure, you are going to see Dell's hardware run on a large number of solutions that we provide and that our OEM partners provide.

We have over 3,000 OEM customers that use Dell's converged infrastructure as the basis for their company.

What can partners expect from the Beta Cloud Marketplace launched this week at Dell World?

Dell's Cloud Marketplace will help Dell customers embrace the public cloud if they want to. There is another interesting trend. Software is getting better and better at managing infrastructure so that customers can create their own very efficient cloud -- be it with Microsoft and EVO: Rail. We think those types of solutions will grow very fast as well as create the benefits of the public cloud with the privacy and security of an on-premise solution. We are going to help customers choose from the spectrum of private clouds or managing the multi-cloud environment -- whether it's public or private from the Dell Cloud Marketplace.

There have been significant headcount reductions at Dell over the past few years. What can you tell us about those staff reductions and how you are managing growth despite them?

We did have a voluntary separation program that we thought was a more humane way to change the nature of the workforce. We needed more people in certain areas. And it's also true, in some cases we needed less people in certain areas of our business.

What I'll tell you is, if you go out to any of the major job sites out there, you'll find Dell is hiring. We are hiring in research and development, we are hiring engineers and we are hiring software developers to grow our business. I think the actions speak in terms of where we are going. We will continue to grow.

Mobile has a lot of opportunity but it has also been very challenging for a lot of companies. For Dell, where do you see the various opportunities? Is it devices, software and services?

I think the first thing you need to realize is the number of mobile devices are growing. It's not just the smartphones. It's also sensors and wearables.

For every 50, 60, 70 newly-minted smartphones, a new server pops up on the network to support them. We see tremendous growth within mobile infrastructure. We are not going after the device space. There are a lot of competitors. We are happy not to play in that space. We are very focused on tablets, notebooks and two-in-one devices.

We are interested in providing the services to help our customers gain better insights from all that mobile data. We are going to help them figure out how to inject mobility into their businesses successfully. We also have a lot of focus on how you secure the environment given that all those additional nodes are vulnerability points in the network. Corporations and business want their customers to access the data, but they want to be able to do it securely in a protected fashion.

Forty percent of Dell's revenue is generate by the channel. How's that transformation gone and where is it going?

It has been a very big change and we started this program seven years ago. We love the channel. We have seen tremendous growth there and we think it's going to continue. We haven't set an upper limit to its growth. Dell still has an omni-channel approach. It has it been a tremendous growth area for us and given us access to many new customers around the world.

As part of that growth, we have also added tier-two distribution with Ingram Micro, Tech Data, Synnex and many others.

What is your ask of the channel?

At Dell World we are here to think about our growth together. We are here to thank you for trusting us and the great progress we had over the last year and some great accomplishments individually and collectively with partners.

We want to continue that with our partners this year and beyond. I'm just asking that you all adopt the 'pleased, but not satisfied' mantra we have at Dell. When things are going well it's important that we continue that aggressive growth into next year and beyond. Join us in the 'pleased, but not satisfied' commitment. Let's go make it happen even more next year.