Posted by : bpburnwal on Sep 27, 2003 - 07:36 AM General

Dell has been one company left untouched by the problems that have bedeviled the IT industry over the last two years. While other suppliers have struggled, Dell's expansion has been relentless.

This month the company launched its first printer products to follow on from storage, network switches and PDAs as new markets for the company while the company has expanded into new geographies.

All of this growth is based on the Dell direct model, but many have wondered if Dell can continue to achieve such fast growth and whether, at some point, it may have to modify its sales channels.

On a recent visit to London, Michael Dell spent some time with Computing to talk about his plans for the company, new areas of business, new markets and the outlook for the technology industry.

Your target is to make Dell a $60bn company. Do you still think this is achievable?

We've set that as a goal for the company. We were a $30 billion company and this year we will be $40 or $41 billion and we are well on track.

I think our growth will come disproportionately from some of the newer areas - servers and storage, services, software and peripherals - and from globalisation - expanding into new markets and growing our share.

You've entered a lot new businesses over the last year, such as storage, networking products, PDAs and now printers, are those new businesses doing well and what are your expectations around them?

They are going pretty well. We have the fortunate situation in our business where we are growing in multiple areas. The storage business in the UK, for example, grew by 98 per cent in the last quarter, and the storage business grew by around 50 per cent overall. All of the areas, as well as the services business, are growing at least two times faster than the systems business.

As standards come into more and more areas of the business and you combine this with our direct business model, this can now work across a broad spectrum of products and services.

But do you seen yourself maintaining the same growth level in the future?

I think we still have a lot of opportunities to grow faster than the market. If you look at the last two and a half years, we've grown at a 20-point premium or faster than the market.

The UK market last year grew by 35 per cent on a year-by-year basis. So it was much faster than the market. I think this will continue for some time. We have the fundamentals of the value we can deliver to customers in terms of the direct business model and then there are the expansion opportunities in terms of new business expansion and geographic expansion into other countries and clearly, Asia.





How are you doing with the direct model in other countries in Europe. It works well in the UK but not so well in other countries, for example, Italy?

We've had three quarters in a row now of records on records on records in terms of revenues and profits across Europe. Profits in Europe are up about 90 per cent on a year by year basis and revenues are up quite substantially. Dell Europe is a $9 billion business and growing quite rapidly so I think if you looked at it on its own you would say, 'Wow, that's a very successful entity, just by itself'.

On the model we use, it's very easy to misunderstand what we are doing. It's happened in the US, it's happened elsewhere - in Italy, as you mentioned - but over time the economics become so compelling that it is hard for us not to see an opportunity in all these markets.

For example, when went to Asia, people said, well the direct model is not going to work, Well, it does work. We have the evidence of 71 per cent growth last quarter in China, we are number one in the Chinese server market, we are the largest non-Japanese computer company in Japan, the largest non-Chinese computer company in China. [The direct model] is doing quite well around the world.

You are primarily known as a company for the corporate market. The SMB (small to medium sized business) market is not a strong market for Dell. SMB's look to the channel. What will you do for the SMBs who will feel that they would rather deal with a smaller company in the channel that will support them?

Our fastest growth in fact is in the small business market and the consumer market. OK, it's not the biggest portion of our business today but small business is growing very rapidly. The European small business group is growing at about 50 per cent, which is about twice the rate of the larger accounts. So I don't have any doubts about our ability to penetrate those accounts.

What new technologies that are coming up do you see as being important?

We think that wireless is clearly a big deal in mobile computing with 802.11 and the varieties of Wi-Fi.

In the enterprise market we are very much believers in the scale-out technologies with clusters or grids of servers - two and four-way servers. More and more what we are seeing is a dynamic pool of servers which are allocatable to different applications and a framework to manage across servers and storage and network resources that is much more flexible than the proprietary systems - you know, one large box or two large boxes.

Are you talking about the opposite of consolidation? You could consolidate in the physical sense, in a cluster, but the cost starts getting our of hand very quickly. If you look at what Oracle has done, with grids for example, you see a grid of Dell two-way and four-way server, you see much, much great performance - 80-plus per cent better performance - at a fraction of the cost to an equivalent eight-way server. And actually the market for larger servers - four eight-way servers - is going down and the projections for two-way and four-way are going up.

What new services areas do you see Dell getting into.

The new service areas are the extended services - Dell Managed Services and Dell Professional Services. Managed Services you can figure as a desktop outsourcing service where we are managing the entire desktop environment for companies like Axa and Cable & Wireless and we provide the help-desk, the refresh cycle, the software and of course the product itself and all the services that go with it. That's a growing part of our business.

Professional services are the services that help the customer deploy some of these more complex products such as Sans (Storage Attached Networks), storage, helping a customer deploy Microsoft Exchange on an array of Dell servers.

What competitor keeps you awake at night?

Well, we worry more about ourselves than the competition. The thing that can trip us up is our own execution. Yes, there are other competitors and they are out there and coming after us. We're going after them. I think we have to worry about our own ability to execute.

We spend a lot of time on leadership development meetings. Growing the talent within the company so we can pursue all of the opportunities we have.

We focus on continuous improvement within the business. Making our processes better. Driving costs down. Reducing cycle time and openly delivering better value to the customers. And it's a relentless process because if you assume that you are going to succeed, just because you've succeeded in the past, you are bound to fail.

This is part of the Dell culture, but how do you keep that culture?

For one thing, you have to be very clear about what the values and objectives are inside the company culture. We do that, we are very clear, we inoculate them with the culture. We make it clear what it means to be part of Dell.

We are very good at setting 'stretch goals' for ourselves. All of our incentive systems are driven around saving money for the customer. Things that are going to make our company more efficient and more effective and will ultimately deliver more value. That's how we succeed.

To see more visit site www.ittoolbox.com