Dell Shares : Services

Launching Windows 7 – Will it generate an upgrade cycle?

DELL-Kristy H — Fri, 16 Oct 2009 15:33:00 GMT

As we meet with investors, we have been getting a lot of questions about a pending corporate upgrade cycle and whether Windows 7 will be a catalyst for PC demand.

First, let me say that we're very excited about the Windows 7 launch next week. Dell is one of Microsoft's biggest OEM partners, and due to a collaborative engineering effort that extends over the past three years, we really feel customers will reap the benefits from upgrading to Win7. Windows 7 has some very compelling features ranging from better applications and drivers to faster boot times and quick online capabilities.

So why Windows 7?

Beginning with boot time - it's fast. Windows 7 uses less memory to boot the OS than Vista. Microsoft removed unnecessary services and drivers from automatically loading, which reduces the boot time and the OS footprint occupied in memory. The user interface also has several cool new features. Jump lists or pinned applications facilitate opening recently viewed items, such as files, folders, or websites in a more organized fashion. And the snap feature allows you to snap two windows to the side of the screen and compare them side by side with ease.

Windows 7 makes it easier than ever to go mobile. Improved wireless connectivity results in less time to locate and connect to a network. And with location aware printing in the Professional and Ultimate versions of Windows 7, you no longer have to manually switch printers when moving from home to work or network to network. In addition, it can also run in XP mode which is great for customers that need a way to deal with legacy applications that aren't compatible with Vista or Windows 7. Clearly, these are just a few of the cool features you will find, so check out more details in our Direct2Dell blog.

As Michael recently stated regarding the use of Windows 7, "You will love your PC again".

What about a corporate PC upgrade cycle?

In commercial accounts, increases in information technology spending are most strongly correlated with improvements in corporate profitability and that will be the key driver of a commercial refresh. Specific to Win7, we have only seen about 30% of our commercial customers adopt Vista with the rest staying on older operating systems. With a weak economy, the installed base has increased to about five years for desktops and 3-4 years for notebooks. So many of our customers are working with older machines and running an operating system that is almost 8 years old. This coupled with the fact that new PCs are faster, considerably more energy efficient, and have much better graphics capabilities make for a compelling upgrade.

We're also working with Microsoft on the launch of Windows 7 next week, and on the upcoming launch of Office 2010. Everything we see right now from the direct conversations with customers to surveys with CIOs tell us an upgrade cycle is forthcoming and likely in 2010 - helped by Win7 but really driven by an improving economy.

Dell Storage Portfolio - EqualLogic PS Series

Robert L Williams — Mon, 22 Jun 2009 19:06:00 GMT

Data is generated at a faster rate than ever before and the need to manage this data efficiently is extremely critical. Also, with heightened regulations, enterprises are required to store more data for longer periods of time, which also increases the demand for storage capacity.

Based on this massive data growth, storage is considered more resilient than other IT hardware in this challenging economy, but customers still require optimal, cost effective solutions as budgets are more constrained. Customers also want confidence that their data is easily available and protected. Recent IDC research estimates the annual cost to maintain storage is 1.5x the cost to acquire the storage. We believe these challenges provide Dell an opportunity to offer customers solutions that will require lower maintenance and improve their overall ROI.

So why Dell? Dell offers a complete storage solutions portfolio which includes EMC, PowerVault, and EqualLogic that covers file storage, block storage, and data protection. Due to Dell's recent announcement on the expansion of its enterprise technology portfolio, I'd like to focus on the EqualLogic PS Series. The recent expansion includes the EqualLogic PS4000 storage array which is designed for remote offices and small medium businesses, provides an affordable entry point for smaller configurations, and offers the same benefits as previous PS Series generations. EqualLogic PS Series have a comprehensive feature set built-in with the software and applications expected from an enterprise-level SAN. This all inclusive feature comes at no additional charge rather than à la carte pricing, which can become costly for customers. There is no additional software to install or service costs to incur to initiate the data management and protection features for this enterprise-class SAN.

The EqualLogic PS Series solution simplifies storage technology, management, and business practices. The PS Series is an iSCSI SAN, so the use of IP and Ethernet networking technology keep costs down on switching hardware and on training costs. Also, instead of making customers play a capacity guessing game, and over-invest in hardware, the PS Series can be expanded modularly, so customers buy only what they need now and pay as they grow - all without disrupting applications. With the EqualLogic peer storage architecture, customers can buy one generation of hardware, expand with a second and third generation of arrays - all online, all within the same SAN, and then retire the older hardware as they see fit. Customers also have the option to download the latest software items to update their arrays at no additional cost. All of these unique features yield TCO benefits: Less time managing storage, all-inclusive software package, pay-as-you-grow model, and cost-effective iSCSI network all help reduce the total cost of ownership for storage.

In 2008, Dell was #1 in iSCSI storage and also received the PilotHouse Award as the Best Overall Storage Provider for Virtual Environments. Dell also ranked in the March 2009 Issue of Storage Magazine as #1 midrange array provider in terms of user service and reliability. The PS Series 2008 sales growth was 134% Y/Y. Also, 82% of the EQL sites were new enterprise storage sites, where our indirect Partners represented more than 55% of these new sites.

The end result is a win-win situation with happy, loyal customers and a sustainable, profitable business.

Jeff Clarke, Vice Chairman, Technology and Operations, Discusses Progress on $4B Cost Initiative

Robert L Williams — Fri, 17 Apr 2009 14:50:00 GMT

I recently sat down with Jeff Clarke, Vice Chairman, Technology and Operations, to discuss a range of topics that have received investor attention including:

Declining Client ASPs in the commercial customer business
Desktop and mobility virtualization
Progress on our $4 billion cost initiative
Optimization of our global manufacturing and logistics network
What we are going to do with the savings we realize from some of these initiatives

As always, I look forward to your questions and comments!

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Dell's Competitive Position in Blades

Robert L Williams — Tue, 31 Mar 2009 16:10:00 GMT

Last week, we achieved yet another milestone in enterprise computing with the launch of our latest enterprise solutions - including our 11th generation PowerEdge servers, a new EqualLogic storage product, and new systems management capabilities. These offerings are specifically designed to help our customers become more efficient and maximize their return on investment in data centers. As part of this launch, we introduced 14 new enterprise products that help customers cut cost and complexity through simplified management, industry leading virtualization and innovative solutions. Two members of our executive leadership team, Steve Schuckenbrock, President, Large Enterprise, and Brad Anderson, Senior Vice President, Enterprise Product Group presented at the launch event in San Francisco on March 25^th.

In today's discussion, I am going to focus on our blade servers. Data centers today have faced increasing challenges as they have grown. The sprawl of many servers, plus the resulting challenges to power and cooling, has dramatically increased the role of blade servers. According to industry research firm IDC, in calendar Q4 of 2008, blades made up roughly 15% of the x86 server market by volume and Dell was ranked #3 worldwide with 9% market share. Per IDC, we grew our blade units by roughly four times the industry growth rate in calendar Q4 of 2008. IDC also projects that blades are expected to experience strong growth in the mid-twenty percent range from 2010-12.

With our M-series blades, the goal from the beginning was to design the most power efficient server enclosure in the world. Another driving force in data centers today is virtualization. Blades fit perfectly in a virtual environment as they take up less space than normal rack mount servers and together with virtualization, provide customers a physical and virtual consolidation to save data center space and ease management. Dell provides industry leading solutions for customers running virtualization. Our ability to boot directly to VMware software is also a key differentiator for us. Dell's virtualization servers provide 50% more DIMM slots in the M905 than any competitive four socket server and 33% more high speed I/O.

So how competitive are our blades? We hired a third party firm to run the exact same server configurations and benchmarks on Dell, IBM, and HP blade enclosures. The result showed that our existing M-series blades had up to a 19% power advantage, and up to a 12% performance advantage, over our nearest competitors. Last week, we announced some further enhancements to our M-series blade portfolio - our new blade architecture now has 27 percent lower acquisition cost and delivers 17 percent lower TCO (total cost of ownership) over 5 years per rack compared to HP's c-Class.

So from a competitive standpoint, we are very well positioned in the blade market space and we are the only vendor to provide fully modular switches allowing customers to grow their blade enclosure throughput as their data center needs grow. With our M-series blades, we also offer FlexAddress, which is a low cost way to keep the server's Ethernet or Fibre Channel connection when changing a blade. This can help reduce customer downtime and works with any switch infrastructure a customer uses today. Designed to solve the major challenges of any data center, our M-series blades can be the ideal way to unlock the optimal data center within a customer environment by maximizing the power, cooling, and consolidation needs of today and tomorrow.

As always, we encourage you to ask questions or leave comments on Dell Shares.

Dell Global Services and the Services Supply Chain

Robert L Williams — Thu, 11 Dec 2008 15:35:00 GMT

Thanks for joining us on Dell Shares. I recently sat down with Steve Schuckenbrock, President of Dell Global Services and CIO, to get some more insight into our services business. Our discussion focused around what we're doing with cloud services and remote infrastructure management. We also touched based on our recent acquisitions, how our services business is growing, and how the current economic environment will impact our business.

Steve walks us through the services supply chain, and how, at Dell, our services business is differentiated from our competitors. Why we believe that customers will embrace proactive, low cost services solutions. Why developing "services aware" hardware allows us to deliver customized-solutions that reduce tedious, people intensive tasks that can be automated. And finally, how Dell's simple and configurable services deliver a pay-as-you-go business model that is both scalable and flexible to our customer's needs.

We hope you find this discussion helpful. As always, we will respond to your questions and comments posted on this blog site as well as via email and over the phone. So please feel free to post on this site or contact us directly. We look forward to hearing from you!

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Dell's Services Strategy

Lynn Tyson — Tue, 13 May 2008 18:27:00 GMT

We have been getting a lot of calls and questions today. Many are wondering about Dell's services strategy, especially in light of the news in the tech industry today. In fact, many of our customers enjoy the benefits of the partnership between Dell and EDS and we look forward to meeting their needs well into the future.

Customers value flexibility, value, configurability, access to innovation and control - this deal is likely to reduce all five for affected customers and perpetuate an old model. We believe the Services Industry is at a key inflection point. Dell will lead the transition to Configurable Managed Services, giving customers access to the best innovations in the world through remote infrastructure management and Software-as-a-Service (SaaS) offerings. By doing so, we will Simplify IT and give customers control, choice, flexibility and the best value in systems and services.

Dell's strategy was recently discussed by Steve Schuckenbrock over at our Inside IT blog. He noted "Dell will continue building out our plan to dramatically simplify IT infrastructure services and give companies choice and flexibility in how they purchase and manage services. Our goal is to improve the price/performance of infrastructure services to save companies millions -- potentially billions-- of dollars for IT that will grow business and improve competitiveness." For more information, you can see Steve's Services deck from our Equity Analyst Meeting in April.

For example, our recent acquisitions of MessageOne, SilverBack, Everdream and ASAP Software are building a SaaS-enabled services delivery platform to remotely monitor, manage and troubleshoot routine IT infrastructure issues such as patch management, anti-virus, asset tracking and software license management.

The Dell approach to consulting services is to use innovative tools and automated discovery agents and technology based analysis and profiling-- instead of armies of consultants-- to virtualize and improve data center power consumption, simplify storage and improve end-user computing, systems management and network security.

Our new ProSupport service is also customizable, letting customers configure their support by speed of response, level of protection and pro-active vs. reactive services that meet their needs.

In each of these cases, Dell services break from standard industry practices. We are building out Dell's services to be configurable and subscription based so customers can start or stop a service or any combination of services at any time, in just one click.

Delivering services that simplify IT is where businesses today derive more value, choice and flexibility. That is crucial to how businesses purchase and manage their information technology.

Dell is bringing to market a fundamentally different services offering than that which has been offered for the last decade or so. As a result, we are also delivering a very different value from "outsourcing" and pure play consulting. We believe our approach will prevent many of the issues that challenge businesses of all sizes, and in true Dell fashion, offer customizable IT services that meet specific business needs and give customers control, choice, flexibility and the best value in simplifying IT.

Dell Completes MessageOne Acquisition

Dell IR — Thu, 24 Apr 2008 15:35:00 GMT

Dell today announced the completion of its $155 million acquisition of MessageOne. Steve Schuckenbrock, SVP and President, Global Services and CIO, wrote a blog covering today's close of MessageOne and its context within a broader services strategy. In the post, Steve discusses our move towards a SaaS-enable services delivery platform, how Dell is simplifying IT infrastructure, and how customers may configure support levels to what they need through ProSupport. Steve's post can be found on Inside IT, and our original post on MessageOne can be found Dell Shares.

Dell Equity Analyst Meeting – Day 1

Robert L Williams — Wed, 02 Apr 2008 18:40:00 GMT

Today, 250 equity analysts and institutional investors joined us in Round Rock for Dell's equity analyst meeting. These meetings, which are available via live webcast, serve two important purposes. First, they give this audience and all of you an opportunity to hear directly from Dell's senior leadership, and second, it's our chance to help you understand where we're going financially, share our key initiatives and address questions and concerns.

The meetings and briefings are spread over two days, with the first day being a prerequisite to discussing our growth priorities on day two. We spent the first day providing a framework by which investors could understand the fundamental changes we're making to Dell's business model - from manufacturing to channels to services.

Dell has always been known for its direct model. With it, we created a direct customer relationship model and build-to-order manufacturing capability like the world had never seen. Our assets were global and our cycle times were some of the shortest in the industry.

But today's PC economics are much different. Moore's law led to better performance, rapid growth and lower selling prices, ultimately leading to smaller absolute cost advantages. And growth shifted from desktops to notebooks and from large enterprise customers to consumers and small enterprises. Our customers are more diverse than ever before. We now need to serve them in very different ways.

Mike Cannon, President of Dell Global Operations, talked about how Dell is optimizing its global manufacturing network to better meet customer needs. By matching product design to customer segments, we're able to eliminate embedded product costs. Getting this part right actually enables us to think more broadly about our manufacturing model and enhance the value we provide our customers.

Many have also questioned how being direct works with channel. The reality is that we have a $10 billion global partner business that we've steadily built for 23 years. Paul Bell, SVP & President of Dell Americas, spoke to our channel strategy and the investments we're making to better work with VARs and systems integrators. The flexible engagement model we've developed is backed by a compelling value proposition for our partners: our strong brand; a broad portfolio of industry-leading products; and simple, beneficial terms. It's designed to minimize conflict while building trust and mutually beneficial relationships. Since we announced this new initiative in Q3, we've worked hard to bring our regional partners onboard to make our solutions available in the geographies that need them most.

Steve Schuckenbrock, SVP Global Services & CIO, spoke about how customers spend a massive share of their IT budgets on services and how they face a burning need to shift this spend from maintenance to innovation. We approach services very differently from our competitors. We believe services should be customizable, a la carte, and available remotely. So Dell's new services model combines disruptive technologies with our core strengths to provide customers convenient and affordable enterprise-class support and monitoring services. Through ProSupport and the assets we acquired through several acquisitions we are building a platform that allows us to remotely manage the client lifecycle. We let customers choose which services they want and when they want them. And we provide solutions where consultants are available - but not required. We have a $6.2 billion global services business today, and there is no reason it can't double over the next 3-4 years.

These are changes in the way Dell interacts with customer. They set a foundation upon which we'll build our future success.

If you haven't already seen the webcasts or presentations, I encourage you to watch a replay of them here.

Dell’s Planned Acquisition of MessageOne

Lynn Tyson — Tue, 12 Feb 2008 12:30:00 GMT

E-mail has become one of the most ubiquitous and critical applications in business today; it can impact revenue, productivity, and a company's reputation. Due to increased regulatory and business requirements, e-mail management--including measures for compliance and disaster recovery--is now more complex than ever. Our announcement today to acquire MessageOne, an industry leader in Software-as-a-Service (SaaS) enabled e-mail continuity, compliance, archiving, and disaster recovery services is an important step towards simplifying IT and restoring integrity around a vital piece of our customer's IT infrastructure.

Dell's customers have been looking for solutions to help them simplify their IT infrastructure. Legacy services masks IT complexity. Estimates show that for every 1 dollar spent on hardware and software another 3 dollars gets spent on consultants and integrators. This is where we believe there is room to fundamentally change the industry's infrastructure services model. Through the use of technology, Dell's supply chain advantages, remote infrastructure management and SaaS, Dell is pursuing a strategy in the services space that is analogous to the approach taken to simplify the hardware business 23 short years ago. We have a legacy of driving down the cost of hardware for our customers and they believe we can do this in services as well.

MessageOne is another key piece in expanding Dell's services, especially in the rapidly growing SaaS enabled managed services market and complements our recent SaaS acquisitions of Silverback Technologies and Everdream we completed late last year. Silverback provides leadership in event-based monitoring and remote management of different Enterprise assets (servers, storage, printers, routers, etc). Everdream extends this capability to include lifecycle management of client assets (notebooks and desktops). These moves also signal Dell's efforts to address the needs of the small and medium business (SMB) market, similar to our purchase of EqualLogic late last year. EqualLogic is aimed at Dell's drive to Simplify IT and virtualization for mid-sized enterprise customers through Dell's channel partners and direct channel. EqualLogic has the third largest sales of iSCSI SANs and has patented storage virtualization technology that will give customers the power to cost-effectively install, expand and modify their data storage resources. We will build upon the portfolio of existing customers and channel partners for all of these offerings and will incorporate the respective technologies into future Dell services, including Dell's new ProSupport offering announced earlier this month.

We think ProSupport is especially exciting because it is more than another service offering, it is a choice of comprehensive support solutions that offer customers a choice based on who they are, how they use technology and where they want to allocate scarce IT resources. Dell ProSupport is breaking the "one size fits all, fragmented" support model that is industry standard, by putting choice in the hands of customers. This global offering spans all areas of hardware and will enable commercial customers, including small and medium business, to obtain world-class service from Dell or our registered solution providers without paying for more or less than they need.

Acquisitions for Dell are not a strategy unto themselves - they are a part of an overall strategy to fuel growth in five key areas: Consumer, Emerging Markets, Notebooks, Enterprise and Small Medium Business. When assessing possible acquisitions we look at several things including strategic fit - or how does it drive growth by scaling through our customer base, give us access to channels or provide new tools. We also look at how it can fit into our business model, how easily we can integrate the business, and also the track record of the management team. Via organic growth and acquisitions we will fill key capability gaps, gain access to new channels and leverage key technologies across our broad global customer base. You will continue to see Dell pursuing opportunities that strengthen our ability to meet the increasingly changing needs and challenges faced by many of our customers and simplify their IT environments.

One thing unique about this transaction is that it involved related parties. MessageOne was co-founded by Adam Dell, Michael Dell's brother, and is owned in part by two venture funds managed by Adam Dell--Impact Venture Partners and Impact Entrepreneurs Fund. Michael Dell, Susan Dell, a trust for the Dell’s minor children, and Mr. Dell’s parents are investors in both funds. Michael was not involved in the negotiation or decision-making process, and the independent members of Dell's board of directors (excluding Michael and Don Carty) analyzed in detail management's decision process to ensure that management was acting independently and in the best interests of the company and its shareholders. Additionally, Dell's board received an opinion from Morgan Stanley & Co. Incorporated concluding that, as of the date the deal was signed and based upon and subject to the matters stated in the opinion, the consideration to be paid by Dell pursuant to the acquisition was fair from a financial point of view to the company. Based on all of that, our independent directors concluded that the transaction was fair to, and in the best interests of, the company and its shareholders and approved the transaction. Michael and Susan Dell have indicated that the proceeds which they and their children’s trust receive from the acquisition will be donated to charity.