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Past Symposium/ITxpo
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Michael Dell: Not Just a PC Company Anymore Thursday, 10 October 2002 View the Webcast Michael Dell, chairman and CEO of Dell Computer, wants the world to know that Dell's not just a PC company anymore. "If you look over the last five or seven years, Dell's actually made a lot of progress in markets beyond desktop computing," Mr. Dell said at his Mastermind Interview Wednesday morning at Symposium/ITxpo 2002. "For example, now, the majority of our profits come from non-desktop computers. We've become No. 1 in the Intel server space in the United States." "We've also globalized the business, and built a large services business," Mr. Dell told Gartner Vice Presidents Leslie Fiering and John Enck during the interview. "Roughly ten percent of our revenues come from services…Dell has evolved from a very efficient desktop-centric company in the early '90s to a broad company that is providing solutions around the enterprise and services, and also doing it globally." Responding to the popular conception that Dell is "just a sales channel," Mr. Dell pointed out that over 90 percent of the company's revenues come from products that they design and manufacture. "And for those of you interested in intellectual property, let me just point you to www.dell.com/patents where you'll find that Dell has received about 750 patents from the United States patent and trademark office," he added. "I think sometimes the direct model overshadows some of the other skills Dell has." Mr. Dell said that while in many instances Dell hasn't necessarily been a key innovator, but "there's a lot of innovation that can be done within a standard." He said that although Dell has been active in promoting industry standards, he believes there are fundamentally two kinds of research development for the IT industry: developments that aid customers, and developments that lock customers into a "proprietary franchise." Dell said he favors the former type of development. Ms. Fiering asked Mr. Dell how he thought Dell, which built its reputation on serving the cost-conscious consumer, could thrive on delivering customized services. She mentioned recent Gartner research that has shown customized service margins "will go down to single digits shortly." "What we're seeing oftentimes is that customer services can be re-deployed time and time again," Mr. Dell said. "So there's actually some intellectual property that gets created, and there's a repeatable process." Ms. Fiering then asked how services can be commoditized. "I think if you look at things like same-day, on-site support, and gold and platinum kinds of support, and storage area network (SAN) implementations, these things historically had quite high premiums in the market," Mr. Dell responded. "As Dell has entered that part of the market, we've brought down prices, on average, 40 percent to 50 percent over the course of the last year." He believes that Dell is going to drive down prices considerably for the overall market, which is good news for customers. "That's part of our business model — we don't want to see customers charged exorbitant rates for these things," he said. "I firmly believe that, over time, every part of the market will find its way to dramatic declines in cost." When asked about three milestones that Dell hoped to pass during the upcoming year, Mr. Dell said to expect continued progress in the enterprise, particularly around servers, storage and services. "We've enjoyed a lot of success in those product categories," Mr. Dell said. "They're among the fastest growing for us, and I'd like to suggest that a year from now, we'll have a lot more customers." "I think you'll see further progress in globalization — in Dell's capability around the world to service customers," he added. "I think you'll see a sustainability and continued focus from Dell on providing the best value in this marketplace," Mr. Dell said. "It's a very competitive marketplace — we've got lots of vicious competitors out there. But our job is to be absolutely the best in the world at driving costs down. I think as more of these markets standardize and commoditize, we've got an opportunity to save customers a lot of money." Michael Calvert Gartner Staff |
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