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Dell: The duck is not merely turning around

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Preeti
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INDIA: Sometimes the problem is not about glass being half full or half empty, but about the size and width of the straw.

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Newsreels reported one more not-so-shocking decline in the first quarter of 2013. This was about PC sales, and the trend apparently continued into the second quarter with little recovery said to be expected for the second half of 2013.

All this time, new devices are pouring heavy into the market thus making it hard to shrug off underlying weakness of the traditional PC market. If the outlook for tablet revenue for 2013 is for growth of 38.9 percent is what there is to it, with mobile phone revenue projected to increase 9.3 per cent this year, as per Gartner's latest reports, then that pretty much explains why some traditional PC majors are inching closer to spin-offs of these lines or why others are sweating it heavy on a turnaround.

From PCs to BYOD, from clunky boxes to virtualized siblings, from server room heat to Cloud; the market has ruthlessly re-sized many portfolios. Sometimes it right sized, some other times it downsized their baskets and for the rest, it capsized them.

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Yet, some brands keep echoing the quintessential strengths of their founders in every quarter, in a glass, or outside it. It comes down to mixing it well with ‘shaken not stirred' tilt after all.

Eponymous to a direct-selling brand case-in-point for years, this pro-iron major has tried many direct and indirect ways of re-inventing itself time and again. The mood in the PC space is different for sure and yet one cannot ignore the strides that Dell has made in bolstering its position in the server segment thanks to high-density and micro server segment play. Or updates like creation of a software group in itself.

Grey is passe

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Would it stay an old-school hardware vendor or would it keep bending towards turning a software-and-services-driven company? Or would it be really about an end-to-end basket that it has touted off and on? Integrated, converged infrastructures- something really more than new fangled names for what Dell sells now?

Industry watchers and critics have their own set of opinions. If grey suits are not selling, maybe it's time to change the way they are stitched or who they are sold to, instead of throwing the baby out with the bath water. But Dell is surely changing the wardrobe in a not-so-easy-to-predict way. From what appears to be going in the changing rooms, there are lot of new colours and even bohemian ones entering the set. What strikes again is that one-theme-trousseau days may be over and the company would rather offer many colours, fabrics and pieces to be mixed and matched in an outfit that a customer feels like wearing.

That is where Dell is trying to be open system-based and yet an end-to-end player. To top this change, there is enough movement in services end of the market too. Whether you want it to tailor a new suit for you, or you want grooming services, Dell looks like ready to be there for every point in the curve.

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That's how Dell seems to be looking at new words like ‘software', ‘services', ‘cloud' etc with curiosity and not alarm. It would be unfair to weigh its new posture down with usual speculations, debate and doubt. Like many turnarounds, specially in technology industry, it is unreasonable to judge anyone too soon.

We will not do that now. What we can do though is have our ears glued to how much of that new flavoured mojito is trickling down for India, and make sense of the new stuff Dell is sipping in this market. What may be interesting to swallow is that it may not just be about avoiding wafers and chasing bigger margins but about new appetite.

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Disruptive flashes

The tone can be felt while talking about anything in Dell's basket. Pick analytics, services, storage-in-a-box, the accent stays the same.

Like for Flash, the really-new-almost-hobo-colour in any storage wardrobe, for which all that Alan Atkinson, VP and GM, Dell Storage sounds off is confidence. "Our flash is four to five times cheaper than the competition. That's what I call disruptive - flash at the price of disk. Usually customers are caught in ‘performance or cost' choice. We want to break the ‘or' dilemma.

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He explains that Dell's way of pushing the envelope on price here is not by going for cheaper components but by the software element. Customers love a flash-level performance so why should price be a deterrent, he poses before asserting that he expects a significant demand shift with this shift of consumer-grade Flash.

With new shades entering the Dell closet, fears of purple overshadowing pastel cannot be ruled out. But Atkinson shrugs off cannibalization worries. "Companies that are afraid of this factor, run into challenges themselves. Look back at the 90s when storage was just a peripheral. Apart from small ripples like de-duplication, this space has not seen any paradigm shift. But Big Data, SAN, Flash etc are worth watching now."

Interestingly he is not worried about how or how soon Indian CIOs would embrace what it has to offer on a new plate. He defines Asia Pacific market as one full of diversity. "Japan is mature, sophisticated but takes time to decide. China is price sensitive so there it is all about skinny margins. India is a bit of both mindsets, and I see the CIOs here very tech-savvy. So trends like Cloud are embraced fast and they understand the space so well, I doubt why should they not be early adopters at all."

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The Service road

Dell has cracked the soil at the right time probably. It cannot get more interesting than this to hear it talk about services in the same mint-fresh breath as it would exhale about its new or existing products. Raman Sapra, Executive Director and Global Head of Strategy and Business Innovation Services, for Dell Applications and BPO is very upbeat about the role of ‘services' layer in Dell's pie.

 

"Customers want everything stitched together. Instead of piece-meal slices, why not have one comprehensive solution. This is what ‘services' allow to do. That enables everyone to think in terms of ‘solutions'."

It should be worth the sweat to let go of the ‘boxes' mindset for sure. It also aligns well with the big and rapid changes the industry is surfing through. Declining markets as well as shares in well-entrenched segments of yesterday have made way for agile offerings and hugs to new buzz words of tomorrow in almost a relentless way.

Manish Bahl, Vice President and Country Manager for India, Forrester Research has his own take. He reminds how Indian CIOs do not perceive Dell as a strong IT services player in the market and the vendor needs to do a better job in articulating its global messaging in India.

He advises that Dell should look beyond traditional technology management delivery and must adopt a business-led approach with CIOs. Indian CIOs are looking for a more dynamic and continuous engagement with their vendors so that they can respond to changing business needs better, faster, and cheaper.

"Dell must shift its sales, delivery, and client service from an inside-out perspective to one that is more outside-in by building partnerships and investing in business-driven delivery models with Indian CIOs." Bahl suggests.

Open and Full, one-stop game

It is more than margin-related play for Dell as S Sridhar, director, Enterprise Solutions group, stresses it ahead. "We do not want to give ‘no choice' to customer and so our solutions reflect the ‘open' flavor always. We are different as we are for peaceful co-existence of different choices to the customer. Reference architectures, boxes or customization; we will give whatever our customers want."

He reminds how rivals may talk about convergence but when it comes to protocols, Dell is different in ‘walking the talk. "Dell products can exist in hybrid environments.

At the same time, Dell will have to be cognizant about concerns of ‘soup-to-tiramisu' offerings on a customer's digestive system. One-stack vendors are easily polarized this way or the other depending on a customer's set of issues, flexibility preferences and the good old' lock-in nightmare.

Sridhar admits that there is no one answer here. "No one model is being exclusively adopted. Depending on opportunities or options, we will offer what customer would be happy with. That said, even in a one-stack environment, a customer is not necessarily disadvantaged solely because we are not a proprietary-bent company but a rather open-approach vendor like I have mentioned already."

It is fascinating not to dwell on what made this vendor so open. Is it because industry standards have thankfully kept pace with what customers want or can credit also be due to Dell's own development efforts?

Sridhar attributes the pat to both factors. "Industry progress as well our own R&D has helped. We provide choices with layers and connectors in our entire set. In fact, gone are the days when one organization can cover all the distance. Combined development efforts in the industry are commendable. That's why we are proud of good relationships with our partners and we can boast of a great ecosystem."

 

The company has been growing in all directions and taking partners or new adopted kids under its fold with quite an embrace. From acquisitions to partnerships, there is always some news worth noting.

For instance, a change in equations with stalwarts like EMC, seems not to perturb Dell's trajectory.

Atkinson reflects that Dell was in an OEM slot there and it was a win-win situation for both. "OEM relationships are tipping your toes in water. Reselling and IP areas are a different game. The value is in delivering it is with a good storage strategy. And Dell has ensured that customers are not hit unfairly with such changes. There was no dichotomy at our end after the decision happened, so that our customers kept feeling smooth. We eased them out without any sharp in-your-face discriminations."

Bahl highlights that one of the key challenges for Dell is to integrate all its software acquisitions into a cohesive product line to position itself as a true software player.

Sridhar on the other hand, feels that the approach is on the right track here though. "Each acquisition is so well aligned to our strategy and open standards that our customers can feel it right on. Our solutions resonate the needs of market and it is not because of only our sales push. With acquisitions we make sure to blend them properly, and fluid data architecture or Gale (where we could shrink its very roadmap by 12 o 15 years) or anything else, we have the ‘fluid forward' tenet sounding very strongly in and around Dell."

All said...

The Dell-on-Dell approach has also allowed the company to pick lessons by wiping other guinea pigs off the table. "The biggest lesson has been that customers want business outcomes. No one buys technology for the sake of it. We have been taking customer feedback and incorporating it every level, from strategic moves to products."

In Bahl's reckoning, opportunities are right there and up for grabs if one sees it well.

Mobility (BYOD, customer and partner facing applications) has started CIOs to rethink their security strategy and they are looking for vendors with strong security services background to help them address mobility aspect for their organization. "Dell has an opportunity to position itself as a strong security services player in the market. However, a lot will depend on how well Dell executes its services strategy in the country."

Services, open-play, end-to-end menu card and room for radical changes; all that says a lot on what Dell may be up to. With all this change that the company is going through, the top brass here echoes what boss might be saying with a thrust on other tables.

 

Atkinson makes it clear commenting on turnaround, "We are making the right interventions, doing the right things and in the right ways."

Straws to sip, or straws to swim out of drowning waters, it's all about the right grip.

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