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Windows 8 will spur a latent market, says Dell

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Preeti
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MUMBAI, INDIA: 

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If all men are the same then why does it take so long to choose one?

Well, the question is almost a mirror image when it comes to reflecting the way IT market is changing drastically. It really takes a lot to stand out in a blur of form factors, cut-wallet competition and merciless rates of obsolescence. What was almost worshipped yesterday is out of the window today.

As one might be tempted to guess that as defenestration of old technology rules picks up, the likes of yesteryear giants like HP and Dell are hanging at a sharp cliff. An edge where even a small slip can cost a lot if one loses a grip over some sharp facts. Write-offs or financial fraud allegations may sound glamorously notorious for grist mills, but speaking of challenges; the real danger zone lies in not adapting fast enough to a market that has already crossed an eon.

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PCs have been struggling against tablets, which in turn, are witnessing how Android fatigue is surviving an iPad dominated screen-saver. Yesteryear chieftains like HP have taken the spin-off route apparently to come out of the PC maze. It is not probably the exact route that its contemporary Dell would also tow.

As to taking the alley called acquisitions, rivals have shown how lack of focus, a strong drag between different divisions and dilution of one's posture can lead to more milk getting spilled from one's palm.

Making sure one knows and nurtures one's real cash cows just might help here then.

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Notably enough, the server factory revenue numbers for second quarter indicate that Dell has come up as the only vendor among the top five whose server revenue increased. Propped up well with a 5.9 per cent growth in the quarter from the same quarter last year, it leaped to the third position, its highest ever server market share as per industry reports. A ladder where Oracle and Fujitsu got to the fourth and fifth positions.

Turning one's gaze deeper into the server side of portfolio is also interesting. What Gartner diagnosed for the third quarter of 2012 shows that HP topped the charts in server shipments but suffered an 8.4 per cent decline, logging a 25.8 per cent market share. Dell crawled up closer to the top spot, with shipments growing by nine per cent and notching a 23 per cent market share. Third-place IBM's shipments toppled by 2.5 per showing it an 11.4 per cent market share.

Yes, consumer revenue has shown a dip for some quarters now. Worldwide PC shipments declined eight per cent in the third quarter, as a result of a weak economy and a move toward smartphones and tablets for more computing tasks, Gartner has underlined clearly. If a company's half of revenue basket is made up of PCs, it surely raises some brows and hurts some profits. More so when reports like those of IHS iSuppli indicate that high-performance PCs will account for only six per cent of the market this year.

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The cliché word that continues to flank Dell is the 'Post-PC era' which has been given quite a stir by mobility advances made by young rivals like Google and Apple. It's time to adapt fast.

It could be done by reducing its dependence on PCs. It could be through acquiring more contemporary firms into its lap. It could be about a very radical capsizing of traditional direct-to-customer strategy altogether. It could be by swimming over to the high-end PC waters or focusing all energy and pipelines to the server segment which alone, clocked some semblance of growth, that of 11 per cent (with networking business), as compared to other pieces like PC, storage, mobility, servers and software etc that flashed a decline placard.

It's better to stop guessing what Dell has up its sleeve. Let's watch what it brings out of its hat. And meanwhile, let's ask the captains if Dell can be as bespoke to changing times and customer habits as it has been about its USPs in the past? An interview with Rekuram Vardharaj, Marketing Director, Enterprise solutions and growth markets, Dell India

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The global PC market, as per what the third quarter numbers for 2012 from Gartner apprehend, is down 8.3 per cent. Gartner also points at a shrinking PC segment in India, with a rate of 5.9 per cent. Dell's share in this sky fall is something around 22 per cent. Have we really hit the bye-PC era?

Times change but the experience that users like on their end devices does not undergo many shifts. It could be a tablet or a smart phone today. It's not as much about the device as it is about the rationale. Innovation is what we are focusing on. We are leaders in desktop virtualization, which is a big enabler of BYOD.

Has Windows 8 been good news or an insignificant one for Dell? Will it have any favourable impact in the markets you chase?

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It's a huge thing and a lot of product launches related to it or extended from it, are coming out at great speed. Specially in the mid market, I hear a lot of software as well as hardware change being caused by it. The effect, however, would be more pronounced as some time passes. It is an infinite shift and is striking the right chords but people will take time to get familiar as should be expected in any adoption cycle. There is a lot of latent interest that this launch is triggering though.

Dell has been a management student's quintessential example of a customized service. Where does the ‘direct' Dell approach move today? Is it still there in other strategic contours for India?

Our technology and tenets remain the same, Our platforms are very important and our thrust is on giving Indian CIOs the facets called relevance, security, manageability and open platforms. It is about giving products that are easy to operate. You can also change one element of your IT fabric into another. With the kind of budget-pressures CIOs face, it is not sufficient to have leading edge products but those that are relevant. We have a comprehensive portfolio. This approach resonates well with CIOs. It is not just about customization but also about allowing them the freedom of choice.

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Everything or Nothing?

As we keep hearing, Dell is slowly moving into the integrated radius and would be all about security, systems management, business intelligence and applications etc. Does that imply that no matter what a CIO thinks of: hardware, software or cloud or infrastructure, Dell is confident to be in the pecking order?

CIOs put their business problem first. It can be about connected devices or virtualization or convergence, anything. Dell is focusing on a fairly large market.

That's what your acquisitions like Sonicwall or Quest or AppAssure lead to?

These acquisitions do not only hint at what we do. It's also about some strategic exigencies. Our stack reflects a pretty much integrated feel. Quest is about manageability and security from chip or device level being moved to the suite level, for example. It shows how being an end-to-end infrastructure player matters to us.

The stack approach to IT is a vendor shift. Does it also echo at the buyer side?

Choice is always important. Between open and proprietary architectures, for instance. While what we offer, by definition is heterogeneous as well, as we have different partners collaborating on it; Dell as an enabling partner helps in the pursuit of solving business problems. We will accelerate our trajectory of being an end-to-end player in the next two to three years.

Mainframes, x86, OEMs (Original Equipment Manufacturers) to ODMs (Original Design Manufacturers); the server market has also seen so many shifts. We see how IDC estimated the market for non-x86 servers declining 19.4 per cent by revenue from the same quarter last year to $3.9 billion. Second quarter hence marked it as the fourth consecutive quarter of revenue decline for non-x86 species. Unit shipments of x86 servers have alongside gone up in the quarter by 3.5 per cent; while Unix servers saw some dip at 20.3 per cent year-over-year to $2.3 billion. Linux severs slice it up at 22.1 per cent and Bladed servers at16.9 per cent of all servers by revenue at $2.1 billion. This leaves Unix at a 18.4 per cent share of server revenue for the quarter. How much has all this changed Dell's server appetite?

Dell has been a strong player like always. We have only gained market share and have been in the top 3. In fact, we are the number one vendor by units in APJ market for Q3. The momentum is only upward. It's a secular trend and with virtualization catching on, the ability to completely maximize benefits of a platform come to the fore. Growth is visible in x86 while Blades have started becoming mainstream, and at the same time high-end workloads are being transitioned. The journey to Cloud would be a multi-stage one for India. Some will opt for hybrid choices, some will go the private cloud way, and the others will take baby steps. There may be a general plateau in global server market but overall it stays attractive.

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