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May 16, 2019

Recap: Dell Technologies World 2019

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I recently participated in the analyst program at the Dell Technologies World 2019 conference in Las Vegas. Overall, the show was positive, high energy, and I’m even more bullish about Dell’s work in the indirect channel than I was back in 2015 when I wrote a blog on the Dell/EMC deal. While at the show we were provided access to executives and panels discussing product roadmaps and company strategy, as well as the chance to speak with partners on the show floor about how Dell fits within their ecosystem. Below are a few highlights: 

Pay Off Debt, Share Growth, and Margin Accretion:

A key breakout was with Dell Chief Financial Officer Tom Sweet, who spoke of the firm’s overarching objectives from a business and investor perspective. According to Sweet, Dell Technologies reached $91 billion in Non-GAAP revenues for the fiscal year 2019. Key objectives remain paying off debt, continued share growth, and margin accretion. With those things in mind and to maintain fiscal objectives, it makes sense that Dell would be more willing to sacrifice pricing in an effort to win deals on lower margin products (e.g., PCs) that generate significant cash flow, while working to up- and cross-sell buyers on higher margin products and services.

In my opinion, this strategy is sound, with a caveat. In larger organizations (like Dell), divisions are often in silos with individual P&Ls, which can make it challenging to get cross-functional teams to work together regardless of incentives. Therefore, inflexible accountability must be at the centerpiece for this to work on the direct and indirect sides.

Simple, Predictable, and Profitable:

With more than 50 percent of revenues coming from indirect channel sales, Dell is clearly committed to the channel, and rivals, who once had defensible barriers leveraging the indirect channel, are now realizing they are competing against a new Dell. In her address at the conference, messaging from Joyce Mullen, president, global channel, OEM and IoT solutions, Dell Technologies, was three-fold: (1) Make it easier for firms to do business with Dell; (2) Help customers transform through Dell’s family of brands; (3) Embrace and monetize new technologies, such as artificial intelligence and IoT. As mentioned above, making it easier to do business with Dell and training solution providers on the entire portfolio to sell higher-margin solutions in verticals gravitating towards IoT/Edge, enterprise storage, analytics, and security will be instrumental in the future. 

Device Management Headaches:

One of the key challenges IT departments and resellers are experiencing is effectively managing their infrastructure. Given the many devices running on multiple operating systems (OS), and an ever-increasing number of applications that require deploying, securing, and managing – this is not an easy feat. With efforts focused on infrastructure management, IT departments are spending less time working on revenue generating projects. Dell’s answer to the problem is Dell Unified Workspace. This offering can integrate with any OS, device, or cloud environment and the lifeblood of the tool is VMWare Workspace One, an endpoint management tool which handles cloud policy, application delivery, automated patching, monitoring, diagnostics, and more  via a unified platform.  

A + B ≠ C (Multi-Cloud):

As much as the major hyperscale providers would love you to port everything in the cloud today, that isn’t always the case and some firms are repatriating workloads from the cloud back to on premise. We are living in a multi-cloud environment, and thus, organizations want solutions that make it easier to operate within a flexible construct. A key announcement at the show was VMWare Cloud on Dell EMC which is a Data Center as a Service consumption-based service that will be available in the second half of 2019. In a nutshell, the offering allows firms to traverse between public and private clouds via VMWare’s Cloud Foundation offering coupled with VxRail which also allows Dell EMC to monitor infrastructure while VMWare handles patch management.

Given everything presented at Dell Technologies World, I am still sanguine about Dell’s acquisition of EMC and strategy for paying off debt, driving further market share, and working to fuse its myriad units (with caveats) in an effort to drive profitable growth and customer entanglement. Sentiment I’ve received from channel partners remains solid and its newly revamped channel program should help the firm continue to drive loyalty in the future.  

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