Industry expects little change when Rollins becomes Dell CEO in July.
As an employee at Dell Inc., Joyce Becknell saw firsthand the business savvy and attention to detail that Kevin Rollins brought to the computer maker, first as a partner with consulting company Bain & Co. Inc. and later as an executive at Dell.
Now, as an analyst with The Sageza Group Inc., of Milan, Italy, Becknell said strong business sense has permeated Dell and has been an important driver in helping its strong growth over the past several years, even as the industry as a whole remained stagnant.
When Rollins assumes the CEO position from founder Michael Dell in July, Becknell said she expects little to change.
"Hes been pretty important to Dell," Becknell said. "Even before he was president, he played a key role in driving Dell forward. ... Rollins has really enabled Dell to drive a lot of its profits, has really enabled Dell to be the business machine that it is. If half the companies in the dot-com era had half the business sense that Dell has, theyd still be in business."
The Round Rock, Texas, company announced earlier this month that Rollins, who came to Dell in 1996 as its vice chairman and became its chief operating officer and president in 2001, will take over as CEO at the companys annual shareholders meeting July 16. He also will be nominated for election to the board. Michael Dell will retain the position of chairman of the board of directors.
Dell officials said the two expect to continue the dual-management system they have used over the past few years; Rollins will still be responsible for the companys day-to-day global operations, while Dell will focus on strategic direction. Industry observers liken it to when Bill Gates stepped aside in 2000 as Microsoft Corp.s CEO for Steve Ballmer while retaining the titles of chairman and chief software architect.
"In a lot of ways, the titles are sort of catching up with the roles," said Dell spokesman T.R. Reid. "Kevin is pretty much functioning as CEO as most people would define it. ... Its the same management at the company now and will be on July 17 and forward."
Becknell echoed what other analysts and customers believe: that such continuity in a company is a positive thing, and, given that Rollins has been a driving force in the company for almost a decade, that they dont expect to see much change.
"Its not a big deal, so long as the good service it gives continues," said Chip Burke, network engineer at MedCost Recovery Systems Inc., a Dell customer in Columbus, Ohio. "If they continue that, its a great thing, and if they can improve on that, even better."
Under the management of Dell and Rollins, the company has expanded its markets while growing its base. Now the No. 2 PC maker behind Hewlett-Packard Co., Dell has moved into other enterprise spaces, such as storage, via its partnership with EMC Corp., as well as printers and network switches. In the server space, Dell has grown to No. 4 worldwide. Its also making a push into consumer electronics.
Despite the economic downturn of the last few years, Dell has flourished financially. Last month, officials said the company hit record numbers in product shipments, revenue and income in the fourth quarter last year. The company earned $749 million on sales of $11.5 billion.
Becknell said the companys strong business sense stems from Rollins. In meetings with Wall Street companies, Dell executives are always prepared and always know the ins and outs of the companys finances. "Dell is ... really more of a business company that sells technology than a technology company," she said.
But its that technologyand the service behind itthat will determine how Dell does in the future. Customers said they were unconcerned with the changeover at the top, as long as it doesnt affect them. "I think if Michael Dell was stepping out altogether, then I would have some concerns," said Mike Terenzi, director of IT operations at Stahls Inc., in St. Clair Shores, Mich. "But as long as hes staying involved, the quality and service should continue."
If there is a weakness in Dells enterprise portfolio, it seems to be in servers. Long & Foster Cos., of Fairfax, Va., standardized on Dell products four years ago, a move that CIO Michael Koval said was a good one, given Dells high price/performance ratio. While Dells desktop and laptops continue to impress, Koval said hed like to see the company expand its server offerings.
Dell is getting pressure on prices from the likes of HP and IBM, Koval said, and its strategy of supporting scale-out environments linked with high-speed interconnect technology is counterproductive to a company such as Long & Foster, which is looking to consolidate its data center.
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