CEO Michael Dell: Being a Private Company 'Just Delightful'
You've talked about, as a private company, being able to be more aggressive in acquisitions. Yeah, one of the things we talked about in the transaction was that, as a public company, we spent about $1.7 and $2 billion a year for the last three years in share repurchase and dividends and interest expense. As a private company, the share repurchase goes away because we bought them all back. (laughs) Done. Biggest share repurchase ever. Bought them all back. The dividends go away because we're not serving these public shareholders anymore. There is an interest expense, but that interest expense is far lower than the combined of the three averaged for the last three years. We actually have a better capital structure with more flexibility to go reinvest in our business, invest in R&D, add some sales and channel capacity, make acquisitions, do all the things we want to do. You've got all these acquisitions. Now comes the need to integrate them. Can you talk about the integration effort that's ahead of you and the challenge it presents? We introduced a product last year called VRTX, a very successful product. There's no way you could have done that product unless you'd acquired a bunch of core technology. That's actually an example of an architectural integration way beyond just patching things together. What you saw on stage with the Fluid Cache for SAN [an upcoming package of data center technologies that will deliver more than 5 million IOPs per second of random reads in PowerEdge servers], that is a deep integration of a lot of unique capabilities and acquisitions. In fact, there's an acquisition we made that we didn't even announce because it was so secret and it has this very, very cool [technology], tons of patents around this, that's actually essential to what we demonstrated on stage.So we've been doing that [integration] for quite some time. You look and see a common user interface across all these platforms. John Swainson [president of Dell Software] talked about bringing Foglight [performance monitoring and management software] to SaaS [software-as-a-service]. We have that up and running. Deep integration across networking, storage, servers, deep integration of our data protection with our storage platform. We have SecureWorks and SonicWall sharing signature data, so we have a network effect that's even greater. There are 2.5 million firewalls installed with SonicWall, which is pretty amazing. A lot of them in small and medium[-size] businesses but also in large [companies]. And then in SecureWorks, we have these [capabilities] protecting network security for all these really large organizations—some medium and small as well. You put those signatures together, and we have the biggest signature footprint of what's really going on with security in the world. That's a big incentive for a company to work with us because we know more about what's going on than anybody. We've got a lot of that [integration] done. We can always do more, but it's not like we've been standing still. Given your vision of what you want to do with this company, how far down the road are you? Are you halfway there? Three-quarters of the way there? It's sort of a race that never ends. It's not like baseball. There are no innings. We just keep going. But you must have an idea of a company that, if not completely done, is where you want it to be. We have 2 percent of the $3 trillion IT industry. Nobody has like 5 or 6 percent, so it's an incredibly dispersed space. There are only 10 companies that have more than 1 percent, and we're one of the 10. We'd certainly like to go from 2 percent to 3 percent or 4 percent. I think the total pool [of the IT market] is going to grow, too. As IT moves from the back office to being fundamental to sales and marketing, and then health care and education, and kind of every part of society, the pool's going to grow. The $3 trillion is going to grow to $4 trillion and $5 trillion, as small and medium businesses can take advantage of the cloud and things like that and get access to IT. If you go to a lot of companies and say, "Word association: IT. What's IT?" They'll say, "Printers and Microsoft Office." There's more to IT than that, so we can help empower these companies quite a bit more. The dream for us is, how do we bring this power to the tens of millions of growing businesses out there? How do we do it without this legacy that's out there and enable the next generation of new businesses to get started and get going? You just think about all this information that we've been helping companies store and protect. How many of them actually use it to make better decisions in real time? The hard reality is, not really many. That's a huge opportunity. That unleashes all kinds of productive capacity. We're not going to do it all by ourselves. No company does it all themselves. … I don't think that's necessarily the right answer. It's not what we hear from customers. They like that we work with Microsoft. They like it that we work with VMware, Red Hat and Oracle.
At least six or seven acquisitions that I can think of came together [for Fluid Cache for SAN]. … The other super-cool thing about that is that a customer that has PowerEdge servers or Compellent [storage products] can seamlessly upgrade from what they have to this, and it works with Oracle, it works with VMware, it works with OpenStack, Microsoft. It's pretty amazing stuff. And it sort of jumps right over the top of—don't want to mention it by name—any of those other storage companies because you can't put the data any closer than right inside the server.