Michael Dell Talks Up the Scalable Enterprise

Dell Chairman and CEO Michael Dell discusses the company's vigorous growth and the dawn of 'the scalable enterprise.'

By focusing on high-value, high-volume systems, Dell Inc. has achieved success in both strong and weak economic cycles. It has also made strong partnerships with computer chip and operating system heavyweights Intel Corp. and Microsoft Corp. Chairman and CEO Michael Dell is focusing the company increasingly on what he calls "the scalable enterprise," which has extended Dells offerings into new areas such as printers and services. Dell explained to eWEEK Editor in Chief Eric Lundquist, Executive Editor Stan Gibson and Senior Editor Jeffrey Burt his ideas about what the company will and wont do, in an interview last week at Dell headquarters in Round Rock, Texas.

Can you update us on Dells newer initiatives with printers, services and storage?

The fastest growth has been in management and deployment services—large companies out-tasking the desktop management to us. Professional services continues to grow along with the enterprise business, as we sell more [storage area networks], more servers, more clusters, [Microsoft] Exchange deployments, Oracle [Corp. software] integrations and those kinds of things.

This will be the first full financial year of our printer business, and well probably sell about a billion dollars worth of printers. In the U.S., we have about 14 or 15 percent market share.

How did you gain share so quickly?

Were providing pretty good value. Plus, theres a network effect. If desktop customers are satisfied, they may buy a printer; if notebook customers are satisfied, they may buy a printer.

I think we can change the game in terms of cost per page and the rate at which new technology is available to customers. Ultimately, this is a business that is ripe for change. Is change going to happen in one or two quarters? Probably not. But if you look at it over several years, youll see a lot of change occurring.

So, of your newer initiatives, printers stand out as the most successful?

Today, services is a bigger business and more profitable. But if you asked what am I most optimistic about five to 10 years from now, I would say printers.

What are Dells key areas for research and development?

Were spending it disproportionately on the newer areas, like enterprise servers, clustering, systems management, storage, printing and imaging. But were still spending quite a bit on desktops and notebooks, and were actually manufacturing those products, too, which is a little different from our competitors [laughter].

Are you targeting R&D at any particular technologies, such as I/O?

A big part of systems architecture in the server world is I/O and the bus speed. New bus architectures like PCI Express are increasing bandwidth. Thats creating more scalability and more redundancy, which, in turn, creates the need for systems management. Customers want to manage systems remotely, and they want it to be an automated process. They want virtualization.

The applications are moving in a kind of scale-out fashion. If you ask whats the vision for Dell, [at an event] with SAP [AG] last week we [talked about] this vision for the scalable enterprise. Perhaps its more pragmatic and less architecture, but we think this is something that we can deliver and [that can] make a real difference in the industry.

How would you define "the scalable enterprise" in 30 seconds?

Building blocks of industry-standard server architecture components that can be almost infinitely scalable to support the largest and most robust enterprise application needs.

In 20 years, Dell has gone from being a small customer of Microsoft and Intel to being probably their largest customer. As youve grown, how much influence have you gained in your ability to set direction?

We have folks inside Microsoft, and were working on things right now in our labs that are well beyond "Longhorn" [the next version of Windows]. We spend a lot of time with Intel and Microsoft on what the next generation should be. As they roll out new products, we have to be joined at the hip. How do you create a new product if you dont know the hardware it will run on? Thats an obvious one.

Architects on both sides are sitting down and thinking of what we need in terms of features and functionality that will meet the needs in 2007, 2008, 2009. I think we have pretty good influence.

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