Rollins Named Next Dell CEO

UPDATED: Dell President and COO Kevin Rollins will become CEO July 16; Michael Dell will remain chairman of the board.

Kevin Rollins, Dell Inc.s president and chief operating officer, will take over as CEO this summer, the company announced on Thursday.

Rollins, who has been in charge of the Round Rock, Texas, companys day-to-day operations, will take over for founder and CEO Michael Dell, who has been more focused on the Dells strategic direction, including technology, research and development.

Dell will remain active in the companys management by retaining his post as chairman of the board.

Rollins appointment, made by Dells board of directors during a meeting in New York, will become effective at the companys annual shareholders meeting July 16. He also will be named to replace Mort Topher on Dells board of directors. Topher is a former Dell executive who retired from the company in 2001.

Rollins, who has been with Dell since 1996 and became its president in 2001, has been a key figure as Dell has expanded its business. On the enterprise side, this includes a partnership with EMC Corp. to sell storage systems, as well as printers and network switches. On the consumer side, Dell now is selling flat-screen televisions and music devices. In the highly competitive server space, Dell has grown to No. 4 worldwide, with 7.6 percent of the worldwide market, trailing IBM, Hewlett-Packard Co. and Sun Microsystems Inc.

Dell spokesman T.R. Reid said that despite the change in titles, the companys "two-in-a-box" management style wont change. Rollins will continue directing the day-to-day global operations, and Dell will continue directing the companys strategic path.

"In a lot of ways, the titles are sort of catching up with the roles," Reid said. "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."

He also said that any inference that Michael Dell will be stepping back from the operations of the company are wrong. He also said the title change had nothing to do with the trend in U.S. corporations to separate the titles of chairman and CEO as move toward more sound corporate governance. "We had a corporate governance plan well before it was the topic du jour," Reid said.

There also seemed to be little concern among Dells customers. Mike Terenzi, director of IT operations at Stahls Inc. — a Dell customer for about seven years—said that as long as Michael Dell continues to play a key role with the company, he had few worries.

"I think if Michael Dell was stepping out altogether, then I would have some concerns," said Terenzi, in St. Clair Shores, Mich. "But as long as hes staying involved, the quality and service should continue."

Gordon Haff, an analyst with Illuminata Inc., said Michael Dells decision to step down as CEO at a time when his company is financially strong is a healthy sign for the company.

"This is a fairly common pattern, where founders who in many cases made their companies quite successful move on to other roles, where they have fewer day-to-day responsibilities," said Haff, in Nashua, N.H. "In general, it speaks well of a company when a founder is willing to step back a bit."

He pointed to Bill Gates at Microsoft Corp., who is now chairman and chief software architect at the Redmond, Wash., company that he founded. In contrast, he said, there is Larry Ellison, CEO at Oracle Corp., who "is less willing to give up control, and thats not necessarily positive." Ellison has seen a number of top executives leave his Redwood Shores, Calif., company over the past few years.

Dell, the second-largest PC maker behind HP, continues to see its financial numbers grow. Officials in February said the fourth quarter in 2003 saw the company hit record numbers in product shipments, revenue and income. The company earned $749 million on sales of $11.5 billion, buoyed by stronger-than-expected sales of servers, storage devices and printers.

"In a way, the challenge Dell has—and its a good challenge to have—is that they have been having great success," Haff said. Now the company needs to look five years down the road to see how it can keep that success going. A key initiative will be to grow its strategy in the consumer electronics space, where Dell already is making a push with such products as digital cameras and PDAs. On the enterprise side, Dell needs to figure out how to keep its momentum in hardware going forward when it relies so much on partners for software.

"In the enterprise, there is a big push for virtualization and automation ... in the software stack," Haff said. "How can a company like Dell, which is essentially a box maker, play in the space against the likes of IBM and Sun, who have a lot of [research and development] in software?"

(Editors Note: This story has been updated since its original posting to include analyst and customer comments as well as additional information from the company.)

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