Last week, at the Fortune Brainstorm: Tech Conference in Half Moon Bay, Calif., I caught up with Michael Dell, founder and chief executive officer of Dell Inc., the Round Rock, Texas-based computer hardware maker. He’s been trying to get Dell’s mojo back for over a year now, and in the past three months, things have started to come together, with sales, profits and the company’s stock price beginning to move in the right direction.
We had a wide-ranging conversation, one that covered everything from cloud computing to the likelihood of Dell entering the smartphone business to the advantages of being a founder. Below are edited excerpts from my chat with the eighth richest man in the U.S., who is as humble today as the day he started selling computers from his college dorm room.
On cloud computing
Om Malik: Will Dell ever start offering its own cloud services?
Michael Dell: Today, we sell to the guys who make clouds. We actually already have some services that we provide; you can think of them as software-as-a-service. For example, for managing your infrastructure, we purchased a number of companies recently like Everdream that are all services provided online. We’ve got a huge business in managing the computing infrastructure for large companies.
Om: What do you do as a company to become a leader in (cloud) client computers?
Dell: For the last eight years, here in the U.S., we’ve sold more computers than any company in the world. In fact, last quarter our lead kind of widened relative to the No. 2 company. Mobile Internet devices and smartphones are all part of our mobile computer business. Our focus is on the bull’s-eye of the volume, which today is notebooks, computers and laptops.
The interesting question is these “Internet-in-the-pocket” kind of things. Do those replace the notebook, or are they a compliment to the notebook? That is the kind of threshold question one would think about as you explore this.
Om: It is actually a complimentary device. But I think the bigger opportunity is in buying those devices because they can be replaced every six months.
Dell: No question, this is a large and significant opportunity and it’s one — I think you will see Dell move in that direction. But I think it will be sequenced in the right order relative to all the opportunities we have.
Om: What do you think is the biggest opportunity for Dell?
Dell: We have identified five big opportunities. When I say big, I’m talking about $5-$10 billion dollars each in terms of scale opportunities. They are the consumer business, mobile computers, emerging countries, enterprise, and small/medium business. We [have] reorganized the company around these key priorities.
On smartphones
Om: Any plans for mobile phones or smartphones?
Dell: We are certainly looking at the whole smartphone category, but I wouldn’t expect anything anytime soon.
Om: With the emergence of Google’s Android, and with Symbian OS and Microsoft Mobile already on the market, do you think that makes it easier for Dell to get into the phone business?
Dell: What you’ve got [are] industry-standard platforms upon which applications are being built and ecosystems are being created, and that kind of building-block architecture gives us all sorts of opportunities.
Om: You can be a big game-changer in this market, right? You can decide to work with Android or Symbian. Is there a desire on your part to work with one over the other?
Dell: We’re not ready to publicly disclose our plans there…we’re kind of working on that.
On being a founder
Om: From your perspective as a founder, what makes a founder/CEO different than a professional CEO?
Dell: The founder has special permission to make changes at a company. There have been two or three times within the history of the company where we’ve made some pretty dramatic changes; the last year and a half has been a good example of that. When I told our company that the direct model has been a great revolution for the industry but it’s not a religion, that was actually a pretty big shock to a lot of our people. Some of them thought it was a religion.
I think as a founder you get special permission to call into question things from the past, and it is up to you to figure out how to do that.
Om: So it’s almost like a political job in that sense.
Dell: I think there’s a lot of equity and trust that gets built up in the company over time. And when we’ve laid out the priorities in the organization — if we’ve done a good job and people see the results and they can see how their efforts apply to their success, and how they can realize their own dreams at the company — then they kind of say, “These guys know what they’re doing.”
On the future
Om: My impression has always been that your biggest competitive advantage was your supply chain; you fine-tuned it to such a level that others couldn’t compete. That has actually evolved over a period of time because others have started to think like the “Dell” way. What is the next competitive advantage going forward?
Dell: I think it’s true that we have had and have a supply-chain advantage. If you look at, for example, return on equity, you’ll see that our return on equity or vested capital [has been] massively higher than our competitors and still is today.
That advantage is very much intact in terms of the capital efficiency of the business. But I think that is really only part of the story. What informs that advantage is the connection we have with customers and the information that customers convey to us in the process. By knowing exactly what customers want and being able to build that and provide products and services tailored to customers’ needs and being able to personalize products — that creates significant advantage and significant growth possibilities for us.
Photo Courtesy of Dell Inc.
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[...] but would you really expect any CEO with a trick up his / her sleeve to say anything different?Read | Permalink | Email [...]
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14 comments so far
2:11 AM PT
So that means dell doesnt make any hardware of its own! cool idea man, assemble and become a pioneer.
8:18 AM PT
@OM,
to bad you didn’t ask about Microsoft’s “new” plan to compete with Apple. Mainly by:
“Today, we’re changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises.”
Does Dell even know about this? Them not being able to provide the full Microsoft experience, or it’s not Microsoft’s fault.
8:22 AM PT
Nice interview Om. Dell is in a very interesting predicament, and Dell’s comment on the “direct model has been a great revolution for the industry but it’s not a religion” is very pertinent. But where to from here? Diverse sources of long term revenue, from services akin to HP and IBM will be hard to achieve for Dell, simply because people don’t view them as that sort of company, and that isn’t their core competency. I think mergers are in the future… Sun, CSC or Wipro perhaps?
9:19 AM PT
I loved your last question about Dell’s competitive advantage the best. I don’t think he had an answer for it. They are probably still trying to figure it out! :-)
11:26 AM PT
Great interview!! Great to see what their plans are for the future… Dell is a great company.
11:28 AM PT
What a bad photo, nice focus on the closet though.
11:44 AM PT
Great, from the guy that laughed at companies that spent big on R&D!
12:03 PM PT
Should have asked him when he was going to close up shop and give the money back to his shareholders.
3:36 PM PT
GREAT post Om!
Dell’s story has been amazing; especially in recent years. Superb interview.
Jim Connolly
(link)
(PS: Thanks for replying to my Tweet earlier Om!)
10:13 PM PT
Interesting interview, Om; except you forgot to ask him to clarify about his popping off ~10 years ago about Apple liquidating itself back to their shareholders.
8:38 AM PT
Om:
Michael Dell continues to strive to stay alive in the PC market and would appear to be making inroads towards that critical goal. Smaller, and more powerful devices, like mobiles and net computers are the rage, but what will be the next thing?
9:13 AM PT
Simply, Mr. DELL, as today, few hundred of dell employees have been lay-off(fired) in Canada(DDS). Meanings, few hundred Canadians families are, again, strugling day in- day out ’cause your “very nice” way to make bussiness. God will take of you !!
11:25 AM PT
Great interview. I’ve used parts of it for an interview on my Dutch website about Android.
3:58 PM PT
I think the affiliation with BluHippo is going to make you millions. If you look up BlueHippo you will see that they are not so nice as Mr. Dell here. Hmmm seems if Mr. Dell is in bed with Bluehippo, which was founded by the same guy that ran Cretitrust into the ground, maybe he is NOT such a nice guy. But I guess if BlueHippo can get away with charging two and three times what a computer costs what does Mr. Dell care right? He profits either way.
Disconect from BlueHippo now. There have already been two class actions, multiple attorney gennerals and thousands of consumers wake up, you should too.