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“The technology industry is always going through transition, and there are some big changes going on now,” said Dell Computer founder and CEO Michael Dell in Silicon Valley Tuesday night. He spoke onstage at a Churchill Club dinner event in Santa Clara with Wall Street Journal reporter, Don Clark, after making another appearance in the very rainy Bay Area earlier in the day at Oracle OpenWorld. Dell addressed a range of topics, including shifts going on at his company, the far-reaching impact of virtualization, acquisitions, the upcoming Windows 7 OS, netbooks and smartphones. His comments on netbooks were especially surprising.
Shifting Toward Services
Dell described his company as “somewhere in the middle” of a broad-based shift toward focusing on services, solutions, the enterprise and emerging countries. He said Dell’s recently announced $3.9 billion acquisition of Perot Systems is directly focused on offering services to enterprises. Hewlett-Packard and IBM have been building such services business for years.
By way of example on the services topic, Dell said that “one of the big things going on in this country is that physicians are trying to figure out how to get electronic medical records, which is not an easy problem.” He said that Dell and Perot are already focusing on solving that problem through Software-as-a-Service (SaaS) solutions. Perot Systems already manages the technology at place in many hospitals, he noted.
The Promise of the Refresh Cycle
Dell made plain several times that he sees the installed base of technology as very old, and sees a coming “refresh cycle,” for which he has high hopes. “The latest generation of chips from Intel is strong, particularly Nehalem,” he said, adding, “and Windows 7 is on its way.” (The operating system arrives Oct. 22nd, although Microsoft’s large-volume licensees are already getting it.) He pointed out that many business are running Windows XP, which is eight years old.
“I’ve been using Windows 7 for a long time now,” he said, “and if you get the latest processor technology and Office 2010 with it, you will love your PC again. It’s a dramatic improvement.” On the topic of the PC, Clark asked Dell how much attention he pays to Apple. “I think Apple raised the bar on product design, and we’re certainly paying much greater attention there than we were a few years ago,” he answered.
Netbooks? What Netbooks?
One of the biggest surprises in the session with Dell was that even though his company has some well-received netbooks, such as the Mini 10v, he really didn’t have one positive thing to say about them or the fast-growing netbook market. “With the netbook,” he said “if you take a user who is used to a 14-inch or 15-inch notebook, and then give them a 10-inch netbook, a few hours later they want their big screen back.” He characterized netbooks as “not a replacement for a high-end machine for an experienced user,” and noted their “slower performance.”
Smartphones in China
Dell was quick to mention the Chinese technology market many times during the evening, which he characterized as doing well, along with other Asian markets. When asked about Dell’s intentions in the smartphone market, he noted his company’s recent demonstration of Android-based smartphones for China Mobile, the largest carrier in China.”They asked us to develop a smartphone based on a derivative of Android,” he said.
Dell also noted, however, that his company can benefit from growth in smartphones in places like China by being involved with service and content providers. “We have a customer in China called Tencent [an Internet service portal] that has 650 million customers, serving millions of cell phone users. Through them, we participate in the Internet-in-your-pocket trend. We’ve sold them enormous numbers of servers.” On the topic of selling servers in volume, Dell also noted that his company has sold thousands of them to Facebook.
Virtualization: Promise, and Challenges
Clark asked Dell about the fact that, through virtualization, many companies end up buying fewer servers, and less hardware in general. “The first thing you have to remember is that any time a new technology comes along that’s good for customers, you get in the way of it at your own peril,” Dell said. “We have to think about how to win in virtualization. So let’s do virtualization right in servers. We’re offering servers with 1-terabyte DRAM footprints. You can virtualize an enormous number of servers with that, and you can put your whole database in memory.”