While Michael Dell is bummed he didn’t see the tablet revolution coming, he’s also not sweating it much, apparently. In an interview with the Wall Street Journal (s nws), the CEO of Dell Inc. says the company’s main focus remains the enterprise market. But will such a low-margin business ensure Dell (s dell) stays on top?
Dell says tablet computing has been the biggest tech trend to take him by surprise since re-emerging as his firm’s CEO four years ago, telling the WSJ “I didn’t completely see that one coming.” Yet he thinks Dell is going to take a bite out of Apple’s (s aapl) tablet market share.
“What’s interesting [is that] business users are not going to give up smartphones. Won’t give up PCs. So now you have a PC, you have a smartphone and you have a tablet. Sounds pretty good. Industry growth.
What’s also interesting is Apple’s great success with the iPhone. Android (s goog) comes along, even greater success. I think you’ll see the same thing on tablets, with enormous numbers of Android tablets with Dell certainly playing a role in that as well.”
Dell may have popularized the direct-to-consumer model of PC sales, but the 46-year-old CEO emphasized that today, only a third of the $61 billion company’s revenue comes from the PC business, and only a small fraction of total PC revenue comes from consumer sales. And while he’s not giving up on tablets, his head is clearly in the clouds.
Dell already offers managed virtual resources as a result of its $3.9 billion acquisition of Perot Systems in 2009. Last year, the company purchased data-storage company Compellent Technologies Inc. for $960 million. It also acquired Software-as-a-Service integration startup Boomi, enabling customers to host their own applications in their own clouds. Plus, it started its own in-house server business to provide cloud computing vendors and webscale companies with gear.
We’re investing a lot in our products. But is the fundamental epicenter of the company going to change from enterprise solutions, services, data centers, storage, virtualization, security? No. But we want to participate in many markets. Consumer is one of them.
Asked how Dell anticipated going up against companies like Rackspace (s RAX) and Amazon.com, (s amzn) Dell reminded the WSJ that the companies were Dell customers (in case the paper forgot).
So we’re helping them build the infrastructure that enables their cloud offerings. The kind of cloud offerings that we’re providing are more secure and more dedicated to the needs of larger commercial organizations. They’re not aimed at the start-ups or the consumer.
While Dell continues to push into enterprise, it has done well by offering cheap and custom hardware for huge webscale and cloud customers such as Rackspace and Facebook. But with Facebook’s Open Compute, which has changed the industry by making servers just a small component in an overall data center strategy and bypassed Dell for those same servers, Dell isn’t going to be able to charge high prices for what has become even more commoditized gear, which leaves the vendor stuck between what looks to be an iffy market with low margins. It’s a not a place most would angle for, but perhaps Dell knows something we don’t.