Michael Dell on Surface tablet: 'The impact will be limited'
Michael Dell has reached a crossroads. PC sales are slowing to a crawl as tablets and smartphones capture more consumer dollars every year. What's the founder and CEO of the third largest PC manufacturer to do?
If you think Dell is ready to give up on the PC, think again. When asked about the so-called post-PC era, he says "the post-PC era has been pretty good for PCs so far," noting that 380 million PCs were sold in 2011. Nevertheless, as I learned in the course of swapping email messages with Michael Dell for this Q&A, even though Dell may be remaining true to its PC roots, it’s also moving at lightning speed into the future.
Hybrid laptops; Windows 8 tablets; and a Dell-powered ecosystem of networking, storage, security, servers, virtualization, and cloud services define Dell today. That’s a far cry from the Dell that wrote the book on direct-sale PCs and e-commerce back in the 1980s.
Today Dell faces serious challenges. Critics have accused it of missing the mobile revolution (despite its having tested the waters in 2010 with its Dell Streak tablet line). And since the iPhone was launched in 2007, Dell has lost 60 percent of its market value.
So what does Michael Dell have to say about his company today?
PCWorld: Since your return to Dell, you have been redefining the company. Can you tell people what Dell is today and what it will be in five years?
Dell: We’ve undergone a significant transformation, but we’re not as different as you might think. Dell has always been about creating customer value and solving customer problems. For a long time we did that by advancing personal productivity through devices and the adoption of the PC.
Today we’re still very focused on helping our customers get more value and better results from technology—but customer needs have changed, and we now offer a much broader set of solutions. It’s really an exciting time to be in IT. Innovations in areas like cloud, mobile, and big-data analytics are changing the way the world works, and we’re aligning our business with these new opportunities to better serve our customers. In five years, I expect we’ll be leading the way as an end-to-end IT solutions provider, but in some ways, we’ll also be the same—meaning very attuned to the needs of our customers.
PCW: Do you see Dell adopting ARM-based products at some point? What can you tell us about upcoming Dell branded smartphones and Windows RT tablets?
Dell: Yes, the Dell XPS 10, a 10-inch tablet with ARM and Windows RT, debuted at IFA last month. It’s among the latest additions to our XPS product line and a great reflection of how we’re approaching mobility and the consumerization of IT. These end-user devices are designed for our core customer set—commercial and mobile professionals—and are optimized for management, security, and productivity.
PCW: You've said that Dell wants to offer customers more than just a smartphone or tablet. What type of total solution are you talking about?
Dell: We’re focused on the entire IT ecosystem. The devices our customers use to generate and consume information are a critical starting point, and that remains very important to us. We have some of the best products in the marketplace. For example, Dell Precision workstations and our XPS ultrabooks. But we recognize that PCs are just part of the picture. We have leading capabilities to manage customer information seamlessly and securely in multiple-device and BYOD environments, including virtualized desktop that you can access from any device.
But beyond devices is an ecosystem of networking, storage, security, servers, virtualization, and cloud. This is where a lot of the opportunity in IT resides and where we believe we can lead. The total solution is world-class devices backed by world-class infrastructure and services that support, connect, manage, and secure customer information. If the only tool in your box is a hammer, then every problem looks like a nail. We’ve built a toolbox of customizable, scalable, flexible end-to-end solutions that put the customer first, not the technology or service we’re trying to sell.
PCW: Microsoft is getting into the computer hardware business via its Surface tablets. Is this good or bad for OEMs in general, and what's your take on the impact of Microsoft's hardware aspirations on Dell specifically?
Dell: I think the impact will be limited, given the number of units they expect to ship. Microsoft developed the product largely as a reference architecture—to set a baseline for Windows 8 user experience. We’re aligning a significant portion of our product development with Windows 8, and we think it offers some great, new capabilities. Anything Microsoft does to support faster Windows 8 adoption is fine by Dell. However, our focus is less on their plans and more on designing and delivering compelling Dell products and solutions.
PCW: Where do you hope to take the notebook and computing with Windows 8? Dell showed a really snazzy convertible notebook at IFA last month. What can we expect, and when?
Dell: We’re working closely with Microsoft to ensure our Windows 8 products deliver the best user experience possible. Along with the XPS 12 you mentioned, we also introduced the XPS 10, a tablet with a mobile keyboard dock, and the XPS One 27 all-in-one PC with touch, all of which are designed for Win 8. We’ll be introducing other products for consumers and businesses closer to launch. We understand our customers’ evolving IT needs perhaps better than anyone [else] in our industry, and that insight is baked into all of our new solutions.
PCW: What are your biggest markets these days? Consumer, SMB, or enterprise?
Dell: More than 80 percent of our business is what we call commercial—a combination of SMB, Enterprise, and Public Sector—so that’s a strength and a priority for us. We are particularly focused on the midmarket, which is underserved and also a segment where we are positioned to lead with our open, scalable solutions. However, with the ongoing consumerization of IT, we are also fully aware of the blurring of lines between what is consumer and what is commercial, and the products and services we’re delivering today and into the future are designed to bridge that gap.
PCW: What services do you see as essential for small businesses as technology evolves? (For example, cloud services and security?)
Dell: SMBs may very well be the big winners when it comes to new and emerging trends in IT. We’re working to make business applications and capabilities that were formerly reserved for the largest of enterprises accessible to any company of any size through solutions that combine various elements of cloud, mobility, converged infrastructure, software. and services. So for example, a midmarket company can access big-data analytics or stand up a cloud architecture without needing a data scientist on staff or an IT department with a couple of hundred people to keep things running.
PCW: You famously started your company at age 19 with $1000 from your dorm room at the University of Texas in 1984. Do you have any brief advice for cash-strapped college kids who want to start a tech business out of their dorm room today?
Dell: It doesn’t necessarily take a lot of cash to start a great company. Some of the best ideas come from young people who bring new insights and perspective to existing opportunities. That was certainly my experience, and I feel pretty good about how that turned out. So if you have a great idea and you’re willing to pursue it, learn from your mistakes and adjust quickly, and keep your customer at the center of everything you do.