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Dell's 'Transformation': Customers Speak

Michael Dell says his company has become a full-fledged provider of end-to-end IT services -- but do customers agree?

Eddie Baker, director of customer service for IT for University of Kentucky Healthcare, wished that Dell would embrace a more active role in medical fields. He said his institution's biggest Dell investments include "roughly 15,000 end user devices and some server infrastructure." When asked if the company had completed its transformation, he said, "Yes, I think that's what they're pushing. I'm not sure I'm completely sold that they're there yet. For us, Dell is still more a supplier than a partner, unfortunately."

He noted that the university "appreciates" its relationship with Dell but said, "I think they're a little bit nervous about getting into the healthcare space … They seem too risk–adverse to get too deep." Baker said his criticism isn't "isolated to Dell by any stretch of the imagination." He said that few tech companies -- he singled out Microsoft -- are willing to deal directly with HIPPA regulations.

Dell and other service providers "can provide solutions as long as the liability is on the agency they're providing to," he said, "but it'll be different when they're providing a service. It's the difference between, 'Do I give you all the equipment and the data stays with you, or do I accept some of the data and some of the liability?'" Because of this provider hesitancy, Baker said that cloud technology is "not really a reality at this point for health care."

Baker also said that the University of Kentucky has embraced BYOD and uses tablets "quite a bit." Dell now has offerings from its Wyse and KACE divisions for managing mobile devices but Baker said the university currently relies on Citrix Receiver for data management. "So far, it's worked out really well for us," he said. He also approved of Citrix's recent acquisition of Zenprise, saying, "We haven't fully deployed all of the Zen products yet but [the purchase] opened up a nice range of products."

IDC analyst Matt Eastwood also was at Dell World. In a phone interview, he said the company has "made a lot of progress" and that "the product side is in good shape" but that there are question marks regarding how it will market its new capabilities.

Eastwood praised Dell for listening to customers and for being "very disciplined" in its acquisitions, which he characterized as "ingredients based" and forward looking, "aimed at 12, 24 or 36 months out." Still, he wondered how "a salesperson used to selling boxes" is going to transition to "selling solutions." The company needs to develop the proper training and hire the right people, he said, noting that "IBM is the master" in this regard, and that other large companies, such as Cisco, have established good models as well.

Even so, Eastwood said "Dell deserves credit for a consistent strategy" and for focusing on the mid-market. The mid-market, he said, represents the largest number of potential customers, and Dell's modular product approach allows these customers to not only start with Dell products but also to stick with them as they grow and scale out their operations. Eastwood predicted Dell would "lose" if it tried to go exclusively after the biggest accounts. "They're not IBM, and they're not Cisco," he said, noting that HP has struggled in part because it has stretched itself too thin.

Eastwood also sees unknowns in Dell's PC business, noting that this uncertainty pervades the entire industry. For PC sales to pick up, "Microsoft needs to win consumers" with Windows 8, he said. Michael Dell optimistically broached this point during his opening keynote but Eastwood said the consumer space is "not a market [Dell] wants to own." Dell isn't trying to compete with Asus or Lenovo, he said; it's trying to compete with IBM and Cisco, companies that "aren't gonna feel that drag" from lagging PC sales. This combination of factors, he said, raises questions about how Dell will position itself as a competitor in multiple arenas.

Nonetheless, Eastwood noted, Dell's transformation has made it "less reliant on its PC business." Although Wall Street has little faith in Dell's laptops, tablets and desktops, "I don't think they're truly valuing Dell's enterprise assets," he said.

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User Rank: Strategist
12/17/2012 | 10:02:40 PM
re: Dell's 'Transformation': Customers Speak
Dell has moved in the direction of supplying some of the IT for companies that don't have or don't want large IT departments, having started out as just a hardware supplier. To continue down this path, it will need to become more of a software company, with software initiatives rivaling hardware. That's been a tricky act for other companies to pull off. But Dell's hardware is "industry standard," without the bound up pride of invention that remains part of IBM and was part of Sun Microsystems. Dell has the potential -- and shows some of the determination needed -- to create a successful software unit. Charlie Babcock, InformationWeek
User Rank: Ninja
12/17/2012 | 10:15:03 PM
re: Dell's 'Transformation': Customers Speak
That's their customers, who, one would think would be pretty satisfied. It would be more interesting to ask companies who are not their customers, why they are not, and to ask those who were, why they are no longer.

This was pretty much a puff piece.
User Rank: Ninja
2/8/2013 | 12:04:44 PM
re: Dell's 'Transformation': Customers Speak
Based on their enterprise desktop hardware alone Dell is still a 3rd tier hardware manufacturer. Shoddy quality for mediocre product that is hopelessly overpriced. IT tells me that things like an external 2TB hard drive are not possible because Dell charges close to 300 bucks for it. Every online retailer with better service than Dell sells it for a third. New systems for 1200 bucks are so bad that I am tempted to spend my own money for the Walmart-Special for 250$ that dances circles around the Dell junk.
If Dell wants to stay relevant they need to improve quality and charge businesses reasonable prices.Both will work because Dell won't have to deal with the massive amounts in returns. About half the stuff we get from Dell dies within six months. Not only is that a cost to Dell, but a noticeable cost to our company.
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