Dell: 'We're Not Really A PC Company Anymore'

Dell evolving its business away from a reliance on PC shipments toward supplying high-end servers, appliances, and rack-mount virtualization packages for the enterprise data center.
Dell is evolving its business away from a reliance on PC shipments toward supplying high-end servers, appliances, and rack-mount virtualization packages for the enterprise data center.

Dell emphasized these elements of its product line, along with its prominent business partners, at an event Monday to outline its 2013 strategy. "We've transformed our business. We're not really a PC company anymore. We're an end-to-end IT solutions company," said CEO Michael Dell at an event staged in San Francisco's financial district's old Merchants Exchange building.

One initiative announced to illustrate the point was a partnership with Microsoft that's produced the Dell Quickstart Data Warehouse Appliance. A Dell PowerEdge server runs Microsoft's SQL Server 2012 and, once installed on a customer's premises, will be connected to Dell's Boomi data integration service hosted in a Dell data center. Boomi can take data out of a user's or other online application and move it into the Quickstart Data Warehouse to be combined with additional data from the customer's sources for analysis, said Dell's Praveen Asthana, VP of enterprise solutions and strategy. The Quickstart Data Warehouse is designed for mid-market customers or departments of large enterprises. No pricing was announced.

[ To learn more about how Dell has transitioned, see Will Dell Lead The x86 Server Market? ]

Dell's push into IT systems accounted for $18.6 billion out of a total $62.1 billion in revenue in fiscal 2012, more than double what it was three years ago. Over the last year, Dell has been selling more high-end servers, vStart integrated racks of servers for data center virtualization, specialized appliances for the enterprise market, and Dell-owned storage. Dell used to repackage other suppliers' storage with its servers. In fiscal 2012, 93% of the storage it shipped bore its own Compellent, EqualLogic, or other Dell brands. "We're obviously headed toward 100%," said Michael Dell at the press conference.

Dell ended its fourth quarter at the end of January with $4.4 billion in GAAP operating income, a record. The revenue was essentially flat for the year, but both income and operating margins were up, thanks to its growing enterprise services and solutions sales. It has $18.1 billion in cash and investments on hand, despite buying back 178 million shares of its common stock for $2.7 billion in fiscal 2012 and purchasing 10 companies over the last two years.

Dell announced Monday the next generation of its EqualLogic PS Series storage arrays: the PS6110 Series for mid-sized deployments, with up to 72 terabytes in a single array and 1.2 petabytes in a single group; and the PS4110 Series, Dell's first 10Gb Ethernet entry-point array. The latter is designed for smaller deployments or remote office locations.

Dell and Citrix Systems announced they are collaborating on a desktop virtualization appliance, Dell Desktop Virtualization Solution Simplified, using the Citrix XenServer hypervisor for starting desktop virtualization projects. Dell and Citrix are also producing Desktop Virtualization Solution Enterprise, a software system designed to scale to thousands of end users running virtualized desktops.

Dell has also capitalized on its networking purchases, including Force 10 Networks last July. Its server, storage, and networking devices now all contain native support for 10Gb Ethernet. The servers in its vStart integrated racks of servers, for example, are equipped with 10Gbps Ethernet for node-to-node connections. Dell officials pointed out Force 10 switches have the capacity to aggregate up to 40 Gbps Ethernet traffic outside the rack.

Dell announced Feb. 2 a new software unit headed by former Computer Associates (now renamed CA Technologies) CEO John Swainson, who stepped down in 2009 and went to work as a senior adviser to the Silver Lake private equity firm. Swainson reports to Michael Dell. Dell increasingly relies on the software it produces to distinguish itself in the x86-based computer market. It provides management tools, monitoring, and integration and virtualization deployments for its servers, storage, and network switches.

Many of Dell's announcements Monday were laced with references to its 12th generation of PowerEdge servers, but details on the servers won't be available until an undisclosed date in March.

Find out how to move beyond server virtualization to build a more flexible, efficient data center in the new Private Cloud Blueprint issue of Network Computing. (Free registration required.)