Michael Dell Tells Analysts Channel Growth Is Key
The Round Rock, Tex.-based company also has no intentions of making any big acquisitions in the near future, Dell said, although smaller ones may be in its future.
"I wouldn't hold your breath for a big acquisition," Dell said. "There are a number of network-effect acquisitions where we can acquire a product line or a key methodology or a key group of skills that we can leverage across our entire network. Our acquisitions will be that kind of thing."
He cited Dell's acquisition of channel-friendly iSCSI storage vendor EqualLogic as an example of Dell's strategy. "EqualLogic we do believe was an exceptional acquisition. We're very excited about the technology. It gives us leading position. In the fourth quarter of last year Dell already had the leading position in iSCSI storage," Dell said.
Software architecture, 10 GB Ethernet and virtualization will also provide enormous opportunities for Dell, he said.
He said Dell's regional and channel opportunities are presently about a $260 billion opportunity and will be about $300 billion in 2011, and that the company can grow both its direct and channel businesses simultaneously, although the channel business is expected to grow faster.
"We have only 5 percent share in this segment. We're expanding in emerging countries, channel partners, retail partners, these are a big part of our growth. When you add infrastructure services to the global opportunity it grows to over $1 trillion.," he said.
The company is expanding its services offerings, added 50 percent more product to its notebook lineup, created SMB-dedicated products and is targeting emerging countries. "All of these initiatives are enabled with the expansion of our channels, both in the commercial side and in retail," he said.
Dell said enterprise and large public customers will continue to be a target of its direct business and it will continue to drive enterprise product sales of technologies like iSCSI, blades and infrastructure services through its direct force.
In the SMB space, however, he said the company's resellers will be important to its strategy.
"The hardware opportunity in the SME and services together is about a $400 billion business. We are strong in North America with 28 percent of the hardware share, but only 10 percent outside the US. This is where our Partner Direct Program will have the most relevance," Dell said.
Dell also discussed the company's plans to cut $3 billion from its expenses by 2011 by streamlining production and operational costs, using less expensive suppliers and manufacturers to build its systems and trimming staff. "We are approaching this from the perspective that there are absolutely no fixed costs at Dell and every area of the company is being pursued," Dell said.
