Michael Dell Says 'No' To Building A Public Cloud

If you're waiting for Dell to rollout a public cloud offering to compete with Hewlett-Packard, Cisco Systems, Amazon and Google, don't hold your breath. CEO Michael Dell said he has no plans on entering the jam-packed public cloud market.

"I think the public cloud is a crowded space, with lots of guys playing there," Dell said in an interview with CRN editors. "In terms of building a public cloud to compete with partners, we are not doing that at all."

Dell said the market is too congested with established players such as Hewlett-Packard, IBM, Amazon, Google and Microsoft along with new entrant Cisco, which recently announced a new public cloud initiative. Instead, Dell said, his company will focus on the on-premise cloud market and being a hardware arms dealer to companies building their own public cloud.

"We have taken a different approach here," Dell said. "Instead of competing with all of those service providers and telcos, we are enabling them. There are also a number of firms out there like OnApp that are integrating our hardware platform and allowing VARs to create their own cloud platform."

Dell partners say the current slugfest between tech Goliaths is only intensifying and that Dell is smart not to "bet the farm" on building its own public cloud and instead focusing its attention on the highly lucrative private cloud market. John Freienmuth, owner of J&J Technical Services, a Rio Rancho, New Mexico-based Dell partner said, "The public cloud market has received too much hype with too many companies throwing huge investments at creating their own public clouds. The market is saturated. The capital Dell would need to become a major player with the scale of its competitors would be staggering."

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Cisco, for its part, pledged $1 billion on building its own public cloud offering last month. IBM recently upped its public cloud game when it purchased SoftLayer cloud services for $2 billion last year and then followed up the acquisition by spending another $1.2 billion on expanding the network globally.

Dell said by not entering the public cloud fray, the company enables partners instead of competing with them. "There are a number of firms out there like OnApp that are integrating our hardware platform and allowing VARs to create their own cloud platform," Dell said.

Michael Dell said his company is focused on selling infrastructure into the private cloud space.

IDC forecasts worldwide spending on hosted private cloud services to surpass $24 billion in 2016. By comparison, IDC says global public IT cloud services spending is growing much faster and will reach nearly $108 billion by 2017. It's that market potential that is driving the current public cloud craze.

NEXT: Partners Say Dell Is Wise To Wait

"We believe that there is still a large proliferation of on-premise cloud deployments that are happening in the enterprise space, small medium business and above," said Dell Chief Commercial Officer and President Marius Haas. "We have got all of the services for that [business]. One of the big announcements you saw from us was an announcement with Red Hat where we jointly distribute OpenStack solutions and we wrap our Advantage or professional services around it."

Peter Horewitch, president of Common Knowledge Technology, an Englewood, Colo.-based Dell partner, said he sees a lot of turbulence ahead in the cloud market. "The public cloud market is extremely crowded with a high probability of many mergers and acquisitions. You can't blame Dell for staying out of that market, at least for now. I think Dell's entry into the public cloud, given the direction of IT, is only a matter of time. But waiting out the storm is wise. Dell will have a public cloud in five years, despite what it’s saying today."

Private cloud hasn't lost its appeal to many businesses, said Ross Jordon, CTO Connecting Point, a Greeley, CO-based Dell partner. He said access to reliable bandwidth in rural settings, security, cost, government regulations, and even service-level agreements keep on-premise cloud an attractive alternative to moving his customers to the public cloud. "I'm surprised to hear Dell isn't more bullish on the public cloud," Jordan said. As a Dell partner focused on the data center with incremental cloud business, he didn’t mind that Dell isn’t spreading itself out too thin, Jordan said.

Haas said Dell was working on a cloud marketplace project that included multi-cloud management tools based on an ecosystem of partner and ISVs. He said the goal is to give the Dell community a "seamless on ramp for customers to go both private and public, secure their data, protect their content at the time they feel comfortable with doing it." Michael Dell said there is more to come shortly on Dell’s cloud marketplace, but didn't elaborate.

PUBLISHED APRIL 8, 2014