10 Signs Dell Pulled Off A Successful Reboot

Dell Flips Script From Struggling To Excelling

As a private company Dell doesn't have to tell the world squat. And when CRN questioned Dell about its growth claims as a private company it was tight-lipped -- pointing only to recent market-share gains and growth within its channel business.

Despite Dell's lack of transparency, there are many signs that the Round Rock, Texas, company has turned itself around compared with the dark days of 2012. That's when the company faced headlines along the lines of "PC Maker In Desperate Need Of A Reboot."

Critics blasted Dell for being a PC company floundering in the wake of more nimble cloud, networking and big data companies. Analysts were pondering how much further Dell could fall before it hit rock bottom.

Fast forward to Dell World 2014, and critics say Dell has turned itself around. Here are 10 signs pointing to a successful Dell reboot.

Icahn Might Have Been Right About Dell -- And That's A Good Thing

When activist investor Carl Icahn was railing against Michael Dell's proposed leveraged buyout in the summer of 2013, he warned that Dell and investment partner Silver Lake had made an absurdly low offer of approximately $13.65 per share.

One year later Michael Dell and Silver Lake have made a paper gain of at least 90 percent on their investment, according to an analysis by Bloomberg. Michael Dell invested $4.2 billion to take his company private. According to Bloomberg, that initial investment is now worth $10.8 billion based on valuations of Dell's publicly traded rivals.

Healthy PC Sales For Dell Means A Healthy Dell

Dell's PC business is strong. That might evoke a "so what?" from rivals such as IBM, which jettisoned its PC business long ago, and from Hewlett-Packard, which is splitting its PC business and enterprise business into separate entities to help each independently focus on growth.

According to research firm IDC, in the third quarter of this year Dell shipped 10.4 million computers worldwide, a 9.7 percent increase from last year. Here in the U.S., Dell owned 24 percent of the market with shipments up 19.7 percent compared with last year.

For Dell, PC growth means adjunct sales of related IT. Two-thirds of new Dell customers come to the company through PC purchases, according to Dell.

Taking Dell's Word At Face Value

Dell itself claims it's growing. Dell's revenue was $56.9 billion in 2013, according to its last filing as a public company. Since then, according to Dell executives, Dell has grown, but it's not saying by how much overall. What Dell will say is that its channel business is growing faster than its direct business. Dell said its channel business now represents well more than 40 percent of its overall revenue. That channel revenue is up from 33 percent, reported earlier this year.

Let's Not Take Dell's Word: Partner Testimonials

At Dell World 2014 in Austin, Texas, there was consensus among longtime Dell partners that their Dell business was strong. In fact, some Dell partners, such as The Davenport Group, a St. Paul, Minn.-based solution provider and Dell partner, have a code word for its Dell business.

"We call it 'Operation Gold Rush'," Sonia St. Charles, CEO and co-founder of The Davenport Group, told CRN in a recent interview.

St. Charles said that Dell, after being born again as a private company, has a new fighting spirit backed up with the right product mix, vision for future growth and, more importantly, a commitment to work with its channel partners.

Value Of Dell's Bonds Are Up

As a private company, Dell doesn't have the same type of financial transparency requirements as it did as a public company. That means to gauge Dell's financial well-being, you would have to look at clues from outside Dell's quarterly 10Q filing with the Securities and Exchange Commission.

According to financial bond markets, the value of Dell's bonds are up based on news the new private Dell is seeing better-than-expected first-quarter performance. Another positive indicator is that the cost of insuring Dell's debt against default has dropped, indicating confidence in the company's fiscal wherewithal. Lastly, Dell said has it repaid $1 billion of debt toward its 2015 obligations.

From PCs, To Servers, To Storage And Beyond

Technology Business Research (TBR) points out that Dell has been extremely successful in leveraging its PC business as a pipeline within a company to drive more sophisticated solutions that include servers, storage and security software.

According to TBR, "Dell uses its software, acquired as the company moved to be an 'end-to-end' provider, to differentiate its PCs. Last year Dell bundled file encryption software, Dell Data protection/Encryption (DDPE), with its PCs. The subscription is complimentary for one year, and $29 for a perpetual license after the first year. TBR believes this bundle helped to drive PC sales growth, considering that Dell reported sales of DDPE grew 380 percent year-to-year."

Two Thumbs-Up From Critics For PowerEdge FX Architecture

Dell turned heads at Dell World with its PowerEdge FX converged architecture, impressing attendees and industry observers. "With a modular and common 2U chassis that can be easily customized and scaled with compute, storage and networking slots, FX differentiates Dell," wrote TBR in a research note.

The research firm pointed out that Dell's PowerEdge FX platform allows Dell to leverage its SC-series storage portfolio and other key hardware while having a strong appeal to Dell's core constituency the mid-market. With the FX, "Dell continues to message its management capabilities in the context of improving infrastructure efficiency and simplicity," according to the research firm.

Charles King, analyst at market researcher Pund-IT, said Dell's PowerEdge FX architecture "could rewrite the book on converged system design."

Dell Makes Good On Promise To Drive Business Higher Up The Stack

Dell still loves selling PCs, which account for about 60 percent of its revenue. But part of the impetus Michael Dell laid out for going private was to move up the value chain and into the IT stack. And so far a private Dell has done just that. Dell's enterprise product blitz includes everything from its new FX PowerEdge server architecture, to its SC4020 Compellent all-in-one storage array, and a host of appliances in partnership wit VMware, Oracle, Cloudera, Fusion-io and Nutanix.

Dell Server At Center Of Enterprise Strategy

More important than moving up the IT stack has been Dell's appliance, software-defined, network disaggregation strategy where Dell's compute power acts as the central engine driving customer solutions be it networking, storage or analytics.

Dell's vision of data center networking, for example, is an open ecosystem model in which customers choose from its various industry-standard networking gear and then network switching OS from companies such as Cumulus Networks and Big Switch.

In these scenarios, Dell acts as the glue integrating the hardware and software. Customers like this approach because it avoids vender lock-in and simplifies management and maintenance. For Dell, it's a chance to move higher up the data center stack with its server hardware.

"Dell’s vision of the data center remains naturally compute-centric, playing to the company’s rich industry-standard server heritage," wrote TBR.

Making Good On Partner Promises

At this year's Dell World, Cheryl Cook, vice president of global channel alliances at Dell, said Dell has made good on delivering more than 200,000 Dell Direct accounts to the PartnerDirect channel partner community. Over the past year, Dell has faced a firestorm of criticism from some partners that said they have yet to receive one of the 200,000 accounts.

Cook told CRN, "One of our areas of focus has been -- and will continue to be -- our greenfield account program." That program, she said, "is how we align the Dell and partner energies and drive new customer acquisitions and business."

Making good on partner promises has been one of Dell's priorities, Cook said.