03 Nov 2016 15:26 IST

‘We have created value, democratised technology’

Margins reflect appreciation by customers; investment in R&D is vital: Michael Dell

At the recently concluded first Dell EMC World 2016 conference in Texas, Chairman and CEO of Dell Technologies, Michael Dell heralded the dawn of a new digital era – where physical and digital realities are transforming into physical and digital businesses – to an audience of over 8,000 people.

Stating that Dell Technologies is the largest enterprise systems company, he said the goal is to be the most trusted, innovative provider of essential infrastructure for organisations to build their digital future, transform IT and protect their most important asset – information.

In an interaction with BusinessLine on the sidelines of the conference, Michael Dell talked about what it means to be a tech powerhouse, new opportunities for growth and innovating for the future. Excerpts:

Traditionally, customers do not like being locked to a single vendor. Dell customers that BusinessLine spoke to fear that the combined powerhouse of Dell and EMC would lead to a monopoly. What’s your take?

If you think about the PC space, for example, where we have gained share for the last 15 quarters in a row, we are doing very well.

But if you double-click a little more on the architecture, when a customer chooses Dell for commercial PCs – this concern doesn’t really come up with consumers – they are choosing Dell for the product, for the service, and support.

At the same time, they are also choosing Intel, AMD and Microsoft typically; which actually have much higher shares than Dell. So, there are suppliers of ours that have an even higher share than us.

If one were concerned about the issue you mentioned; you would be concerned about our suppliers like Intel and Microsoft maybe more than you would be concerned about us.

That’s precisely the point. You may not yet be there, but you are you not getting there?

I think one of the reasons we’ve succeeded is because we’ve created a tremendous amount of value for customers and democratised technology – made it more available, more affordable.

There is no shortage of competitors in the businesses that we are in. I think if we continue to deliver great value to customers, continue to provide high levels of service, continue to innovate, and have great relationships with them, customers will reward us with more business.

If we don’t, they will not do so and choose somebody else. And there are plenty of other choices really in every business we are in.

What are the challenges of integrating the two distinct corporate cultures of Dell and that of EMC?

It’s already done. We had a decade-and-a-half lead up to the combination of Dell and EMC.

This goes back to 2001, when Dell and EMC announced an alliance in which Dell would sell EMC storage technology to its customers and form a Dell-EMC storage business.

The Dell server technology was embedded into pretty much every EMC storage product line that existed, and EMC became our largest OEM customer in the world. And so our teams, starting in 2001, learned how to work together in terms of supply chain, R&D, sales and importantly culture; we became friends.

I was present within EMC from the day of the announcement – at leadership meetings, learning about them as we came together. It is one family and the cultures are more similar than different.

Customers have paid different margins for Dell and EMC products. With the new organisation structure in place, how do you plan to rationalise the margins customers will have to pay henceforth?

In terms of margins, the averages tell the story. When you de-average, you get a very different story because Dell has some products with high margins, and some with low margins. There definitely are ways across the portfolio to manage that.

We also tend to focus more on the margin dollars than the per cent, as a private company.

Let me explain what I mean by margin dollars – if your goal is to have a business with the highest margin per cent, then sell mousepads.

Why do we spend $4.5 billion every year in R&D? We think we will get back more than the $4.5 billion in margins, because of the innovation we are applying.

And margins are a way of the market telling you that your innovation is valuable and appreciated.

What more needs to be done to create opportunities for growth, and a stronger value proposition to customers?

We have a lot of cross-selling to do with the combined entity. We have an organic innovation engine that is very significant, with the R&D teams across Pivotal, VMware, Dell EMC and the whole family.

We also have alliances with hundreds of important companies from SAP, Microsoft, Oracle, to many others.

We have our own Dell Technologies Capital Group investing in hundreds of new companies that are 24, 36, 48 months out into the future in terms of new things that are evolving. These may be in machine learning or security, cloud or big data.

We will continue to make acquisitions. We think of ourselves as a company with big ears – we are always listening and trying to figure out what the unsolved problems of customers are.

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