Dell Technologies’ strategies
Deliver ‘essential infrastructure’
Dell Technologies’ key strategy is to deliver on what it promises: comprehensive and competitive essential infrastructure, specifically, hardware and systems software for PCs, data centers and cloud vendors. Dell Technologies fills in this spectrum with a mantra of “from edge to the core to the cloud,” where edge includes PCs, gateways and near-the-edge data center hardware. By “core,” Dell refers to on-premises data centers. Dell has been investing in R&D and in breaking down internal silos to compete in its core business, with a successful recent track record. For the last two years, part of this strategy included consumption-based pricing to compete with cloud offerings. Dell Technologies’ main competitors, Hewlett Packard Enterprise (HPE) and Lenovo, have similar strategies, including flexible pricing.
‘Better together’ with VMware
The company differs from its competitors in its ownership of VMware, a provider of popular software products that provide an abstraction layer between workloads and hardware, allowing flexibility and efficiency. VMware products run on all vendors’ hardware — a necessity for VMware’s continued presence in the market. Dell Technologies seeks to leverage its relationship with VMware to make it easier for customers to benefit from VMware solutions when they buy them on Dell hardware. This “better together” approach is delicate; “better together” implies “worse apart.” One company spokesperson described Dell Technologies’ approach as offering a combined solution to those who prefer Dell hardware or are indifferent and continuing to offer separate solutions for customers who prefer competitors’ hardware.
With or without Dell hardware, VMware’s solutions are very profitable, and contribute approximately one-third of Dell Technologies’ operating profit. Maintaining VMware’s strong position in both core and cloud markets is critical to Dell’s continued success. For this reason, Dell and VMware must ensure that Dell hardware and VMware cannot be too much better together. VMware also plays a role in Dell’s cloud strategy by playing key roles in the company’s multicloud offering, Dell Technologies Cloud, providing a way to work with multiple clouds, both public and on premises. By providing the ability to move workloads between public and on-premises clouds, Dell makes it easier to bring workloads back on premises, where Dell’s margins are stronger and where, the company claims, customer operating costs are often lower.
Dell Technologies World 2019 was, to a large extent, a celebration of the success of a long-term plan. Dell has emerged from a sequence of going private, shedding many businesses, acquiring a huge federation of related business, and then going public as a healthy, growing company. Despite some continuing challenges, Dell Technologies has largely achieved the goals of an ambitious plan to become the dominant provider of “essential infrastructure,” which includes computer hardware, systems software and supporting services “from the edge to the core to the cloud,” including PCs, cloud hardware and data centers.