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It’s a multicloud world: Dell Technologies embraces software innovation

Dell Technologies (NYSE: DELL) will undoubtedly face stiff competition on its journey to multicloud leadership. Building a simplified and unified multicloud environment remains an elusive concept for customers operating on a diverse set of platforms serving unique stakeholders. While by TBR’s own analysis, building a fully unified cloud experience for customers remains a distant goal for many vendors, Dell Technologies is taking steps in this direction by giving customers the tools to manage workloads running on Dell Technologies platforms more seamlessly and enabling customers to utilize Dell Technologies’ stack in tandem with public cloud. Success will hinge on Dell Technologies’ ability to scale partnerships, the speed at which Project Alpine initiatives ae rolled out to the market, and the company’s ability to win customers’ favor in leveraging Dell Technologies’ SaaS platforms for multicloud management.

Dell Technologies unveiled a series of multicloud initiatives, with software taking center stage

Jeff Clarke, vice chairman and co-chief operating officer for Dell Technologies, opened Tuesday’s keynote by pointing out that software innovation across the industry is consistently outpacing hardware innovation. This theme resonated throughout the event, which focused on Dell Technologies and partner capabilities that can marry on-premises and public cloud data, automate IT management tasks and enhance security. Dell Technologies is building an ecosystem around its ISG portfolio that can increase the value of its own software and tools, particularly in the storage space.

ISG has performed competitively versus market peers over the past year, growing 4% year-to-year in 2021 to $34 billion in annual revenue. Although much of the product emphasis during Dell Technologies World focused on storage innovations, recent ISG growth has predominantly been driven by the server and networking business, which was up 4% in 2021, while storage has remained flat, partially due to marketwide challenges around securing components. Dell Technologies’ leadership position in the storage market is a key advantage for the company and is important to protect, particularly as competitors such as Pure Storage (NYSE: PSTG) and NetApp (Nasdaq: NTAP) have intensified their focus on hybrid cloud storage solutions via partnerships with major hyperscalers.

APEX and Project Alpine announcements focus on data protection and multicloud capabilities

The primary service expansion announced for Dell Technologies APEX, Dell Technologies’ portfolio of cloud and IaaS offerings, was Dell Technologies APEX Cyber Recovery Services. This managed service provides day-to-day management of cyber recovery vault operations and assistance with data recovery should a cyberattack occur — valuable capabilities that help customers not only deal with ever-increasing ransomware threats but also fill in gaps for customers whose IT teams lack the capacity and expertise to address security issues.

Dell Technologies also expanded its partnership with Amazon Web Services (AWS)(Nasdaq: AMZN), announcing CyberSense for Dell Technologies PowerProtect Cyber Recovery for AWS, which adds AI and machine learning-based monitoring of files to determine if a cyberattack has occurred as well as applies post-attack forensics to identify the customer’s last good backup copy.

While Product Group VP Caitlin Gordon noted that Dell Technologies is not new to hyperscale partnerships, with 1,500 companies already using Dell Technologies Data Protection on AWS, expanding the breadth of the company’s partnerships to include more services and a larger number of cloud providers is essential to address a more robust number of customer use cases. Gordon stated that the Dell Technologies PowerProtect Cyber Recovery Service, which was launched with AWS in 4Q21, will be available on Microsoft Azure in the second half of 2022.

Dell Technologies’ Project Alpine, introduced in January, encapsulates the company’s efforts to make more of its software available on public clouds. Project Alpine will make Dell Technologies’ block and file storage software available on public clouds to give customers a unified experience managing and moving workloads between their on-premises Dell Technologies infrastructure and public clouds. Gordon provided an update on the progress of Project Alpine, noting that customers will be able to access the same Dell Technologies management tools they are already familiar with via a SaaS interface to move data between environments. Project Alpine is a key step in not only increasing the appeal of Dell Technologies’ storage portfolio but also remaining competitive against storage peers that are taking a similar approach to cloud alliances, such as Pure Storage Cloud Block Store, Azure NetApp Files and Amazon FSx for NetApp ONTAP.

Dell Technologies lands the first on-premises partnership with Snowflake

Dell Technologies is the first hardware vendor to announce a partnership with Snowflake (NYSE: SNOW), a data warehouse company popular among public cloud users for analyzing and managing their company data. With this new partnership, Dell Technologies customers will be able to bring their on-premises data sets into the Snowflake cloud alongside public cloud data sets, a capability that is currently not available for other vendors’ on-premises systems. This type of partnership is an example of how Dell Technologies is expanding customer choice and the capabilities of its platforms, a trend that is likely to continue as Dell Technologies grows its partner roster and perhaps begins to ramp up acquisitions following the spinoff of VMware (NYSE: VMW) in late 2021.

Storage updates focus on software innovation
Dell Technologies focused on the software innovation theme as it highlighted improvements to its storage portfolio, which includes PowerMax, PowerStore and PowerFlex. For the enterprise PowerMax storage product line, Dell Technologies emphasized the zero-trust architecture and increased intelligence and automation, which reduces NVMe-over-TCP setup time by 44% and guarantees a 4:1 data reduction ratio. Dell Technologies highlighted a more SaaS-based approach for its midrange PowerStore operating system software, rolling out version 3.0 to customers free of charge with 120 new features.

Dell Technologies commits to making its products developer-friendly

Perhaps one of the most critical aspects of gaining share in multicloud environments for Dell Technologies will be winning over developers, an audience that has been more of a tangential focus for Dell Technologies in the past as its historical customer base has been rooted in infrastructure managers. In his keynote address, CEO Michael Dell noted the company is focused on making its solutions API-driven, increasing levels of automation and supporting Kubernetes platforms like VMware’s Tanzu and Red Hat’s OpenShift in addition to AWS EKS, which is available on Dell EMC VxRail and PowerStore.

Dell Technologies CIO and chief digital officer Jen Felch went on to discuss how the company has applied these principles to its own IT department. Dell Technologies focused on its own developer experience by creating self-service infrastructure through automation of virtual machine provisioning, networking and container deployment, in addition to providing developers with increased cost transparency to help them make more informed decisions. This was orchestrated through the Dell Technologies Developer Cloud, a user interface utilized by Dell Technologies’ developer and infrastructure teams. Per Dell Technologies’ own internal audit, enabling a self-service infrastructure helped the company’s developers increase their time spent on software development (versus administrative tasks) from 20% to 75%, a success point that Dell Technologies believes it can help its customer base achieve. Dell and Felch did not comment on what the company is doing to cultivate a Dell developer community, which will be another critical element to driving participation in the Dell ecosystem.

While multicloud took center stage, PC innovations highlighted collaboration and security

Dell Technologies’ PC business has been fueling the company’s revenue growth, with the Client Solutions Group (CSG) growing 27% year-to-year in 2021 to $61 billion in revenue, while also supporting strong margins. Highlighted PC innovations focused on the top end of Dell Technologies’ portfolio, for both business laptops and the Alienware gaming line, with a theme of collaboration, connectivity and security. Dell Technologies showcased a prototype of its Latitude 9330 laptop featuring buttons built into the trackpad to manage virtual conferencing functions such as turning the camera and microphone on and off, chatting, and sharing content. The PC also leverages AI-based features such as fixing videoconferencing performance issues by connecting to multiple networks simultaneously to increase bandwidth. From a privacy and security standpoint, the PC can detect whether onlookers are viewing the user’s screen and obscures the content from view.

Aside from innovations centered on user experience, Dell Technologies showcased the company’s focus on sustainability in PC design via Concept Luna, a three-pronged approach to reducing the carbon footprint of PCs by decreasing the size of components such as motherboards, intentionally choosing eco-friendly materials, and designing PCs to be more serviceable, which facilitates repairs and refurbishment.

Conclusion

Dell Technologies World 2022 illustrated Dell Technologies’ intentions to enable a multicloud ecosystem for its customers. The company is taking a broader approach, rather than relying solely on its APEX “as a Service” portfolio to drive growth, by embracing partnership opportunities with public cloud vendors and turning its attention toward meeting the needs of developers who are consuming vast amounts of infrastructure services. Partnerships are also a focal point for building a broader ecosystem. While Dell Technologies’ relationship with VMware remains close, the company’s first major event since the VMware spinoff gave Dell Technologies greater opportunity to highlight a broader range of partnerships, including its new alliance with Snowflake and in support of customers using OpenShift. The multicloud messaging throughout the event demonstrated that Dell Technologies understands its customers’ most essential market needs, and now the company must focus on executing to meet those demands, particularly through Project Alpine and by expanding its strategies to better cater to developers.

With Project Apex, Dell aims to surround the public cloud and tame it

At the virtual Dell Technologies World on Oct. 21 and 22, the company painted a picture of the future, a picture it calls Project Apex. “Apex” can refer to a summit, but it is also the term used to describe the top predator in an ecosystem. Dell Technologies spokespeople did not clarify which definition they intended in naming the project, but it is likely that the predator definition is used widely within the organization. The company aims to use Project Apex to conquer not only public cloud providers, its biggest threat, but also competitors that have similar offerings, such as Hewlett Packard Enterprise (HPE) and Lenovo.

Project Apex is a combination of Dell Technologies Cloud and the company’s goal of offering everything “as a Service.” Dell Technologies Cloud is a multicloud system that includes public and private clouds as well as all of an organization’s assets. Dell Technologies is prepared to manage these assets, both on premises and in the company’s data centers. This system combines the benefits of public cloud — demand-based pricing, simplified operation and outsourced management — with those of on-premises resources — greater control and flexibility, and more efficient use of edge devices. Dell Technologies intends to surround and engulf public clouds.

Project Apex is similar to HPE’s GreenLake initiative, which has the tagline, “The Cloud That Comes to You.” It is not surprising that the two largest data center hardware companies have similar strategies. In fact, while Lenovo’s multicloud and consumption-based pricing strategies are promoted less than those of Dell Technologies and HPE, Lenovo is moving in the same direction. These common strategies are a response to a common threat: the public cloud. Public cloud providers are meeting an increasing share of organizations’ computing and storage requirements, reducing hardware providers’ revenue and profits. All data center vendors have cloud service providers (CSPs) as customers, but CSPs’ scale and ability to provide their own services drive down hardware companies’ margins. The public cloud is a threat, and these combinations of multicloud offerings and consumption-based pricing are the hardware companies’ countermeasure.

Dell Technologies paints a rosy picture of the future, with free movement of data and workloads from the edge to the cloud and everywhere in between. This kind of fluidity would make it much easier for companies to implement and refine large numbers of diverse applications, enabling responsive and flexible digital transformation. The future, of course, is never as bright as pictured in the brochures. But the technology world is making progress in that direction, and Dell Technologies, as the self-defined provider of “essential infrastructure,” is well positioned to deliver it, albeit incrementally.

Project Apex includes the major technologies and techniques that fuel digital transformation. Dell Technologies Chairman and CEO Michael Dell listed six: hybrid cloud, 5G, AI, data management, security and edge. Every large IT system will include these components as well as others. 5G is especially interesting because, apart from critical hardware components for data transmission, it is a software-defined system, giving networking the flexibility that underpins Project Apex.

Project Apex is more a direction than a goal, and Dell Technologies and other tech companies have been moving in that direction since virtualization and its inevitable offspring, the cloud, became important. With the increasing importance of edge devices and edge-generated data, the Project Apex vision, where the public cloud is part of the picture but is no longer dominant, becomes more plausible.

Right now, however, the public cloud is growing rapidly at the expense of traditional on-premises data centers, and hybrid multiclouds are mostly just a vision. There is progress in “as a Service.” Dell Technologies on Demand, the company’s “as a Service” portfolio, now has a $1.3 billion annual run rate, reflecting 30% year-to-year growth. Annual recurrent revenue, which includes traditional financing and services, is $23 billion. Dell Technologies and the other hardware vendors cannot really see the light at the end of the tunnel, but they can describe it.

As digital transformation matures, customers voice their concerns about data and scale

This week TBR wraps up its 2019 digital transformation insights research with our Voice of the Customer report, in which Senior Analyst Boz Hristov notes, “More buyers are beginning to embark on full transformations as new technologies promising faster, scalable outcomes push buyers to ramp investments and AI and analytics gain mindshare. Vendors can take advantage of buyers’ increased investments in AI and analytics and demonstrate tangible ROI, but only if they can guarantee they are using cleansed data.”

Additional assessments publishing this week from our analyst teams

“Forging closer relationships with clients in select regions enables opportunities to upsell and cross-sell emerging solutions and attach services as clients continue to modernize IT environments. HPE provides the infrastructure needed to modernize clients’ IT environments, creating opportunities for HPE Pointnext’s expertise around close-to-the-box services and solutions.” Kevin Collupy, Analyst

“TBR’s 3Q19 Dell Technologies report dives deep into the complex market dynamics impacting the vendor’s go-forward path. Ongoing server market softness has caused some pivots within the Infrastructure Solutions Group’s initial 2019 goals, and VMware’s transition to more of a subscription sales model coupled with the associated expenses of completed and pending acquisitions add wrinkles to the vendor’s financial story.” Stephanie Long, Analyst

“The 3Q19 Hewlett Packard Enterprise report tunes its lens to the implications of Antonio Neri’s Everything as a Service by 2022 goal. The impact of this goal will be felt, both positive and negative, throughout the next year as the vendor’s financials adjust to a subscription selling model from a transaction selling model and as customer demand for consumption-based pricing is increasingly satisfied by these changes.” — Stephanie Long

 “As Accenture wraps up 2019 we expect the company to continue to capitalize on its momentum, targeting Diamond clients by deploying industrialized, AI-enabled solutions. We expect Industry X.0 and other similar initiative to further support the company’s efforts to secure core revenues as buyers embark on broad-based transformation initiatives.” — Boz Hristov

“As discussed in TBR’s Hyperconverged & Converged Market Landscape, the emergence of public cloud competition in the private cloud market, as vendors seek to capitalize on the rising trend of hybrid cloud adoption, has created unique and complex dynamics for hyperconverged infrastructure (HCI) vendors to navigate in the HCI space. These vendors not only continue to grapple with hardware commoditization and the ongoing emphasis on software in HCI sales, but now also face an additional angle of competition from the public cloud side, as Amazon Web Services makes Outposts generally available and Microsoft’s Azure Stack increasingly resonates with customers for hybrid cloud. On the other hand, HCI’s applicability to the edge is also resonating and creates additional pockets of opportunity for HCI vendors. Similar market dynamics are being noted in TBR’s upcoming Hyperconverged Platforms Customer Research, which examines the market through a customer-centric lens.” — Stephanie Long

Acquisitions and internal changes strengthen Capgemini in consulting

Every spring and fall, TBR releases a Management Consulting Benchmark with details on 13 leading vendors, including strategies, performance, positioning, and expectations for the next few years. For most of those consultancies, TBR also publishes individual profiles, providing additional details and analysis. The first of those profiles, on Capgemini, will be released this week, with the following assessment from  Senior Analyst Elitsa Bakalova: “Capgemini will continue to grow management consulting revenue in the next two years. A string of acquisitions in the digital segment enables Capgemini to expand into the digital design and consulting space, create a global network of design studios, and gain industry consulting expertise such as through KONEXUS Consulting in the energy and utilities sector. The announced acquisition of Altran will improve Capgemini’s ability to address clients’ IT and operational technology (OT) needs and pull through management consulting opportunities. Capgemini will position as an intelligent industry vendor that can provide solutions around Engineering 4.0 and Industry 4.0. Changes Capgemini made during the past several quarters to its portfolio, organizational structure and sales model enable the company to address demand from clients’ business side, not just in terms of their technology, and strengthen relationships with clients to expand wallet share.”

Additional assessment publishing this week from our analyst teams

Dell Technologies continues to navigate complex market dynamics. In TBR’s 2Q19 Dell Technologies report, TBR explores some of the vendor’s recent strategies to mitigate revenue declines in Infrastructure Solutions Group, including closer ties with VMware to promote a cloud-centric go-to-market message. On the PC side, performance was favorable and investments in ProManage, a new solution announced at VMworld, will be more deeply analyzed. Stephanie Long, Analyst

Also this week, TBR’s Cloud and Software team will offer insights and analysis during the Cloud pairs well with partners webinar on Wednesday at 1 p.m. EDT.  

IoT is a piece of a larger IT strategy and should not be treated as a unicorn

Let us begin with the bad news: Many IT and operational technology (OT) vendors were disappointed — and some incurred damage or had to scramble to realign — as the IoT opportunity failed to live up to inflated expectations prevalent between 2015 and 2017. Many anticipated far more rapid growth than was reasonable, given that IoT is neither a technology nor a market, but a technique or a class of solutions. Many also thought that version 1.0 of horizontal IoT platforms was a fast and easy sell. An early victim was General Electric (NYSE: GE), but TBR expects other large names to narrow their IoT businesses and investments, if they have not already, and several smaller names to disappear or get eaten by bigger fish as they find themselves spinning their wheels in the mud with nondifferentiated portfolios.

The good news: Starting in late 2018 and continuing into 2019, TBR has observed the IoT opportunity recovering as lessons from the difficult times have led to increased sanity and smarter messaging around IoT. We believe that the pace of IoT project implementation is increasing, but that the mix has shifted to smaller projects. Over time, however, the number of active projects will grow and the amount of data they produce will also grow, leading to an accelerating growth curve.

TBR believes a few significant realizations and realignments are driving acceleration:

  • IoT really is not a market (although that is the easiest way to describe it) nor a technology. It is a technique for applying technology. It is not a very novel technique, but rather an evolution of IT solutioning that includes sensors. More vendors and customers are coming to understand what IoT is and are avoiding the perception of IoT as something that is new, novel and complex, making it easier for vendors to leverage IoT to help customers overcome business challenges. With IoT being treated as one tool in the larger IT solutioning toolbox and the focus turning to solving the end problem, rather than defining the technology needed to get there, vendor-customer relationships are back to business as usual. Vendors do not have to get bogged down in education cycles as much because customers understand IT solutioning, and vendors can focus on delivering solution components instead of getting embroiled in discussions on the perception of IoT as a discrete and transformational technology and the complexity, hesitation and perceived risk that stem from that.
  • IoT is not easy. This is true for two reasons: because customer organizations are complex and have numerous stakeholders with differing priorities, visions and systems, and because IoT is rarely implemented in and of itself. IoT is more often tied with existing or new systems, such as product lifecycle management, supply chain management, enterprise resource planning software, or a multitude of specialized software from ISVs. Adoption is largely from the bottom up in organizations, but customer IoT champions and vendors are realizing that adoption must be supported from the top down to extract maximum value from IoT. Customers are increasingly adding CIO and chief digital officer (CDO) roles to guide holistic, consistent transformation, and vendors are investing in sales strategies targeted at the C-Suite, such as innovation centers and improved messaging. To answer the second challenge, vendors are learning that they cannot address everything alone and must partner to tackle the variety of interconnected systems and build best-in-class solutions.
  • Being the best at a few select components of IoT is better than being OK at everything. Thousands of vendors are attacking the IoT opportunity, culminates in a busy, confusing and hypercompetitive market for customers. Winning vendors are finding their swim lanes and exploiting their niches, such as self-service Amazon Web Services (Nasdaq: AMZN), application-focused Oracle (NYSE: ORCL), embedded-driver Dell Technologies (NYSE: DELL) and things-focused Bosch. These vendors are increasingly known for being the strongest in their chosen niches, and their narrower focuses not only make them prime targets for systems integrators to pull into solutions but also make partnerships easier, with joint go-to-market efforts proving to be a winning strategy for vendors to employ beyond their legacy customer bases. 
  • Packaged solutions are emerging. With customization comes cost and complexity, anathemas to the customer base, especially large customers. As vendors begin packaging components together for shared applications or to address common challenges, costs are beginning to develop boundaries, helping customers understand exactly how IoT can be used and what to expect in terms of ROI. TBR expects packaged solutions to drive steady market growth moving forward. Each solution has its own growth curve, with some being quite rapid—but taken together, these solutions are delivering accelerating but moderate growth.

The 3Q19 Commercial IoT Market Landscape looks at technologies and trends of the commercial IoT market. Additionally, TBR catalogs and analyzes more than 520 customer deals by vertical, uncovering use trends, identifying opportunities, examining maturity, and discussing drivers and inhibitors.

Deloitte’s willingness to go into unorthodox markets supports growth

“Broad-based investments including low-cost resources and platform-based solutions are among the recent examples of Deloitte’s efforts to expand its addressable market, resulting in improving non-management consulting revenue performance,” says Senior Analyst Boz Hristov.

“While Deloitte is far from reaching revenue diversification compared to the likes of Accenture, the firm is making inroads in unorthodox markets such as outsourcing services. To succeed, though, Deloitte will need to showcase pricing flexibility as it deploys new ways of engaging with clients.”

In his recent assessment of Deloitte’s management consulting practice, Boz noted that augmenting legacy services through investments in legal services, as well as technology partnerships with the likes of Google and ServiceNow, will play a critical role in building and solidifying trust with new and existing buyers, especially as the majority of them fall within the Extension stage of Deloitte’s digital transformation initiatives. Teaming consulting and analytics experts with solutions architects as a core go-to-market strategy will likely not differentiate Deloitte much from rivals. However, the firm’s dedicated investments in regions such as Germany, where consulting sales revenue share surpassed that of legacy audit services, will help build the globally integrated, diversified portfolio Deloitte needs to protect its No. 1 position among TBR’s benchmarked vendors.    

Additional assessments publishing this week from our analyst teams

In 1Q19 VMware experienced another healthy quarter of revenue growth, which increased 12.8% to $2.3 billion. Late 2018 acquisitions helped buoy revenue, as did double-digit cloud management bookings and the reported success of CloudHealth in the quarter. — Cassandra Mooshian, Senior Analyst

In its 1Q19 Hewlett Packard Enterprise Cloud report, TBR discusses the company’s modest 2.8% cloud revenue growth, to an estimated $1.9 billion, and how that underscores Hewlett Packard Enterprise’s (HPE) focus on and commitment to cloud-based hybrid and emerging technologies. HPE GreenLake continues to play a crucial role in HPE’s success, as GreenLake orders grew a reported 39% year-to-year in 1Q19. — Cassandra Mooshian

TBR’s Dell Technologies report deep dives into the performance and strategies of the vendor’s Client Solutions and Infrastructure Solutions groups, while painting the picture of Dell Technologies’ bigger overall strategy. Deeper analysis of some of the announcements that emerged from Dell Technologies World will also be highlighted as well as the ongoing strategic positioning of VMware. — Stephanie Long, Analyst

And sign up now for TBR’s next webinar, Where will hyperconverged infrastructure fit in the modern data center?

Dell Technologies knew what it was doing all along

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.

TBR Weekly Preview: March 18-22

In addition to this week’s vendor analysis, TBR Senior Analyst John Caucis will host a webinar Wednesday, March 20, sharing his insights on the state of the healthcare IT services market and the 2019 HIMSS mega-event. 

Furthermore, TBR analysts will be attending several events this week, so be on the lookout for special reports on Accenture, SAP and Oracle as early as next week.

Monday

  • Despite its top-tier innovation and optimistic messaging, Oracle struggles to find incremental growth outside its cloud ERP portfolio. While traction around autonomous database builds, these ERP inroads present an opportunity for Oracle to more effectively craft a story across its integrated cloud applications and platform capabilities. TBR’s initial findings can be accessed today, but read more on the subject in our 1Q19 Oracle Cloud full report publishing in April. (Meaghan McGrath leads TBR’s analysis of Oracle.)

Wednesday

  • HP Inc. delivered corporate growth of 1.3% year-to-year, a significant slowdown after five quarters of double-digit growth. During the company’s 4Q18 earnings call, executives discussed challenges within HP Inc.’s profitable print supplies business, but slowed growth in its commercial printing and overall PC businesses indicates the problem is broader. Slowing consolidation opportunities and rising opposition from its peers in the PC market will increasingly challenge HP Inc., whose PC business composes most of its top line. In addition, the CPU shortage has been more impactful to HP Inc.’s wider portfolio. Read our full report to find how HP Inc. will navigate these challenges throughout 2019, including growing its Device as a Service portfolio and supporting its sales channels to build a bulwark for upcoming PC share wars. (See Dan Callahan for more analysis.)

Thursday

  • According to TBR estimates, Dell Technologies achieved $23.8 billion in revenue, up 8.6% year-to-year in 4Q18. Gross profit increased 20.7% year-to-year, highlighting Dell Technologies’ successful improvement in overall profitability. In TBR’s 4Q18 full report on the company, we will dive into the performance of key business units. Within Infrastructure Solutions Group (ISG), TBR believes aggressive market share expansion in both servers and storage will be a key focus for at least the first half of 2019, which will result in investments in direct sales, ISG’s channel partner program and portfolio enhancements. In Client Solutions Group, Dell Technologies will continue to benefit from shrinking memory prices as well as the CPU shortages, which will drive profitability up during 2019. From a corporate perspective, 2019 will see tightened integration between the vendor’s strategically aligned companies. (See Stephanie Long for more analysis.)
  • In this quarter’s analysis of Dell EMC Services, TBR will highlight how Dell Technologies integrating preconfigured services solutions around core infrastructure technology competencies enables Dell EMC Services to attach profitable and recurring services revenue streams. (Kevin Collupy leads TBR’s analysis of Dell EMC Services.)
  • In 4Q18 Hewlett Packard Enterprise (HPE) reported corporate revenue of $7.6 billion, down 1.6% year-to-year. TBR estimates total cloud revenue reached $1.9 billion, up 3.1% year-to-year, as HPE continued to invest in its cloud portfolio and capitalize on customer demand for hybrid IT solutions. HPE’s leaner business and ongoing restructuring efforts through HPE Next allow HPE Cloud to focus on and invest further in its core areas of strength, namely hybrid infrastructure and edge computing for IoT and telecommunications use cases. (Cassandra Mooshian leads TBR’s coverage of HPE Cloud.)
  • VMware’s top-line growth continues to outpace that of its software peers in TBR’s Infrastructure Management Software Vendor Benchmark. In 4Q18 VMware experienced its strongest quarter since 3Q14, with revenue growth of 16.4% year-to-year to $2.6. Revenue growth was buoyed by strong adoption across VMware’s emerging product lines, with vSAN revenue growing 60% year-to-year and Hybrid Cloud and SaaS revenue growing 35% in the same time period. Further, the company is successfully packaging solutions around hybrid management to increase deal sizes and reported a company-record 23 deals in excess of $10 million during the quarter. (Cassandra Mooshian leads TBR’s coverage of VMware.)
  • Huawei is taking a prominent role in setting standards for 5G and launching solutions to help operators implement 5G services, which has led to key early commercial 5G-related contracts in EMEA and APAC. While security concerns around 5G will persist, Huawei will continue to grow revenue in 2019 largely due to its Consumer and Enterprise business units, which are taking share from incumbents.(Michael Soper leads TBR’s coverage of Huawei.)

Friday

  • According to TBR’s 1Q19 Telecom IoT Market Landscape, TBR estimates global communication service provider (CSP) IoT revenue rose 25.6% year-to-year to $22.3 billion in 2018. Despite sustaining strong revenue growth, TBR estimates global CSP IoT revenue accounted for only 1% of consolidated global CSP revenue in 2018, which is insufficient for most service providers to offset erosion within challenged segments such as legacy network services. To maximize IoT revenue opportunities long term, CSPs are focusing on attracting customers by implementing more cost-efficient network technologies such as NB-IoT and LTE-M, targeting high-value contracts in areas such as smart cities and healthcare, and by positioning to support next-generation IoT solutions integrating technologies such as 5G and edge computing. (Steve Vachon is TBR’s lead analyst covering the Telecom IoT space.)

Inside the evolving IoT strategy of Dell Technologies

For Dell Technologies, an Internet of Things (IoT) strategy has emerged over the last year, addressing the challenges faced by horizontally focused companies when approaching a fragmented market.

The tech giant shared its approach during a recent analyst summit, revealing a multi-faceted strategy that Technology Business Research (TBR) believes is thoughtful, sophisticated and likely to help the company grow.

The strategy includes a strong partnership network, specific IoT solutions and a growing set of relevant infrastructure components.

In short, IoT is important to Dell Technologies because it generates data at the edge of the network.

— Ezra Gottheil, Principal Analyst

Dell Technologies’ IoT strategy evolves

IoT is strategic

Internet of Things (IoT) is important to Dell Technologies because it generates data at the edge of the network. CEO Michael Dell reiterated that, “AI [artificial intelligence] is your rocket ship and data is the fuel,” but one might just as well say that data is Dell Technologies’ fuel. Dell Technologies’ business is built on customers’ need to obtain and extract value from data. The fact that IoT is edge-based helps with Dell Technologies’ need to maintain and grow its on-premises infrastructure business. While Dell Technologies is a vendor to public cloud providers, its on-premises business is more profitable. Data generated at the edge increases the need for edge storage and processing and makes other on-premises storage and processing more attractive.

Dell Technologies is starting with partners, bundles, and appliances

While other digital transformation technologies such as machine learning and blockchain are not as edge-centric as IoT, they are often used in IoT solutions and they present Dell Technologies with the same problem: Their applications are so diverse and specific to businesses and business processes that Dell Technologies cannot acquire or develop the domain knowledge necessary to create and sell enough specific solutions to address the breadth of the market or the majority of the revenue. For this reason, Dell Technologies prioritized the development of a strong partner ecosystem. Different ecosystem partners bring to the table domain expertise, other desirable technology, or the services necessary to integrate, deploy, and run specific solutions.

 

Dell Technologies Analyst Summit 2018: Dell Technologies’ (NYSE: DVMT) Internet of Things (IoT) strategy has emerged over the last year, addressing the challenges faced by horizontally focused companies when approaching a fragmented market. The company shared its approach with analysts in half-day interactive session, revealing a multifaceted strategy that TBR believes is thoughtful, sophisticated and likely to help the company grow. The strategy includes a strong partnership network, specific IoT solutions and a growing set of relevant infrastructure components.