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Dell's Core Strategy

 
 
By Steve Wexler  |  Posted 2010-05-24
 
 
 

Like its larger rivals, Dell has been active on the acquisition front, picking up a variety of companies to bolster its offerings, including services (Perot Systems), managed services (SilverBack Technologies), storage (EqualLogic) and earlier this year, system management appliances (Kace). The latter two had their roots in the channel, which is historically uncharted territory for the company that pioneered direct PC sales, but according to Rob Meinhardt, Dell Kace president, the channels of both acquisitions are flourishing under the new management.

That should be positive news for the channel because even more acquisitions are coming, says Michael Dell. During Dell's fiscal first quarter earnings call last week he said "we will continue to be acquisitive and there are certainly capabilities we will want to add to our portfolio."

Channel Insider spoke with Meinhardt and Chip Lawson, K1000 product manager, about Dell acquisitions and the channel as they launch a major refresh of the K1000 management appliance, adding green IT power management capabilities and ITIL ready Service Desk. Meinhardt says the channel is alive and well at Dell, and the latest results for both Kace and EqualLogic demonstrate that.

"We've seen large incremental growth with Dell, 54 percent growth in new acquisitions in the last 90 days." While at least part of that growth stems from Dell's direct sales arm and larger geographic reach, the channel has also prospered, he says. All but one of the top 10 resellers who accounted for close to 80 percent of Kace sales have stayed, says  Meinhardt.

Prior to the acquisition the channel accounted for 70 percent of Kace's sales and  he says it’s essential to keep that focus strong. For instance, during the last three months Kace did more than 80 lunch-and-learn sessions, evenly split between partners and the direct sales team. Meinhardt adds that from a resource standpoint, Kace's channel team is one of the strongest in the unit, and was responsible for the initial Dell reseller relationship. Even better, the channel team will be doubled in size as Kace looks to build out its U.S. Channel.

Lawson, who used to manage the Kace relationship prior to the acquisition,  says he was one of the first ones that really brought Kace into Dell. "I put them into our channel."


Meinhardt says Kace and EqualLogic represent one of the core strategies for Dell, creating "best-value solutions", products that not only offer extraordinary ROI, but where Dell owns the intellectual property. "I see companies like Kace and EqualLogic... as cornerstones of bringing these products into the Dell ecosystem."

EqualLogic sales have grown 500 percent under Dell's stewardship, he says, "and the amount going through the channel has gone up". Last quarter EqualLogic revenue grew 78 percent, which is very impressive when you consider that the total disk storage systems market grew 0.2 percent in the fourth quarter of 2009, according to IDC.

The future for Kace as a PC-alternative also appears to be looking very bright. Like the other PC vendors, Dell is expecting a massive refresh in the near future in the corporate and public client segments. "We estimate that less than 5 percent of large commercial customers worldwide have made the transition to Windows 7 and Office 2010," says Michael Dell. "I think it is a fairly unique time because the age of the installed base is as great as it has ever been and there wasn’t really a catalyst or series of catalysts to upgrade and now we believe there is. We are seeing significant projects and conviction among customers."

New features in the K1000 include:

  • easy-to-use capabilities allowing customers to quickly and easily configure and enforce power settings on Windows and Mac OS X systems;
  • predefined reports that display energy savings which may be used to qualify for utility rebates;
  • service desk functionality consistent with Infrastructure Library (ITIL) best practices that simplifies the automation of key IT processes; and,
  • enhanced Smart Label technology dynamically groups managed machines for easier reporting and improved automated policy-based management.