On March 27, 2016, Dell entered into a definitive agreement with NTT Data International L.L.C. to sell substantially all of Dell Services for cash consideration of approximately $3.0 billion. On June 19, 2016, Dell entered into a definitive agreement with Francisco Partners and Elliot Management Corporation to sell substantially all of Dell Software Group for cash consideration of approximately $2.4 billion.
Integration talk, plus the idea of IT becoming BT: “business technology.”
After Dell Software’s expected sale is completed this fall, its new private-equity owners will separate some of the divisions — including Quest Software and SonicWall — into independent companies.
This is similar to how Novell was divided up under Attachmate.
“Dell Cloud Manager v11 features new state-of-the-art distributed blueprint support based on the TOSCA standard, simplifying portability and management of cloud applications and services throughout their lifecycle. New support for Windows Azure Pack and enhanced support for Microsoft Azure give Microsoft customers the first independent unified solution to centrally manage their combined private and public cloud environments. New automated scaling and recovery capabilities also provide added efficiency, helping to better satisfy service level requirements.”
There’s a quick overview of Dell’s new “we do all of IT” marketing push up. They’ve got their cloud management strategy in play:
The company doesn’t have its own public cloud infrastructure, but it’s happy to help set up a private cloud or link a customer to one of the major public clouds, such as those offered by Amazon, Google or Microsoft, and run it all for them. And if they want to run it themselves? Dell can build the software needed to manage all of those clouds in one place. Security concerns means that businesses will always need to maintain some level of in-house IT architecture, which needs to be maintained. Dell wants a piece of that action, even if the overall pie is shrinking.
And it looks like they’ve been growing account sizes (a possible indication that they’re selling more new stuff, not the same old stuff):
The company recently [back in Sep 2014] said that the aggressive strategy was paying off, with new lines of business within existing Dell accounts up 175% in North America for the quarter ending April 30, compared with the same quarter last year.
In an interview with their new hardware CTO, you can peek into what they’re thinking beyond “computers are awesome,” among other comments, e.g.:
“There’s been an interesting transition happening in the market where things used to be a web economy, and it’s in a transition to becoming an application economy. I would say that today we’re seeing an API economy. Customers’ focus isn’t necessarily on developing applications. Many do, but it’s really about how quickly can you tile together a service through the integration of multiple APIs from services that already exist?”
Dell’s problem in expanding their business has typically been, ironically, not getting low level enough to explain the “how” and “what” of their new stuff. They’re often big on “why” and end-result instead. I’d get all excited when they’d stoop down into the stack as their last hardware CTO was prone to do in recent years.
Having helped put together software and cloud strategy a few years ago when I worked there: I hope it works out for my old pals in Round Rock.
New Dell signage in the Austin airport.
I checked in with Dell’s end-user device management folks, KACE, recently and wrote up a report. Patching and all that isn’t exactly thrilling (but, as they say, necessary), however, it’s interesting to see the momentum the acquisition has had since 2010. Because we’d been collecting revenue from KACE over the years (thanks to Dennis), we could estimate what growing the business 5x looked like.
The full report which goes over recent updates, competition, etc. is up for clients. Here’s the 451 Take:
While end-user device management may seem one of the less glamorous sides of IT, it’s a vital ‘keeping the lights on’ function. If you showed up to work and there was no device to send emails from, everything would (perhaps delightfully!) grind to a halt. Nowadays, end-user device management is all about enabling employees to use different types of devices rather than straitjacketing them into outdated ones, and KACE seems to be keeping up with the times. We’re equally interested in KACE’s progress as an indication of how the vision for the Dell Software group is playing out. It seems to be going well, with KACE revenue having increased 5x to about $100m by our estimate. While this represents just 5-6% of Dell Software’s $1.8bn revenue, that growth should be viewed as good. Of course, as software, its margins should be far and away higher than Dell’s hardware business. John Swainson, Dell Software group’s president, has commented that he’d expect to see software contributing 25% of Dell’s profits, never mind the relative top-line. Indeed, as IBM has shown over the years, that’s the point of a software group inside a systems group – cash contribution.
As always, I like to get a sense of the numbers and the relative size of things. The KACE group was one of the first software assets (albeit packaged as an appliance) that caught my attention and impressed me about Dell ambling into software, back in 2011.
And, as always, you can apply for a trial and mention me to get a preview of the stuff we have behind the paywall.
We typically think in big animal terms. The true hyperscale market is a very small set of customers, maybe the top seven to ten players. The scale-out customers sit below these, and include Web tech, HPC, and the large financial institutions for their quant farms. The core enterprise comes next and includes converged, high-value workloads and volume workloads, and finally there is the SMB/value segment. All four of these segments are growing right now. The strongest unit growth is probably on that scale-out space below hyperscale and we are still seeing great opportunities for Web tech and technical computing. I think that HPC is becoming less and less a thing off in the corner and more of a critical component of almost everybody’s business. And the interesting thing from our perspective is not necessarily the exascale ambition and hundreds of millions of dollars in government projects. We are much more interested in the commercial, mid-scale, and educational technical computing areas and we think these are fast growing segments. Core enterprise has returned to growth.