Dell Tech Camp provides a clear indication of Dell’s strategy

OVUM VIEW

Summary

At its recent Tech Camp in Amsterdam, Dell provided some insights into its strategy. The main theme was that over the past 12 months it has made seven key acquisitions that will help it transform the way the data center is perceived. Two key messages were the integration of infrastructure management capabilities into its products, and extending client management to all device types. However, after the event, Dell moved to become a private company, and Ovum believes that was part of the transformational strategy.

Dell’s Gale Technologies acquisition is a key component of the Active Infrastructure family of solutions

The converged infrastructure market is growing in importance to vendors and enterprise customers alike. Dell’s first foray into this market was with the vStart product. While vStart provided the basic building blocks, it did not go far enough to address customer challenges. Top of customer requirements is for any converged infrastructure solution to be simple to deploy, reduce the time to value, to scale as needed, and to enable flexibility in deploying services. Dell’s acquisition of Gale Technologies in November 2012 provided it with the management and orchestration technology needed to deliver a converged infrastructure solution that could become a multi-purpose platform for business services.

Effectively Gale Technologies gives Dell an infrastructure orchestration and automation software platform that discovers the resources in an environment and allows the IT department to create templates for services based on resource needs. Dell is re-engineering its vStart solutions to incorporate the Gale Technologies capability and eventually will rebrand vStart under the Active Infrastructure family. This represents a significant development in the market and moves the converged infrastructure market beyond just a consolidation argument. The Gale Technologies software capabilities are being renamed Active Systems Management, which Dell is incorporating into converged infrastructure to position its Active Infrastructure solution as a multi-purpose platform. Currently, Dell sees the market for converged infrastructure as requiring solutions for SAP, Oracle, collaboration technologies, Exchange, and VDI. While Active Infrastructure is not tuned to any specific workload, if customer demand requires it, Dell can quickly respond with workload-specific SKUs.

Ovum believes that the converged infrastructure market will grow to require a multi-purpose generalist solution and a workload-specific, optimized solution for markets where demand dictates more specialist solutions. With Active Infrastructure Dell has the core capabilities to architect a solution that will appeal to a wide audience.

Dell’s strategy begins to address the client management issue highlighted by recent acquisitions

KACE, Wyse, and Quest Software represent good strategic acquisitions for Dell, but they also create something of a headache. All three of these vendors have client management solutions that on their own deliver value to customers. How is Dell going to integrate these solutions so that it is not offering competing solutions to the market, end customer, or channel? According to Dell these solutions can be differentiated: Dell Cloud Client Computing solutions are based on a customer’s unique requirements. Dell believes that it offers customers the most complete set of options for small, medium-sized, and large deployments. Ovum considers this a good way to segment the products, but does not believe that it is clearly understood by Dell’s customers.

KACE appears a natural solution for any customer looking for an appliance-based approach, and it has extended its solution to include mobile device management as well as Windows, Mac, and Linux client computers. This meets market expectations and should help Dell add value to any large PC/laptop deal. KACE quoted SBB Cargo as an example: providing notebooks to an organization and adding a management appliance to control them is a value add that its competitors cannot provide. The Wyse cloud client manager can be segmented as providing an off-premise management capability, but the messaging was not clear from Dell on if that was its segment. Quest solutions appear to be the most difficult for Dell to position as they do not lend themselves to simple compartmentalization. This would not be a problem for a software company, but Dell is a hardware vendor where software is provided as an added value. Dell has positioned Dell vWorkSpace as best suited for customers who are looking for a cost-conscious solution to desktop virtualization with options such as a combination of VDI, terminal services, and application streaming. Quest’s vWorkSpace and Desktop Authority solutions are now part of the KACE portfolio, which is now known as Endpoint Systems Management, and Dell will be working to integrate these capabilities over the next several months. This approach represents one solution, i.e. merge the capabilities and market them as a single solution; alternatively, Dell could position the solutions for clearly identified markets. Ovum believes Dell is still working on this part of its integration strategy.

As a private company Dell can accelerate and be more long term in vision

The rumors that Michael Dell was going to take Dell out of public ownership and take a controlling interest in a private Dell were proved correct, as Dell did so on February 4. Going private represents a good opportunity for Dell to assimilate all its recent acquisitions in a way that it wants, and not have to report back to the financial analysts on Wall Street about why it is divesting of this technology for this price, when it bought it at a higher price only a few months previously. Dell’s move to become a solutions provider of intelligent hardware represents a good move, but it requires time for all the different elements to be assembled and integrated.

APPENDIX

Author

Roy Illsley, Principal Analyst, Ovum IT

roy.illsley@ovum.com

Further reading

Dell’s Software Strategy: Focused Ambitions, IT018-001393 (August 2012)

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