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How a private Dell works with customers, and sees its rivals

Patrick Thibodeau | July 2, 2014
The Dell user conference was held in a beach hotel against a calm ocean with no threat of storms. For a company that wants to be known as the strong, silent type, the location may have been perfect.

HOLLYWOOD, Fla. - The Dell user conference was held here last month in a beach hotel against a calm ocean with no threat of storms. There were families and children on the beach and the atmosphere was relaxed. For a company that wants to be known as the strong, almost silent type, the location may have been perfect.

Dell, now privately-held for nearly a year, wants to hold a reputation for innovation — it has increased R&D investments from 1.6% of annual revenue to 2.1%. Its revenue was $56.9 billion in 2013, its last reported year.

Company executives say that because they are no longer subject to quarterly public reports, they are freer to invest in projects that may take some years to develop.

But Dell remains a deliberately conservative company when it comes to research, particularly when compared to Hewlett-Packard and IBM. Its executives describe an approach focused on pragmatic investments that directly improve its products. It's not aiming to make waves with what it calls "science fair" experiments undertaken by some of its rivals.

Another change since going private, apart from the increase in R&D spending, is how Dell interacts with customers. The sales pitches and incentives that arrived near the end of each quarter are less frequent, if at all.

Jeff Stacey, a senior technical analyst at Richardson International, an agri-business, uses Dell systems and praises the engineering. But he was less pleased with the predictable end-of-quarter, quota driven calls from sales representatives.

That stopped when the company went private, and he welcomes the silence. "If we need anything, we call them," said Stacey.

Forrest Norrod, vice president and general manager of Dell servers, said there is less stress at the end of a quarter and less pressure to close by week 12.

"You got a more relaxed time period, a more relaxed engagement where you can talk more about their problem," he said.

Dell tells its customers allows it to focus on what can best help them over the long-term, as well as to make faster decisions.

This approach is illustrated by Dell's decision to give users a choice of network operating systems, termed disaggregation. Networking systems have traditionally been sold with an OS that can't be swapped out. But users of Dell networking hardware can now run either Dell's Force 10 Operating System or Cumulus Networks, Linux-based networking software.

Gartner praised this decoupling of networking hardware and software, and in a report said it "increases customer choice in networking software, reduces long-term vendor lock-in, and increases the potential for independent hardware and software innovation."

Before the announcement was made in late January, Tom Burns, vice president and general manager Dell Networking, needed to speak to Michael Dell, the CEO and founder. He approached Dell at last year's Dell World in December, shortly after the company went private.


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