Company Special: Dell shifts to growing focus on IT solutions

US hardware and IT solution giant Dell Inc will continue to increase investments and further commit to the Chinese market next year, said the company's top executives on Thursday at the 2012 Dell Solutions Summit in Beijing.

The summit featured discussions of the latest trends and showcased Dell's full range of enterprise solutions.

More than 300 industry experts and customers were invited to talk about the challenges faced by all areas of commercial enterprise while exploring the future of scientific and technological innovation.

The summit had nine exhibition areas, including medical, education, mobile data, mobile, e-commerce virtualization and cloud computing.

This event also serves as a marketing activity that demonstrates Dell's ongoing transformation from a hardware manufacturer into an end-to-end IT solution provider, said the company's senior vice-president and chief marketing officer Karen Quintos at the summit.

"Today, we are much more than a PC manufacturer. Dell today is a global leader in delivering customer-centric technology solutions for businesses and customers," she said.

According to the latest earnings reports, enterprises and services accounted for more than 50 percent of Dell's profit margin for the third quarter of its fiscal year 2013.

In her speech, Quintos said there will be a boom in Internet data in the near future, and that is why the company is altering its business model to become a solution provider, including data center, server and storage services.

Based on the figures from US IT research company IDC, 1.8 trillion gigabytes of information was created and replicated online in 2011. Gartner, another US research company, predicted that the growth of data will hit 850 percent by 2016.

In the last five years, Dell has invested heavily in software, server and end-to-end solutions to keep up with this trend, and China, the world's largest Internet and PC market, is strategically important, Quintos said.

"We had a pilot marketing event in Germany earlier this year. Now we have chosen the United States and China to hold more events," she said.

Quintos said 80 percent of Dell's branding strategy is based on guidance from the global headquarters, but 20 percent comes from the local market. She said the company will emphasize Chinese customers in its advertisements in the country, such as how Chinese appliance giant Gome can benefit from Dell's solutions.

China is the company's second largest revenue-generating country after the United States, and it represents a continually larger share of Dell's revenue and profit margin.

"Dell is seeking new technologies to better serve our customers, and we here in China carried out a series of important initiatives to enhance the ability of Dell as a total enterprise solutions provider," Dell Greater China President Michael Yang said.

"After the United States and Germany, China is the third country worldwide and the first in Asia to launch the new branding campaign. We look forward to the adoption of the campaign here as a better way to enhance customer communications and understanding in China, resulting in better service for our customers with solutions that can actually solve their problems," Yang said.

In order to become a leading solutions provider, Dell has made 20 acquisitions of firms related to security and storage in the last few years.

On Nov 16, it announced the acquisition of Gale Technologies, which offers solutions that are complementary to Dell's cost-effective management tools.

"Last year we announced a billion-dollar investment in Dell solution centers and data centers, and in the third quarter results, enterprise, data center and server business sectors saw solid growth," Quintos said.

During that quarter, Dell enterprise solutions and services revenue grew 3 percent year-on-year to $4.8 billion. These businesses accounted for about $14 billion for the entirety of fiscal year 2008, when Dell embarked on transfer its strategy to deliver end-to-end solutions.

Those businesses now generate more than 50 percent of the company's gross margin. During the same period, server and networking business grew 11 percent, marking the 12th consecutive quarter of growth.

Consumer business for Dell will continue to be crucial because trends in IT spending are shifting. The line between consumer and commercial is becoming increasingly blurred, Quintos said.

According to Gartner, 90 percent of organizations will support corporate applications on personal devices by 2014.

Therefore, creating a product that works in the office as well as the home is important to Dell, especially Windows 8 embedded touch-screen notebooks and tablet PCs, she said.

Yang said enterprise and IT solutions revenue already accounts for a major proportion of the company's revenue in China, showing "the transformation is clearly being made".

During the third quarter, China still saw quarter-to-quarter growth, but the growth rate slowed, Yang said.

According to IDC, Dell reached the number one position in the PRC x86 server market in 2011, with a 25.5 percent market share.

Yang said global IT spending in 2012 will total $3 trillion, and China will account for a significant portion.

"Generally speaking, IT demand development will surpass the GDP growth rate. In 2012, IT spending in China will reach about $170 billion, and the number will hit $250 billion by 2016," he said.

Besides China, Dell will also invest in other emerging markets, such as Brazil, India and Russia, where infrastructure development is being accelerated. Comparatively speaking, China still has faster GDP growth than other countries, but the government remains cautious about investing in key areas, such as education and health care.

"Compared with other emerging markets, China has some noticeable characteristics, such as Chinese people work very hard and place more emphasis on education, so the middle class will grow faster than in other countries," Yang said.

tuoyannan@chinadaily.com.cn

(China Daily 11/30/2012 page14)