The $67 billion merger, announced in October 2015 and completed in September 2016, was the biggest in the information technology (IT) industry. For its fiscal year ended 3 February 2017, the combined entity—called Dell Technologies—reported revenue of $74 billion. In India, the entity goes by the name Dell EMC.
“In India, all the three main segments (client and small business; commercial; and enterprises) of our business have been showing substantial growth—year-on-year and, now, quarter-on-quarter as well. There are very encouraging signs of the business build-up," said Alok Ohrie, president and managing director (India Commercial) at Dell EMC, in an interview in Mumbai.
Ohrie pointed out that in storage infrastructure, the company ranked No. 1 in the first quarter of 2017, with a 43.4% market share. “If you look at our PC (personal computer) business—which we call client business—we had a 22.5% market share; we are a strong No. 2 there," he said. In the mainstream server business (also called x86 servers that are built on Intel architecture), however, the company’s market share in the same quarter slipped to 20.5% from 26.5% in the first quarter of 2016, according to research firm International Data Corp. (IDC). To be sure, the No. 1 company in this segment, Hewlett-Packard Enterprise (HPE), also saw its share fall from 46.2% to 40.3% in the same period.
While Dell EMC does not break up India revenue, in an interview this April, the company’s global chief financial officer Tom Sweet said the combined entity was “on track" in India to “hit the $3 billion mark in a couple of years" (bit.ly/2pis46K).
Ohrie insisted that despite the initial scepticism of some analysts about the merger, the company picked up pace in acquiring new customers and launching products better suited to a world that is fast embracing trends such as mobility and cloud computing. The “positivity around Dell EMC", he said, has to do “with the fact that we have integrated the organization very quickly". According to him, the company globally acquired about 10,000 new customers in the first half of 2017. In India, the number is “upwards of 1,100". The qualifier here, he added, is that for Dell EMC, any customer that “gives business worth upwards of $5,000" is a new customer.
The company could also have lost customers during the same period. Not due to this merger, insisted Ohrie. “Do we lose business otherwise? The answer is yes," he said. But most companies tend to keep Dell EMC in their buying consideration, he said. Citing a survey by IDC which showed that 99% of the customers polled globally said they will buy from Dell EMC, or increase their buying from Dell EMC, Ohrie said “that’s a huge thumbs up".
According to Ohrie, banking, financial services and insurance (BFSI), and the government’s smart cities initiative are providing a lot of traction in terms of revenue and potential. Fintech companies and “newcomers" are pushing traditional BFSI customers to take new initiatives alongside running their businesses the traditional way, forcing them to redefine the way they do business, he said. This move, said Ohrie, is helping Dell EMC win new deals wherein they are helping such firms implement the new initiatives—“whether it is in payment gateways or a better customer experience". He cited the example of a “massive branch automation project" going on at State Bank of India “where Dell EMC is involved".
Elaborating on the opportunity that is stemming from the digital transformation journeys that companies are undertaking, Ohrie explained that the different brands under Dell Technologies—Pivotal (for writing cloud applications), VMware (virtualization or making the software define how IT systems are used), Virtustream (cloud services) and RSA (data security)—are “being leveraged well" to “push our case with prospective customers".
Among the two major focus areas Dell Technologies had announced last year was an investment of $4.5 billion in research and development (R&D) and interest in the potential Internet of Things (IoT) market. Ohrie said the R&D investment had resulted in several new product launches, the latest being flash storage arrays and its “fourteenth generation" server range that comes with a different architecture. As for IoT, the company has launched its Edge IoT gateways which, according to information on its website, “aggregates and analyses the (sensor) input and…sends only meaningful data to the cloud or control centre." “We are saying that we will not just be in the space of gathering, collecting and transmitting data but we will also see if we can do edge analytics (performing analysis in real time at the point where data is being generated—eg. from sensors, cameras, etc.)," said Ohrie. Such analytics help in avoiding the bandwidth choke that could otherwise result from a lot of sensor data being sent directly to the cloud computing or other central facility for further processing.
Dell EMC is also working with start-ups and in the government sector for expanding its business. “We have bid for a few of the smart cities where we have proposed for waste management and power management in terms of managing leakage and managing better distribution of electricity," said Ohrie. He added that while Dell Technologies has set up a $100 million fund globally for start-ups, in India the company “jointly runs demand-generation programmes" with some of the start-ups, realizing that “the mindset of the chief information officers" has changed. “We are working with close to 100 start-ups, mostly fintech companies and start-ups involved in smart cities," he added.
Sanchit Vir Gogia, chief analyst and CEO of Greyhound Research, said, “I think the company must be given credit for handling the complexities at hand fairly well." Another thing that Dell Technologies has managed quite well, according to him, is the product overlap; it was “not an easy task" to bring the portfolios of companies such as VMware and RSA together. However, he added that given that 70-80% of their business comes through distributors, they can possibly do a better job at reskilling them, as many of them may not be ready to talk the same language with customers as the company itself. He added that EMC was “a low-volume, high-margin company" whereas Dell was “the opposite—a high-volume and low-margin company".
“Until now the sales momentum of the two organizations was high and each brought in the sales volumes; but now that they are inter-locked into each other, we will see the real impact of the merger as the year goes by," he said.
On the competitive landscape front, Gogia believes that HPE is “going quite aggressively after their customer accounts" and will pose a significant challenge to Dell EMC across the portfolio. Ohrie, on his part, concluded that Dell EMC now has “an integrated sales organization, with a great blend of people from either side". He hopes this will help the company not lose momentum.