The Six Five Team discusses Dell Securities Analyst Meeting 2023.
If you are interested in watching the full episode you can check it out here.
Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.
Transcript:
Daniel Newman:
Hey, Pat, you and I spent the morning yesterday watching Mr. Michael Dell, Mr. Jeff Clarke, and the leadership team at Dell for the first time in several years, go to New York City and tell their story to the investors. What happened there?
Patrick Moorhead: Yeah. So I think I tuned in for, I don’t know, two, three hours. And it’s funny, the first thing that dawned on me was, “Wow, founder-led companies are just different.” Michael got up there and with him, folks like Larry Ellison, bring to the table, Jensen Huang, there’s just a, “This is my company, I founded it, and there are still elements of me, big elements in the culture.” And it was a very fact-based… It was interesting. It wasn’t about… This was not about sexy. This was about black and white, “Here’s what we do well and here’s our focus.” It should be no surprise, the generative AI is the big focus. It’s not only a TAM expander, but it’s a market that Dell is doing very well in, and a lot of it’s due from infrastructure.
The other reason is because they’ve got some rockstar salespeople, this gigantic go-to-market engine, and this services group that I’m glad to see them as the top four elements of the go-forward strategy here. You and I have both spent a lot of time with the Dell services group. We’ve had them on The Six Five, we’ve written white papers about them, but it’s great to see them as a first-order citizen on the place mat. The final thing is supply chain. Who was one of the top companies to be able to supply people during the P period, which I’m not going to say, so we don’t get flagged? It was Dell, right? A lot of CEOs were getting up there saying, “Oh, we can’t hit it. We can’t meet demand because we can’t. Our supply chain…” Dell, pretty much for the most part, could deliver every single time.
Now, constructive criticism, I do wish they have their one strategy slide, one slide for the overall strategy. It’s a little bit dry. I wish they could have put their growth areas on there, which, by the way, is more than generative AI. Michael did a good job of really talking about what his customers are looking for, elements of multi-cloud. This is one I need to go back and read the transcript. It was very rich. They had some really good questions from the investment community related to, “Hey, why are you going to win in this generative AI thing? Isn’t that going to be a public cloud thing?” And they talked about… It’s funny. Me, the squeaky wheel, “Hey, 75% of the data is still on-prem, 14 years after the public cloud.” They didn’t use those words, but that was the essence of it. So something that I’ll be tracking here is where will the bets be made? On-prem? Public cloud? It’s going to be both. But I don’t think there’s going to be this huge swing to the public cloud. I just don’t.
Daniel Newman: They did quote some other firm that I’ve never heard of, some number that-
Patrick Moorhead: Oh, you mean firms that get numbers from other companies, and then sell back to them? Those firms?
Daniel Newman: Yeah. It’s really an impressive business model.
Patrick Moorhead: Someday I’ll be there.
Daniel Newman: I go over to Dunkin, I get a bunch of coffee, and then I stand in front of Starbucks and I sell it to people five times as much.
Patrick Moorhead: I love that. I like that.
Daniel Newman: I’ve got swagger. Hey, look. First of all, I love your sentiment about Michael. I do agree with you, as founder-led companies ourselves, I do think there’s just something different. And we aren’t even in the same stratosphere as Michael, so please don’t mistake anything I was saying. But the passion is always so evident when you have someone like that, and Michael’s ability to talk about how he’s done it over four decades. Effectively, he’s recreated the business six, eight different times. He’s done it through inorganic, through organic, through product development, through new partnerships. And the AI era is absolutely going to force the company to do it again.
But one of the things I would say is it’s easy right now if you’re an outsider to look at Dell, look at its margins, look at the challenges of the PC industry and maybe suggest that its future is going to be complex. That’s a nice way of saying people that might doubt. But everywhere along the way, when the company first entered infrastructure, no one believed it. When the EMC deal got done, everyone thought, “Look at all the debt. Look at how complex, how hard that’s going to make it for the business.” Added VMware, spun off VMware. This is, first of all, someone that has amazing financial acumen and strategy. And second of all, someone that has seen the trends and been able to… You’re talking about $102 billion in sales. $102 billion, Pat. Most large companies, large enterprises don’t make that sales. And by the way, some of the companies that we tout and clamor, don’t do that revenue.
Patrick Moorhead: Yeah.
Daniel Newman: Not even in that same stratosphere. Now, there is a lot of seasonality in that business with things like PCs, and that does create complexity, but he has diversified the business in a way. But I do believe that what you said, probably the most important thing that I got out of that meeting, is, look, everything’s not going to the public cloud. We’ve said this a million times here, we’re going to say it a million more times here. Data is not all moving to the public cloud. There’s going to be edge. There’s going to be on device data. There’s going to be data center premises, premises data. And then there’s going to be, of course, that public cloud data. And all of that needs to be able to be levered for insights, analytics, tools, applications. And Dell has products to support that whole continuum.
Look at all the number ones and categories that Dell still runs, all the new and cool storage and data companies out there that are rising. And, of course, Dell’s paying attention to them, but they’re not even making a dent in Dell’s storage business right now. That’s just a for instance. Excited to see how they put it all together. That’s what Dell’s value prop is going to be. Putting it all together, helping the companies navigate the complexities of AI and GenAI. I think they’ll do it. Of course, competition will rise, but the market will grow and the demand for tech will grow. And every generation of this, Michael’s been there and so is Dell. So I expect that to continue. It’s hard to not feel positive about where that’s headed.
Patrick Moorhead: Did Jeff just seem jazzed? I mean, Jeff is always high energy. But Jeff, I think, has entered a new place. I mean, guy’s been there for 37 years.
Daniel Newman: And he only looks like 50.
Patrick Moorhead: No, no. I know.
Daniel Newman: It’s not like he looks 12.
Patrick Moorhead: And by the way, everybody else is in suits and he’s in a blue T-shirt with AI on it with cowboy boots. I just love that.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
