CIO - I had a fascinating and wide-ranging discussion with Michael Dell in advance of last week's Dell World. (We even chatted about his new Tesla S. He's a big fan of that car.)
But what's of greater interest is how becoming private will change Dell. Since the company's no longer beholden to shareholders and quarterly earnings, Dell now seems prime to innovate and to renew its commitment to both customers and partners. In the long run, this should make Michael Dell a better CEO and Dell a better company.
Robots and Watson and Scanners, Oh My
I shared with Dell my belief that robots, 3-D scanners, intelligent systems such as IBM Watson and superconductors are all fighting to be the next big thing. Google is working furiously on robots, HP on 3-D printers and scanners and IBM on intelligent systems. I asked about Dell's plans to create the next wave.
While he neither confirmed nor denied he was working on any of these things, he did point out that, by going private, Dell will have more than $1 billion in extra cash every year. This cash will be spent on buying down debt and making big bets on the future consistent with, but not limited to, the technologies mentioned above. Since Dell sets the benchmark on how to buy companies right, acquiring a firm that already has an advanced position is clearly on the table as well.
Dell World News: Dell, Red Hat Team to Sell Enterprise Openstack
Dell has been freed up to create a new wave - and Michael Dell seems excited about being freed up to anticipate a market instead of chasing it.
Keeping Customers Happy Is Easy Without Shareholders
Most people don't realize that a public CEO really has to balance a company's interests among a number of key customers. This includes the customers for their stock, which just wants stock prices and dividends to go up; they don't really care about customer satisfaction, employees or the sustainability of the company. That's how Mark Hurd could get such high marks as HP's CEO even though he crippled the company. Plus, since CEO compensation is often tied tightly to stock performance, this can make CEOs do stupid things to keep their companies running.
By going private, Michael Dell now only has to worry about users and IT buyers. Yes, there is tension between these two groups, but it's far less than that created by investors. As a result, the complaints I get about Dell have fallen off a cliff; Dell customers, collectively, seem much happier.
Granted, some of this is likely due to how upset they are at Oracle at the moment, making all other companies look better by comparison, but Dell's renewed focus on customers' needs hasn't gone unnoticed - and this is happening in advance of the major changes that going private will drive.
Turning Partnerships Into a Competitive Advantage
While most of Dell's competitors spread themselves very thin, attacking every new market opportunity that emerges, Dell picks its fights carefully. This is particularly with regard to Web services, where Dell has decided to implement a strategy that will differentiate them from the other firms.
Rather than compete aggressively, Dell treats Web services firms more like customers - and these firms are responding by favoring Dell for servers. Companies don't like to buy from companies they compete with. This gives Dell, at least with respect to companies in its class, a competitive advantage.
Some of these firms had been moving to create their own hardware, too. Dell's move, then, should create a more favorable alternative, since it comes with services and experience. This should make the result far more reliable, with a far lower TCO as well.
CEOs of Private Companies Have an Easier Job
One thing I've noticed about CEOs of public companies is that they tend to do three things: Overwork themselves (Steve Jobs), focus so much on stock performance that they harm the firm (Hurd), or take the job for granted and mine the perks (Carly Fiorina at HP).
These examples are extreme, but often you'll find a bend of these problems in most CEOs. None of the paths are good for the company. While Michael Dell, as a founder, would generally resist No. 2 and 3 anyway, the risk of No. 1 and the conflicts of No. 2 are clearly driven by the special requirements of a large, public company.
The best benefit of being private is that lets the CEO to think about ways to advance the company and be a better manager. The collateral benefits won't just be better customer and partner relations or a fascinating new product. The end result will be a much stronger and healthier CEO - and that will result in a much stronger Dell.
Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.
Read more about financial results in CIO's Financial Results Drilldown.
- Aberdeen Group: Marketing Analytics for Manufacturing: Forging Customer Insights There are no recalls for poor marketing. Manufacturers need to get their customer intelligence and messaging right the first time. Learn how.
- The Brave New World of Customer-Centric Manufacturing The Unique Opportunity for Manufacturers to Better Understand their Consumers
- See the Possibilities Utilizing Data Visualization Do you simply want to collect data, or do you want to derive business insights from it? What if you could quickly and...
Changing the Way Government Works: Four Technology Trends that Drive Down Costs and Increase Productivity
This paper discusses four technology-based approaches to improving processes and increasing
productivity while driving down department and agency costs.
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users?
- On-demand webinar: "Mobility Mayhem: Balancing BYOD with Enterprise Security" Check out this on-demand webinar to hear Sophos senior security expert John Shier deep dive into how BYOD impacts your enterprise security strategy... All IT Industry White Papers | Webcasts