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3 Things That Will Make the 'New' Dell Different

By Rob Enderle
December 27, 2013 04:57 AM ET

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.

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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.

Related: 7 Habits of Highly Effective Tech CEOsAlso: How a CIO Can Save an Incompetent CEO

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.

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This story is reprinted from CIO.com, an online resource for information executives. Story Copyright CXO Media Inc., 2012. All rights reserved.
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