We maintain our focus on our customers and our relationships with them. That's what drove our PC business. That's key. Within the context of storage, we've recognized that the industry hasn't matured enough to the point where it's easy to deploy solutions. So we're focusing on standardization and commoditization so that products are easy to deploy. As a result of standardization and commoditization, we're able to aggressively drive down costs. This is the value we add to our customers. I don't understand why you would want to standardize. Don't you risk making your hardware a commodity?
Yes, you do. But, that's not necessarily a negative. From a server perspective, Dell standardized on Intel processors for its PCs, for example. Standardizing on one processor allows us to leverage buying power -- your leveraging industry standard components -- which in turn allows us to reduce prices. Don't other companies do that?
Some do, but many push their own proprietary technology. What happens to your margins?
We can very efficiently operate with margins much lower than our competitors because of this focus on commoditization. Users get better price/ performance. If you can run at lower margins you can sell your products at a more competitive price. This is the threat to larger companies. They have all this internal cost structure. It makes it difficult to aggressively
Selecting one vendor to deploy [their storage infrastructure] is the best thing for some businesses. But, the customer has to remember that [if they've set up their infrastructure with a] configuration that's complex they're going to pay for that. I do believe complex requirements don't require a complex architecture. In recent weeks, several companies have announced "interoperability" initiatives -- it appears to be a real show of solidarity, but I'm skeptical. Where does Dell stand?
From a Dell perspective, we say, 'yes, we want that [interoperability] to occur.' Dell is supportive of and a member of SNIA [Storage Network Industry Association]. We believe that standarization preceeds commoditization and you can't have commoditization without standards. Without standards you can't have interoperability -- even though you can have standards that aren't interoperable. In the Dell model, we want to drive standards so that commoditization will follow. What if a customer doesn't want the limits of just one vendor?
What we have today is point-in-time installed interoperability. We can make it work. There's not much we can't do. From a theoretical and a technological point of view there's no reason why you can't make something work. But as soon as something in your infrastructure changes, then you have to [get someone to] come in and get it to work. We're a long way from standardization. But, we're starting to drive that. Clearly it's still not plug and play. What do you mean by standardized?
Leveraging volume with industry components in order to drive down costs. How do you see the market evolving in the next six months, 18 months, two years?
Financially, I can't give forward-looking indicators. But, we [traditionally] grow at a multiple of the market rate. And, I expect that to continue. From the storage market itself, I think the direct attached storage market will evolve into a commodity market. Network attached storage (NAS) is also close to commodization. In nine to 12 months that market will have commmoditized -- just by the strength of software and a shift toward using Intel as a file server. SAN is the one that will continue to be the most complex and it will take a while -- and that complexity with drive customers to deploy easier, less complex systems. Why has your storage division been so successful? Is it more than just riding the wave of a burgeoning market?
Three things. First, it's our account teams. We have customers who say 'Don't take this account team. They're helping me find solutions.' It's our customer approach. If we can deliver to you the product you need, isn't it worth it. It's the direct relationship with our customer.
Two: Leveraging our commodity. We can deliver a better value -- for the space that we cover -- equal or better value.
Three: The economic downturn. We'd like it not to have occurred. But, customers are taking a fresh look at their storage environments. Customers are looking at what they have. And, while a lot of the features they have are nice, [when they look at how much they cost] they're not that nice. We help them save money. We're playing to our strengths.
That's really simplifying it.
It highlights the point of our strategy -- that these heterogeneous environments are hard to deploy. Our position with customers is that if you have a system that is too complex, you need to take a more simple approach.