Tag: Dell

Dell: we’re serious about enterprise

haas330Dell CEO Michael Dell, so the rumours go, notoriously hates his company being referred to as a box-shifter.

While speculation about him personally taking the company off the market to exert more control increases, European bigwigs here at Dell’s Technology Camp, Amsterdam, took to the stage promising a packed room of analysts and reporters that Dell is on an aggressive push into enterprise, but that it is very much established there already.

Dell believes it will find opportunity in a world plagued with recession, and heavy hitters such as Marius Haas, president for Dell Enterprise Solutions, are fighting the company’s corner.

Opening the presentation was Aongus Hegarty, president, Dell EMEA. He insisted that Dell’s position is as an established software company, and that its many recent acquisitions – recently herded into one umbrella group as Dell Software, are paying off. Recurring themes from all the speakers were the company’s broad intellectual property and a vast stockpile of patents, swelling with each acquisition.

Crucially, Aongus pointed out that Dell is unique to the competition. Showing a slide that presented the company in a very favourable light within the enterprise, his statement was backed up by HP veteran Marius Haas. Haas said that over the last 10 or so years, people have been mostly thinking about performance and value – but the trend has shifted onto how also to provide operational efficiency across the board.

Haas pointed out that systems can be expensive to maintain, and flagged the Itanium as an example. Although these systems can provide some operational efficiencies, costs are there because they don’t provide the full package, according to Haas. Even with cheaper Chinese vendors (naming no names), though capital costs may be at bargain prices, operational costs can be higher because there are other factors to think in – and they still must be maintained. This is where Dell differs, he said.

Scalability is another key point. Being able to deliver services from the SMBs to enterprise level means more opportunity and flexibility. Haas mentioned an initiative by the British government to store all data from every study in a digital format: this leads on to conversations from high computational requirements through to what is possible with tape storage, or the cheapest options to protect and keep that data.

Although there has been a slow down in business spending, Dell fully expects the second half of this year to pick up. We will have to wait and see. What is clear, is that Dell is serious about further entrenching its brand as an enterprise company and its execs were quite convincing. Can a further shift away from shaky consumer territory be on the cards?

Extended warranties are an untapped gold mine

Alaska - Gold MineIn the troubled economic times it is starting to look like resellers are turning to extended warranties as a good way to boost cash.

Buried in Dell’s quarterly results was a surprise statistic which indicated that the importance of the box shifter’s extended warranty program continues to rise.

A few years ago it was twice as large as the product warranty operation, now it’s four times larger and it is accounting for a rising percentage of the company’s total revenue.

Dell has traditionally been a big fan of the extended warranty programme and the idea was nicked by Apple, which has now become the world’s largest peddler of extended warranties.

In its heyday, Dell could control the sales channel from beginning to end through its extended warranty policy, kicking HP which usually sold its computers through retailers. These retailers had their own brands of extended warranty to sell and ended up harming HP’s margins.

The money involved was huge, according to Warranty Week. It estimated that Dell had sold $31.1 billion worth of extended warranties since February 2004, as opposed to the $17.5 billion Apple has sold since October 2003.

Apple saw its extended warranty revenue rocket upwards since the launch of the iPhone in late 2007 and probably matches Dell by now.

All this starts to make it clear why Apple has been so keen to avoid EU laws on warranty. Apple has its AppleCare programme, which is an extended warranty that kicks in after a customer owns a product for longer than a year. EU law says that the warranty for electronic goods should be two years, which makes AppleCare less attractive.

Apple has been in hot water in Italy, and now in Holland, for selling its AppleCare packages without doing enough to tell customers that in most cases they do not need it.

The way resellers can get around all this is to offer extended warranty packages which are more generous than the EU laws. But for this to work, the warranty would still have to expire before the parts on the electronic items start to fall to bits.

Last year, Dell reported $4.3 billion in extended warranty sales revenue, and $1.025 billion in product warranty accruals. Apple sold $5.3 billion worth of AppleCare contracts. It was estimated that the cost of actually fixing Apple products was $1.786 billion in claims paid last year.

This means that even with the large volume of products and the lowering of price of components, the profits that the two biggest warranty peddlers have are extremely high.

Acer suffers in weak PC market, moves to ditch value brand

acer-logo-ceAcer is taking a beating on the back of a slow PC market and fears that it expanded too much, too quickly.

The Taiwanese outfit is the fourth largest PC maker in the world, and it peaked in 2010, when it briefly ranked second. However, things have gone downhill and on Wednesday Acer announced it expects to post a full-year net loss for the second consecutive year. It is also looking at a $120.1 million write-down on several value brands under its umbrella.

During the PC boom in the late nineties and early 2000s, Acer went on a massive shopping spree and picked up a number of value brands, including Packard Bell, Gateway, eMachines and E-Ten. The write down on said brands dragged Acer to a net loss and the company plans to discontinue the eMachines brand altogether.

Other PC makers are facing similar challenges, as they struggle to reinvent themselves and gain a toehold in emerging sectors, like smartphones and tablets. Acer has a small presence in both sectors.

The company’s phone business is practically negligible and its attempt to expand its presence in China in 2012, with smartphones based on Aliyun, a heavily customized Android-based OS, was promptly ditched after Google threatened to cancel the company’s Android license. Acer had a bit more luck with Android tablets and it is moving into the Windows 8 tablet space as well, but its efforts have been overshadowed by the likes of Asus and Samsung.

Even as it struggles to remain competitive in the PC market, burdened by underperforming value brands, Acer prospects in the heavily contested smartphone and tablet markets look even bleaker.

Brokerage houses Nomura Holdings and UBS are anything but optimistic and UBS cut its target price and maintained the “sell” rating on Acer stock after the report. Nomura was somewhat kinder, but it also maintained its “reduce” rating on Acer, Taipei Times reports.

“Longer term, we think Acer still needs to face the reality of how to rebuild the brand positioning/image for Packard Bell and Gateway amid intense competition and slowing PC industry growth,” said Nomura analyst Eve Jung.

ARM set to grow share in server market

arm_chipA report from Markets and Markets (M&M) suggested that the micro server market will be worth $26.55 billion by 2014 and microprocessors based on ARM technology are set to take a significant share.

Micro servers major on low power consumption and have small footprints, and use multiple mobile processors. The main market will be small to medium sized businesses and applications use light duty web serving, can be used for dedicated hosting, cloud computing and analytics.

Right now, this sector only accounts for 2.3 percent of total server sales, but M&M predicts that in the next five years to reach between 25 and 30 percent of sales worldwide.

While some large enterprises are already using micro servers in an area dominated by Intel Atom and Xeon CPUs, 64 bit ARM processors are set to appear in 2014 and that will change the market dynamics, the research company said.

North America is the biggest market for micro servers currently, followed by Europe, but it is expected that the Asian region will overtake Europe by 2018.  Vendors already in the game include Intel, HP, Dell, Fujitsu and Samsung.