Dell – Ready To Challenge HP And IBM For The High Ground?

Historically, the positioning of Dell versus its two major competitors for high-value enterprise business, particularly where it involved complex services and the ability to deliver deeply integrated infrastructure and management stacks, has been as sort of an also ran. Competitors looked at Dell as a price spoiler and a channel for standard storage and networking offerings from its partners, not as a potential threat to the high-ground of being able to deliver complex integrated infrastructure solutions.

This comforting image of Dell as being a glorified box pusher appears to be coming to an end. When my colleague Andrew Reichman recently wrote about Dell’s attempted acquisition of 3Par, it made me take another look at Dell’s recent pattern of investments and the series of announcements they have made around delivering integrated infrastructure with a message and solution offering that looks like it is aimed squarely at HP and IBM's Virtual Fabric.

Consider the overall pattern of investments:

  • Dell purchased EqualLogic for its IP storage capability, a must-have for flexible VM environments where the cost and complexity of traditional SANs is prohibitive. Subsequent acquisitions of Ocarina and others established a clear pattern of attempting to flesh out its storage solutions stack, and with products that were relatively agnostic about the underlying hardware platform.
  • Added Perot Systems for service delivery capabilities. Admittedly not the peer of EDS, but a whole world better than what they had before.
  • More recently, Dell acquired Scalent. Scalent is a pure software play in the automated infrastructure provisioning, management and virtualization niche. With Scalent, Dell gains IP that will allow it to offer capabilities that place it squarely in the realm of HP’s Matrix, Cisco’s UCS, and IBM’s.
  • Last but not least, 3Par. If Dell succeeds in acquiring 3Par, Dell will have internal IP for core SAN requirements. If Dell does not succeed in acquiring 3Par, the consequences will be negative but not necessarily catastrophic. In my opinion, money and common interest will heal any wounded feelings, and Dell and EMC will have an even stronger relationship with 3Par off the table and acquired by HP, which EMC regards as a major competitor. To be fair, Andrew and I have differing opinions on the severity of the consequences of a failed 3Par acquisition, with him coming down on the side of the fallout from a failed acquisition being more severe than I feel it would be.

In addition to these investments, Dell has organized parts of the company around integrated infrastructure solutions, increased hiring, and seems to generally be doing all of the internal things needed to bring complex products like an integrated virtualized infrastructure stack to market. Their go to market messaging for their offerings are under the VIS (Virtual Integrated System) umbrella, which currently includes their VIS Director (infrastructure services monitoring), VIS Self-Service Center, and now Scalent, under the name Advanced Infrastructure Manager.

Barriers? Plenty, including the technical aspects of integrating all of the acquired IP, significant hurdles to fully integrate Perot Systems, and a continuing cultural revolution within Dell. But this time, as opposed to several legacy programs that went no further than the PowerPoint Zone, it appears that Dell has the right vision for the times, is on the way to offering a well-structured suite of offerings to bring the vision to market, and has executive backing to make it happen. Even more importantly, customers may be ready to listen – Forrester has talked to several large HP and IBM shops recently who were aware of what Dell was going to offer and, while not ready to switch vendors now, would be willing to put Dell into serious consideration for future procurements where they would previously have not been a serious contender.

Andrew and I are having fun trying to tweeze out the implications of both the in-play acquisition of 3Par and the ongoing strategic evolution at Dell, and we’d love to hear from you as well.