Dell: We'll make you a custom server if it helps us innovate

Dell will do custom server work---including complete new design prototypes---for innovative cloud business models as a way to innovate and learn from startups. Ultimately, these designs should make it to the enterprise.

That's the message from Steve Schuckenbrock, chief of Dell's large enterprise business, and Paul Prince, chief technology officer. At a press lunch in New York City, Dell execs moved to position the company more as being more innovative than the company is given credit for.

The backdrop of Dell's talk comes as the company lost out on bidding for 3Par (probably for its benefit). Meanwhile, analysts are wondering what's next for Dell as it plays in the land of giant integrated IT stacks from IBM, HP and Oracle. Schuckenbrock said Dell's aim was to "innovate without the proprietary stack" and pursue tuck-in acquisitions. Prince trumpeted Dell's efforts working with key cloud and social computing providers---notably Facebook and Salesforce.com.

If you know the financials of the server giants, Dell has a significant hurdle to clear when it comes to R&D. According to annual reports, research, development and engineering accounted for 1.2 percent of Dell's revenue. IBM spends 6 percent of revenue on R&D. Hewlett-Packard spends 2.5 percent of revenue on R&D. Oracle spent 12 percent of revenue on R&D.

Dell's plan: Team up with cutting edge companies as a way to crowdsource innovation and collaborate made a lot of sense. The numbers, however, lessen the argument a bit.

Exhibit A at the lunch was Onlive.com a cloud gaming service that went live in June and is about to ramp up with some cool toys for multi-screen gaming. Steve Perlman, OnLive's founder and CEO, said Dell built prototypes of servers that were eventually deployed in his three co-located data centers. These custom machines featured GPUs and other goodies designed to use OnLive's video compression technology and enable a bunch of streaming games. Dell and OnLive wouldn't disclose specs of these dream servers.

Schuckenbrock said Dell, best known for its direct model, will do custom work for young companies and then grow as the clients do. Schuckenbrock also added that Dell "doesn't spend enough time talking about its innovation." Prince said these efforts ultimately apply to the enterprise as Dell tweaks systems to cut the steps in launching a virtual machine.

Dell's data center solutions group has targeted 25 companies with innovative models and is in 21 of those accounts. The game plan: Work with these companies, sell lots of servers, learn and then take that knowledge to enterprise customers that are most likely doing a hybrid cloud infrastructure and easing into virtualization.

If successful, Dell's greenfield IT collaboration approach could pay off. But it's going to take some time to play out.