Dell's formula for ROI
Summary
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Here at TechXNY in New York, I met with several Dell officials, most of them dressed in dark suits, white shirts, and dark ties. Apparently, the casual atmosphere at Dell is history. At least for now.
For example, with handhelds and wireless being all the rage here and in the market (millions of devices already have been sold), you'd think a mass marketer like Dell would be in the game with its direct model kicking the $#&@! out of everyone else that has to go through the retail channel. But Dell sticks out like a sore thumb as a big player without an offering.
"It's really simple," says Terri Mirka, Dell business planning and marketing programs senior manager. "A standard hasn't emerged and the market hasn't been commoditized yet to the point that we're ready to get in."
Mirka is referring to the market split between devices based on Microsoft's Pocket PC operating system and those based on Palm's Palm OS (which was recently upgraded to version 5.0). Even though both operating systems have standardized on Intel's X-Scale processor technology, that's not enough. Mirka and other company officials say they're waiting for a clear leader to emerge before the company dives in.
Evaluating its options
But that doesn't mean Dell isn't beginning to evaluate its options. Director of Product Marketing Anthony Bonadero, who ultimately will recommend a handheld strategy to Michael Dell, is looking at the company's options now and is actively soliciting feedback on the pros and cons of the major handheld platforms. So far, he won't say which way he's leaning. Given Dell's strong Wintel heritage, though, the answer seems obvious.
Another indicator of Dell's conservatism is its choice of chipsets for servers. The more I think about it, the more this seems to fit in with Dell's formula for everything from handhelds to servers--stick with standard building blocks and drive product into highly commoditzed markets and compete on the strengths of the company's direct model. Nothing fancy like IBM's EXA or HP's ZX1 chipset.
Decisions like these are helping to keep Dell financially sound during difficult times. Stay the course and nothing fancy (except for Steve). I asked Michael Dell when he thought the industry would pull out of the slump, and he replied, "Well, we're out of it already. Our last quarter did much better than the previous one, and that one did better than the one before it." I could sense him privately gloating that his competition hasn't been quite as lucky. The truth is, it's not luck. It's the company's conservative course and its mindfulness of the bottom line.
ROI tool for customers
Minding the bottom line is also something Dell wants to help its customers do. As a means to that end, it has jumped on the server consolidation bandwagon with an ROI tool that helps customers understand how IT shops can control costs through server consolidation. According to Dell's Mirka, the tool (which requires a visit from a Dell representative) has numerous variables that can be dialed up or down to play sophisticated what-if games that help IT managers establish a range of potential savings should the "customer" take on a consolidation project.
The tool produces a 50-plus page document that can be used to justify the project with cranky CFOs who have no inclination to spend money unless the return is clear. That's where the dials come in handy: The analysis can be tweaked to produce estimates that are conservative, liberal, or somewhere in between.
While the document produces a virtual RFP that could be handed off to another vendor, one of the many assumptions that the tool's methodology uses is consolidation through the purchase of Dell systems. According to Mirka, the methodology was produced in collaboration with ex-Gartner folks who helped Gartner produce the TCO methodologies it uses in many of its analyses. If that's true, then the pedigree is pretty good, and the tool probably produces some credible results.
To give users a taste of what the tool can do, a scaled-down version is available via the Web at www.dell.com/roi. According to Mirka, the more robust ROI tool is also a free service, but customers must go through a qualification process first to make sure the Dell visit isn't a waste of anyone's time.
Is Dell lucky, right--or both? Are there lessons here for the industry? What has Dell done for you? TalkBack or e-mail me at david.berlind@cnet.com.
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