Dell to tap Asia's diversity for enterprise push

SINGAPORE--Addressing the vast market diversity within Asia will be a challenge and opportunity for U.S. tech giant Dell to further its enterprise IT gameplan. This includes providing consulting and advisory services besides products for customers and focusing on companies in emerging markets where there is less likelihood of legacy infrastructure.

"There is no [one] Asia", said Phil Davis, vice president for enterprise solutions, Asia-Pacific and Japan at Dell, referring to the region's heterogeneous markets. Davis and other Dell executives were speaking at media roundtable here Thursday.

Just between mature markets, there are already differences, right down to voltage specifications for data centers for example, as compared to the United States where there is some degree of homogeneity, he pointed out.

According to Pranabesh Nath, industry manager for ICT practice for Asia-Pacific at Frost & Sullivan, Dell's main challenge in Asia, as would be similar for other vendors, is handling the diverse markets that require different strategies, local sales teams and country-based support services.

It is a "tough" climate for IT suppliers, because customer spend is either stagnant or reduced whilst having a "wait and watch approach" to trying any new technology. Therefore Dell will have to increase its efficiency and investment in providing competitive services to keep up with peers, and also focus on growth markets, Nath pointed out in a separate interview.

Charles King, principal analyst at Pund-IT, added Dell was also challenged by the rapid maturation of regional vendors such as Lenovo and Asus in selling to enterprises.

It is common in Asia that customers prefer doing business with locally-based vendors, King noted. Dell's enterprise strategy is in "good shape", provided it continues strong product development as well as build close relationships and explore new opportunities, he added.

Amit Midha, president for Asia-Pacific and Japan at Dell, said he observed companies in the Asia being open to advice.

They want guidance on best practices that will make them globally competitive, even if their target market happens to be domestic or regional, because other multinational corporations MNCs could come into their home turf and compete with them, Midha explained during the roundtable.

As such, the consulting business, which comes under Dell's services arm, is integral in the overall enterprise strategy in Asia. According to Midha, the first step is educating and informing customers, then looking at how to meet customer needs, for instance, by starting with small rather than large-scale deployments.

"We think our solutions can sell themselves. We don't have to go and create this anchor point and lock customers in. The moment we try that, we will lose our credibility. Once customers see the rip-off other competitors do with their lock-in strategies, they won't go with it." 

^{-- Amit Midha, president, Asia-Pacific and Japan at Dell}

The "handholding" also indicates customers have choice, meaning if they want to, they can decide to procure various components from different vendors, be it storage, servers or networking, Midha emphasized. This addresses customers' fear of being anchored or locked in to any vendor for its entire IT stack, he added.

Whether this could impact Dell's sales, Midha replied: "We think our solutions can sell themselves. We don't have to go and create this anchor point and lock customers in. The moment we try that, we will lose our credibility. Once customers see the rip-off other competitors do with their lock-in strategies, they won't go with it.

"We're saying we have end-to-end components and we give you flexibility to choose any component you like or don't like. We'd like to be in a trusted advisor position. The more we can do that, over time, customers will see the value and benefits. People will always want to start out slow. Once it works, then they'll go enterprise-wide. And that's perfectly fine with us."

Concurring, Angela Fox, vice president and general manager of Dell Services in Asia-Pacific and Japan, explained there was a significant opportunity for Dell's enterprise push in Asia beyond selling products. A broader business transformation has been occurring on top of the IT changes to the existing infrastructure, such as reducing operational expenditure (opex) or increasing innovation, which is where consulting services step in, she said.

"It is not just about server B replacing server A. And the reality is customers don't have the luxury to forklift their environment," she said.

Acceptance as an enterprise player
Dell has been shifting from its consumer PC-only roots toward being a more serious enterprise IT vendor, even though company executives insist it is "not walking away from the consumer".

Last month, Dell reported fourth-quarter 2013 revenue of US$14.3 billion, out of which enterprise products and services sales grew 6 percent year on year to US$5.2 billion, while consumer revenue fell 24 percent to US$2.8 billion.

That enterprise revenue is going up shows there is market acceptance of the company's offerings, executives noted.

Davis said Dell's transformation was ongoing in order to remain ahead of the pack as the market develops, and "no company can ever just stop". The three areas it has focused on and will continue to do so are brand evolution, growing technical capabilities and IP (intellectual property), and talent development, he said.

According to Midha, Dell's buyout plan to become a private company represents an "exciting new chapter" for the vendor. "It doesn't change our transformation strategy, if anything, it accelerates our transformation," he said.