Rollins on Macs, Michael Dell and more

Dell's CEO opens up and explains why he's not threatened by the Mac mini, why he thinks the iPod is just a fad and what it is like to fill Michael Dell's shoes
Written by Andy McCue, Contributor

It has been just six months since Kevin Rollins took over the reigns at the helm of PC giant Dell last year after founder Michael Dell stepped aside as CEO.

ZDNet UK sister site silicon.com caught up with Rollins on a visit to Dell's sprawling headquarters just outside Austin, in Red Rock, Texas, last week where a breezy, youthful-looking Rollins, sporting a casual open-necked shirt and a pair of modern black-rimmed 'new media' glasses, fielded questions for an hour in a plush wood-panelled executive meeting room.

Not much is known about Rollins and it is only now that he is starting to step out of the shadow of Michael Dell and into the limelight. Rollins says he is comfortable being the public face of Dell but claims he has no ego or need for fame. When asked if he wants to become part of the tech billionaire group occupied by the likes of Bill Gates and Dell, he says: "That's a unique group. I don't even aspire to that."

So what makes Rollins tick? Outside of Dell he is a classically trained violinist who plays in public several times a year. He races motocross motorbikes and likes to take himself off skiing. He's also a keen fan of history books who has taken a recent interest in the 'founding fathers' of the US, and likes to read about political leadership in times of crisis -- not a comparison that can be drawn at Dell, which continues to consistently outperform the rest of the market and beat analyst expectations.

We asked Rollins about his views on everything from Dell's next move to the Chinese market, Apple, the iPod and the Republican Party.

Q: Your current target is to double the size of the company from $30bn to $60bn, but is there a limit on the size of Dell? How big do you see Dell becoming -- do you have a vision of a $100bn company?
A: We have not launched publicly what is the next step. What I can tell you is I have not found the end. We own 18 per cent of just the PC business. Now that's only about 60 per cent of our business today. But if you look at that business alone at 18 per cent is it conceivable to double the size of that business? Yes, 36 per cent market share is not irrational. That would take us this year from $50bn to $100bn. Now will we do it? I don't know. It's very hard to do but it's not irrational.

What would stop you achieving that? Where are the weaknesses?
The weakness in the company is if we fail to execute. What we learned several years ago was that one of our weaknesses would be if we didn't develop enough people with the knowhow to run our company, it would come to the point where we would just stop. There would not be enough talent that's educated, developed and ready to take on the next leadership challenge and it would cap our growth. Now we've put programmes in place not to have that happen but that could be a weakness.

After the IBM-Lenovo deal, how much room do you think there is for further consolidation in the PC market?
I think the economics of our competitors -- the fact that no-one else is making any money -- is going to drive the consolidation. IBM reported in the last three years that they lost $1.1bn in their PC business. That's the reason they got out. I don't know who [else] will get out but I do believe we will see continued consolidation. You cannot have companies where many of the largest ones lose money indefinitely without someone finally waving the white flag, and IBM is the most recent example of that.

Do you think the HP-Compaq merger has been a success and if not, why not?
Well, you would have to say: 'What are the criteria to determine the success of any merger?' It would have to be that the companies are stronger financially, that they took market share and they are on a very steady footing in terms of their performance. I think you have to ask yourself the question of whether those criteria occurred in the case of the HP-Compaq merger. I think they've done a nice job of trying to integrate the companies but they are in a very, very tough industry and at just about the time they got the thing integrated and took all the cost out they were right back in the situation where they don't make very much money.

Would you consider growth by acquisition as a strategy for Dell? Will you be a consolidator?
I think not, and the reason is our organic growth has been very good -- somewhere between 17 and 20 per cent each quarter. And our size: the company this year is going to be close to $50bn so if that's the case, and you can continue to grow that fast, I would rather put my energies to solving customer problems and growing our business than worrying about integrating and laying people off.

Will China surpass the US as the dominant technology nation?
In the market it probably could, there's so many people there. Obviously I'm an American so I'm going to feel pretty strongly about the US being able to keep its competitive edge but there are a vast number of people who are very educated, very talented who will compete aggressively. Now for Dell that doesn't have much of an impact because we're going to compete everywhere but that's more of a country-to-country competition.

How important do you think the role of consumer electronics is to Dell's business?
Consumer electronics is a challenging one. It's very interesting, everyone wants to talk about it and right now music, flat panel televisions, a whole host of new handheld devices are fun to talk about and very exciting to look at. Our mindset always says it's not how big the market is but how profitable it can be as the key determiner of whether or not we want to be in it or not.

I think right now the jury is out on where and how much profit is available in the consumer electronics industry because if you look at the current consumer electronics players the biggest ones on the planet struggle to make profit consistently. If they can't make it being very large, sophisticated, entrenched players, what will it look like now that everyone else is getting into this business? It might make it very, very tough.

Do you resent the amount of publicity Apple gets given its market share?
Apple's created a niche. If you look at the grand scheme of things this quarter, we are supposed to achieve something like $13.5bn in revenue. Apple's in the $2.4bn [region] so the size and scale is not even in the same league. But what they do they do very well and they've had great success with the iPod. It's interesting the iPod has been out for three years and it's only this past year it's become a raging success.

Well, those things that become fads rage and then they drop off. When I was growing up there was a product made by Sony called the Sony Walkman -- a rage, everyone had to have one. Well, you don't hear about the Walkman anymore. I believe that 'one product wonders' come and go. You have to have sustainable business models, sustainable strategy. But don't read that as any sort of disparagement of Apple. They've done a nice job.

You've dropped hints about AMD over the past few months -- can we expect to see a partnership with AMD this year?
I don't know. I'm the one who made many of the bold comments that we'd seen the technologies from AMD as pretty good. Their technology in many areas was leading. But those are transient. You have one quarter one company is ahead and the next quarter someone else is ahead so we just made a statement of what we saw at the time. Intel's still our main partner. We have not announced anything with AMD and don't have anything planned but we're constantly being aware to make sure our customers get the best technology; when the customers demand technology we move and adopt it. Right now since we're focused mostly on corporations they are not demanding it.

Are you Republican or Democrat?
I actually give to both sides but I am probably leaning more towards the Republican side. I believe that because predominantly I am an open market individual. I don't believe in closed markets and I was starting to fear that with the challenges President Bush has I was fearful his competitors would close the US market down and was going to be protectionist and was not going to foster growth and open trade the way we need to do in this country.

Dell was one of largest corporate donors in the tsunami relief effort. What role do corporations have to play in these types of situations?
We're just very proud that we could even help. We think we have a responsibility. And I think it's important for all of those of us in the Western world to realise that we've all been blessed a lot and if you go to these parts they don't have a lot, even before the tsunami. I think we all personally need to do that and if companies can they should help too.

How does that sit with the shareholder ethic?
We used some amount of shareholder money but we've asked our employees to give too... so it's a joint effort. Our shareholders look on that and they say that's fair, we'll give in some. I think they are proud of what we have done and I know our board of directors is.

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