Digital transformation has become the new mandate for almost every company nowadays. And it’s about more than just automation and mechanization. While technology is the driver and enabler for change, the executive decisions that strategically leverage advancements are what allow businesses to survive and thrive in a digital world. Michael Dell, founder, and CEO of Dell Technologies Inc. knows this all too well, having pushed his company to evolve into a forward-thinking enterprise. The bold moves made by Dell Technologies Inc. have involved a $25 billion privatization, a $67 billion mega-merger, and most recently, a bid to return to the public sector in a $22 billion buyout. Thanks to fearless yet meticulous tactics, the company that once struggled with declining sales has managed to remain as one of the strongest forces in technology today.
Michael Dell speaks at length about the impact of the fourth industrial revolution and Dell Technologies role in its future. Now the company is shifting paths again to focus on leading the industrial revolution by focusing on what is at its core – data.
“The Challenge is, how do you use the data in real-time to make a better product, a better service, a better outcome. Firms are really just beginning this, but it’s setting up the foundation for a kind of fourth industrial revolution,” according to Michael Dell.
Becoming a PC Industry Giant
The journey of Dell Technologies Inc. started with an idea to provide affordable personal computers to college students. Michael, who was just 19 at the time, launched his business in his dorm room at the University of Texas with only $1,000. The Dell computer company revolutionized the personal computer buying process by selling directly to the customer to avoid middleman markups. His company became one of the first online retailers that enabled customers to personalize and custom-order. In addition, Michael developed a system for mass production of individually made-to-order units. These innovations in manufacturing and distribution changed the IT industry forever.
The Dell computer company went public in 1988 and got listed in many of the most renowned trading indexes. For a long time, the company was the biggest online computer retailer, earning an average of $30 million in revenue a day. Michael also became the youngest CEO ever to earn a ranking on the Fortune 500 back in 1992. The Dell computer company became a household name in the tech space.
During the period of 2008 through 2011 Dell underwent a series of strategic acquisitions, led by David Johnson, to change the company into one that provided Best Value Solutions (Software and Services) while re-inventing its supply chain ecosystem. The company also placed more focus on the medium-sized business market as it also expanded its offerings in the public and enterprise spaces. Dell mergers and acquisitions during this time period included Perot Systems, SecureWorks, KACE Networks, Ocarina Networks, Scalent Systems, EqualLogic, Boomi, MessageOne, Exanet, Compellent Technologies, RNA Networks, and Force10 Networks.
Recognizing the Need to Evolve
In 2012, Dell Technologies Inc. found itself facing challenges that began to undercut the company’s business. Other innovators were reshaping the technology industry. Android smartphones and iPads were becoming the best-selling devices. The opportunity to sell servers amidst the increased demand for data centers was hindered. Why? Because customers like Google and Facebook had the ability to build their own equipment.
These and many other factors resulted in slumping sales, impacting its share price. In an already shrinking market for PCs, the company’s shares dropped to 10.7% that year. There was clearly a need for Dell to reinvent itself in an industry where PCs were no longer the biggest moneymakers and the enterprise business was shifting to more data, machine learning, artificial intelligence and the Internet of Things. Michael knew that big changes had to be made if his eponymous business was going to survive.
Bold Moves for Transformation
Despite opposition from some shareholders, Michael took the Dell computer company private in 2013 with the help of technology-focused private equity firm Silver Lake Partners. The $25 billion deal was the biggest management buyout at the time since the Great Recession. It gave Dell the space it needed to rethink and reposition itself for a future beyond computers. Prior to privatization, the company accumulated businesses and combined acquisitions that boosted profits and paid down billions in debt. Dell was on the road to investment grade status.
Then came one of the biggest steps in Dell’s turnaround plan. Dubbed as the largest deal in tech history, the company purchased virtualization software giant EMC in a $67 billion cash and stock merger. The acquisition added EMC, along with its VMWare business, to Dell’s own suite of offerings, including network servers. It cemented Dell Technologies Inc. as a major one-stop shop for hardware and software needed for business operations.
On December 11, 2018, Dell Technologies Inc. won a shareholder vote to return to the public market. This is another transformative transaction for the Dell computer company after a nearly five-year absence in stock markets. “With this vote, we are simplifying Dell Technologies’ capital structure and aligning the interests of our investors,” Michael said in a statement. The company has a tangled corporate structure that holds together a tech empire ranging from servers to security software. The move will allow for greater flexibility to raise capital, boost value and pursue stock-based acquisitions.
Michael Dell is Driving Innovative Integration Fueled by Data
The Dell computer company has been making significant investments in boosting its capabilities in cutting-edge software and cloud assimilation. The company now has a lineup of servers, storage hardware, networking gear and a growing suite of software tools. Dell Technologies Inc. has been working towards closer integration between hardware and software. Artificial intelligence and the Internet of Things are also on the agenda. At the core of all of it is data.
According to Michael, there is an explosion in the number of connected nodes and the massive amounts of data that are being created. Dell Technologies Inc. is building a lot of the engines and working with the companies that are creating the tools to be able to do that as society enters the fourth industrial revolution.
Dell Technologies: Stronger and Better Positioned in the Multi-Cloud and Customer-Centric World
As Dell Technologies relisted on the public market, it did so as a more diverse industry leader. Now that the company is financially stronger, it can focus on growing in a multi-cloud and data-intensive world.
“And as the amount of data continues to explode, it’s driving an acceleration in IT spending as IT departments face the dual priorities of investing in cloud-native applications for the future while also optimizing the traditional applications and infrastructure,” Michael stated. “Dell Technologies is well positioned to capture an out-sized portion of this spend given the breadth of our innovations across our entire family of businesses.”
Dell Technologies Inc. is a testament of how businesses can stand the test of time despite the odds. The enterprise was able to reinvent itself and was even able to leverage services that were once thought to spell its end. In the fast-paced, ever-changing world of technology, the future is uncertain. But we can expect that the Dell computer company will keep finding ways to adapt.
The company is also poised to exploit a huge database of customer data that spans consumers, government clients, and businesses across the globe. This data will be key as the company uses it to drive future revenue growth.
To read more about Dell Technologies and their leadership, check out this Bold Leader Spotlight on their General Counsel, Richard “Rich” Rothberg.