Speeches

Michael Dell spent a week in Europe at the end of April during which time he met with customers, business leaders, government officials, employees and the media and discussed topics ranging from virtualization to mobility, and from cloud computing to opportunities in emerging countries.

Transcripts from Michael's remarks and Q&A sessions are included below.

Institute of Directors Event (April 29, 2009)

Andrew Main Wilson: We had one of our interview sessions about five, six years ago. It was all going very well, you were chief executive, you then after that became chairman, and you are now back, through popular demand from your investors and your staff, back in the CEO chair. Just tell us, on your trip to Europe at the moment, and indeed, when you go to Asia, you’re very proud of being close to your customers -- what’s the temperature, what’s going on, and what are those businesses saying they’re wanting?

Michael: Clearly, what we hear from our customers right now is that they are really trying to conserve their capital, and they’re very concerned about cost and cash flow, and they are looking at, how can they use technology to drive the next wave of efficiencies. I very much believe that in every challenge, in every crisis, there’s an opportunity. We think about the ways of technology that are changing our industry and the way work gets done.

So, one of the big things going on right now is a lot of action in the data center. Companies typically have thousands of legacy applications, they have a lot of complexity, and they look over at the Facebooks and the Yahoos, and the Microsofts and Amazons, and say, “I’d like to have one of those clouds, and, how do I get my costs down to that kind of environment?” So we’re really in the business of building private clouds for these companies, using virtualization, taking out the variability, and creating the next wave of technologies around collaboration, virtualization, mobility, that really change the way they get work done, and sort of attacking the legacy-installed base, and driving a new platform.

Andrew: And the advantage of that, you have lower capital costs, because prices are coming down the whole time, you still have to spend capital to replace what you have. What’s the right balance today, for a business going forward, to capitalize on more efficiency, but a lot of people are saying, "We’re just going to have to hang onto the equipment we have for another couple of years."

Michael: You could do that. Our business is an interesting one, in that we make products that make people more efficient, so at the end of the day, our business is one of providing productivity. There are a lot of ways you can make people productive: you can give them a piece of paper and a pencil and say, "Okay, now go and be productive"; you can give them a calculator and say, "Now go and be productive"; or you can give them modern IT tools, make them productive. Our job is to make a product or a service that is fundamentally, significantly better than the one that we sold a couple of years ago, and if it’s not better enough, they will just keep the old one that they have.

Whenever you get one of these challenging periods, it reminds us that we have to go and make our customers more efficient; that’s what our job is, so that’s what we’re very focused on. There are lots of ways to do this. Obviously you have power consumption: how do you utilize the technology more effectively, with virtualization? How do you enable collaboration? How do you better manage this pool of assets? And how do you really enable people to get and share the information in the most efficient way?

Andrew: In your own personality, you’re a very genial guy. You, like Lars, can be very relaxed. What was it about you in 1984 that set you on a road to a vision that created something so big? What’s special in you that perhaps others should try and emulate?

Michael: My mother told me I could do anything I wanted to do – maybe that’s part of it. I ask a lot of questions; I tend to be a pretty optimistic person; I like to be a bit mischievous, in the sense of, "How can we change something? How can we disrupt something in a positive way?" - Lots of examples of this.

You mentioned the PC business, that’s certainly a business for Dell, but around the middle of the 1990s, we said, "We want to go into the server business, because that’s going to be an interesting business and a fun business, and we think we can do some great things for our customers there." So we went after that from 1995 to 2002; we built the enterprise server storage business to about $5 billion from zero. From 2002 to 2008, we built it to $12 billion, and now we are up to a 37% share in the U.S., leading share for the last eight years in servers. We’ve now been using all this input that we’re getting from these big cloud customers - like the Facebooks, and Microsoft Lives and salesforce.coms, and we have a customer in China called Tencent that has 650 million customers doing text messages - and these customers are really pressured to provide information in enormous quantities at very low cost.

Taking that knowledge and bringing that back to the smaller and mid-sized companies, to government organizations, to large commercial companies and global companies, that’s very exciting for us. And then seeing this technology called virtualization and building servers and stores that are really specialized around that technology so that customers can take advantage of it – we just like to think in opportunities, and we love new technology.

Andrew: And do you still set yourself that rocket growth curve that you’ve been on so far? A lot of people are looking at the Far East now, particularly China and India, where they’re starting to put pressure on every brand, whether it’s the car market, whether it’s the IT market on price. Where do you see the balance of power going, firstly in your industry, but also globally, Brazil, India, China, versus U.S. and Europe over the next five years?

Michael: We had this pretty amazing period where we grew 50,000%. I don’t think we’ll be able to do that again, otherwise our sales would be more than the GDP of all nations combined, or something like that, so that’s not likely to happen. But, if you look at the increments of growth, in billions of dollars, they can be pretty substantial. China has grown very rapidly for us, India as well. Yes, there are challenges in those places as the economy goes through its various cycles. But when you look at the long-term demand for information in these economies, it’s enormous.

Andrew: How will you then compete with their own companies, ambitious and eyeing your crown, perhaps from a lowest cost base, and ability to actually imitate the software and hardware that you guys are using?

Michael: Our approach in China has been, go there and be Chinese, so we’ve basically built a fully-integrated business in China, with research and development, manufacturing, with sales and support teams, and –

Andrew: Joint venture?

Michael: No. 100% Dell-owned business. It’s a several billion dollar business; we’re leading in share among large organizations in China, growing quite nicely there.

Andrew: It’s interesting, because they do really try and get JVs all the time, but you’ve managed to keep 100% brand control.

Michael: 100%. We don’t have any joint ventures, in China or anywhere else.

Andrew: And where do you think China and India will stack up against the U.S. and Europe, as business economies over the next five years?

Michael: I think China is going to continue to grow at a pretty torrid pace, India as well. They have different strengths and capabilities between the two economies. For us it’s not is it India or China, it’s both, and it’s all of southern Asia, and its Northern Africa, and it’s the Middle East, and Russia. We have to be everywhere. We have too many customers, and they want us to be wherever they are, and so, yes, we’re there.

But with two-thirds of the world’s population, you can’t ignore Asia. We have four business units at Dell: the smallest is the consumer business, and the largest is the large enterprise business. We put one of our business units’ headquarters in Asia, because there’s so much activity there, so much opportunity there, and we really see enormous growth in potential continuing there.

Andrew: If you were starting again today - either one of your children in their college room, or you were starting again – what would you do to build something huge? And do you believe it’s harder or easier to do it today, for a start-up entrepreneur, than it was when you did it in 1984?

Michael: How do you start a $60 billion company? That’s really easy. Here’s what you do: you go into a market space that is growing enormously, and you come up with a breakthrough idea to deliver value and capability that is unlike any other in the world, and then you just execute on it, that’s all you have to do! [Applause]

Andrew: There you go. There’s your money’s worth for the day. And do you maybe see the Facebooks and the LinkedIns with enormous customer acquisition growth at the moment – it’s a Facebook today potentially adding nearly a million customers a day.

Michael: We love that, because every time they add another million customers, they’re buying servers. I think they have 190 million or so users, and their plan is a billion, or something like that, and they’re serving up all this data. Those are very interesting business models, and I think this whole social collaboration space, the billions of people online, whether they’re using mobile phones or PCs, as connectivity increases, all kinds of opportunity and new businesses are created, it changes the way media occurs. All of commerce is affected, so it’s very exciting stuff, if you’re into that sort of disruptive thinking.

I think one key point is, the pace of change in all businesses is only accelerating, so if you’re waiting for things to slow down and not change as fast: sorry, it’s not going to happen, the pace of change is only accelerating.

Andrew: On that basis, if you look at work-life balance, here you are, very successful guy. You were chairman; you’ve come back into the business, partly because everyone wanted you back, to drive that next level, things were getting more difficult – for everyone, the next few years will be quite tough. What advice do you have – because I know you are a dedicated family man as well – on work-life balance: what works for you, when you already have millions or even billions in wealth behind you that makes life fulfilling? Or is it not possible to have the best of both worlds?

Michael: I think you have to have a clear sense of priorities and that is a personal decision about what is important to you. For me, I’ll be very clear in saying, I put my family ahead of my business; it’s just the way I operate. But I find plenty of time to do business, and actually for me business is a lot of fun, so I work hard, I play hard. Work, play, it’s kind of the same thing; I’m having a good time. I think there are lots of ways that technology can actually dramatically improve this question of balance, and I say ‘question’, because for each person it’s going to be a little different: what does it mean? And how does it feel? It’s a different character for each person.

For us, in our mobile computers, we are putting in little cameras, and people are doing video conferencing, and that’s improving. If you plot this out, all of a sudden you have a high definition, 60 frames a second, ten ADP. Imagine your high-definition video experience on your Dell laptop, and you’re talking point-to-point with any of your colleagues in the world over a standard IP network, or even wirelessly, in your Fourth Generation cellular embedded inside your notebook that we deliver next year.

So, those things dramatically alter how we collaborate, how we share information, how we work, how we play, and that’s a great opportunity to improve that work-life balance.

Andrew: Your own leadership style is, you try and grow a brand so large, across so many cultures now – in terms of your delegation style, how would you describe that today, and what’s the trick of keeping on top of things, in terms of rapid expansion geographically as well as in sales volume?

Michael: I try to think about, in my role, "What is the point of impact that I can have on the business?" We have a company with 70-80,000 people, obviously I’m not going to be making every decision, and that would be really bad anyway, as I’m not that great at making all those decisions. I’m more on the creative, new things.

So for us it’s divide and conquer, clear accountability, responsibility. We have these four business units now which we believe is very much the right way to organize a $60 billion business. They each have a clear customer they’re focused on; they are fully integrated, so the accountability, the responsibility, the P&L is very, very clear. It’s all about painting a clear vision and mission and a strategy for our teams to get excited about, and they say, "Okay, we’re going to make our customers more efficient, if we’re serving the public sector, our mission is their mission. We’re all about better outcomes in schools, we’re all about better outcomes in hospitals, and in doctors’ offices, using medical information. We’re going to enable small businesses, we’re going to bring consumers the latest technology, we’re going to make global companies more efficient."

Like I tell our chief information officer, "I don’t care about the IT budget. I care about the profit of the company." If you’re managing information in our company, you are responsible for the operating income of our company, and we think of our job as, we’re going to make our customers more productive.

Andrew: In a difficult market, you’re trying to grow, and it’s a high innovation area. I know you’re looking at slightly ‘sexier’ PCs, perhaps learning from what Apple have done in terms of great design, maybe looking at the whole mobile area as well, mobile telephony, but those are huge R&D commitments. When many companies are under P&L pressures to deliver their numbers, what plans do you have in terms of innovation that you can discuss, and how do you balance those high costs of innovation against delivering the short-term numbers?

Michael: I think we very much believe that there’s a customer-led innovation that is very, very powerful, and part of Dell’s business model is listening to customers. There are enormous things going on in the ingredient inputs that go into our industry – semiconductors, software, light programming frameworks that aren’t tied to operating systems - all kinds of fun things going on in stuff that goes inside. Then there are all these customer requirements – customers are saying, "I have to be more productive; costs are too high; it’s too complicated; help me make this stuff really become cost-effective."

Our job, and the magic, is to match those together and find a product and services that really go and meet those needs in a very powerful, compelling way. For us, innovation is about addressing those needs for customers.

Andrew: One innovation was you were totally dedicated to direct sell, and then you’ve gone into retail. Culturally, has that been quite a difficult thing to do, to match direct channels with retail, has that worked well?

Michael: The consumer business, as I mentioned, is the smallest of the four businesses, and about a year and a half or so ago, we decided to expand the number of places that you could buy a Dell computer. Before, you could buy a Dell computer on the phone, you could buy a machine on the Internet, so you could talk and you could click. Now you can walk into the store.

Talk, click, walk – here in the UK, of course, we have Dixons and PC World as great partners. We have about 28,000 stores now that sell our products, and there’s probably about 100,000 potential stores for us to expand into across the world, so we’re maybe a quarter into that journey.

Andrew: And you reassure retailers by keeping the same price as the direct model?

Michael: Dell is the leading provider of computers to businesses and governments around the world, and thank you very much – many of you are customers, we really appreciate that, so thank you. What happens at a PC World store is people come into the store all the time and they say, “Do you have Dell?” “Oh no, we don’t have Dell”. Well, now they have Dell. That wasn’t that hard to work with them.

Andrew: Your public sector business, obviously, you see that as much more stable because the spend is still there?

Michael: Certainly right now the spending by large governments around education and health care, infrastructure, green IT, these areas are very significant, and those are ones where a lot of innovation can be driven, particularly the education area. I think people have a lot of passion around that in the developed economies because, let’s face it, economies like the UK or the United States have a very small percentage of the world population, but a very high percentage of the wealth, and the only way that sustains itself is with advanced education and science. I think one of the things that really gets us excited about our business is, if we look at all of the scientific challenges that are out there, all the great unsolved problems that scientists have, they’re really all computational problems, and with more computing power, the challenges around biology and physics and protein-folding and how do we cure cancer, how do we address energy problems that exist in the world – all these problems, with additional computational power, will be solved over the next ten, twenty, thirty years –

Andrew: It’s the role IT plays, it’s often forgotten.

Michael: And we are very fortunate to play a role in putting the tools in the hands of these scientists. I’m not going to tell you that we’re going to go and solve those problems; we’re going to create the tools that are going to go and solve those problems.

Andrew: Very good. Well, congratulations on your first 25 years, we look forward to seeing what you’re going to do over the next 25. Ladies and gentlemen, Michael Dell.

British Computer Society Elite Event (April 29, 2009)

Michael: Good afternoon. It's been about a decade or so since I was last speaking to the BCS and it's fair to say there have been a few changes in the world since then in your businesses and the business of IT and the global economy and even in Dell's business too.

I think right now it's fair to say that the global economy is in some state of challenge or crisis or turmoil. And whenever we see those kinds of situations, we like to think about it and say, "Well, hey, you know, what kind of opportunity does this present? What new things are going to happen to get us out of this kind of crisis or challenge?"

And being a guy in the technology business - I love technology, grew up with technology, I eat, sleep, drink, breathe technology -- I always believe that there are new waves of technology that lead us out of one economic environment and to another one.

And you might say, "Well, what are those things?" Well, it's virtualization, it's cloud computing, it's green IT, it's social networking, it's mobility, it's 3D - I mean, it's all that.

What they want is SAP and they want Exchange and they want a reliable data center that scales. They want backup and recovery. They want security. And so we as a company had to shift our skills into solutions and be able to really understand the challenge the customer has - and also to change our business from providing products only to products and services and solutions.

I was with a client earlier today where we are, in fact, not selling them products; we are selling them a service. And the service costs a certain number of dollars per month, and it includes everything you could imagine from creating the image, managing the software licenses, the help desk, removes, adds, changes, the whole life cycle, the replacement, kind of the entire cycle of ownership. We are, in fact, the IT company for that client's environment.

And more and more of our business is moving to that. And that means we have to develop new skills. Some of those we build ourselves, some of those we go and acquire, and some of those we build with partners as well.

We make devices and products and services that can only be replaced if the new one is significant better than the old one in terms of efficiency: the efficiency it provides, the productivity it provides, the capability that it provides.

The small and medium business is quite interesting because they tend to adopt technology more rapidly and they tend to be pretty flexible. We’re busy building out a lot of resources and capabilities online for small businesses, medium-sized businesses to understand how to fully utilize the latest techniques in IT.

I would say the managed services part of our business not so much in the small businesses, but in the medium-sized businesses, the kind of 500-person type firms. You know, that's a rapid area of growth.

When I look at the big scientific challenges that exist in the world, they're all basically computational problems. And we're not the scientists that are going to go solve those problems, but we are the company that is going to build the tools that we give to the scientists to go solve those problems, and that gets me incredibly excited to see what people are doing with the kind of tools that we create.

Editor’s note: This transcript may have been edited for length and clarity. Due to varying sound quality and issues in translation/transcription, the information in this transcript may contain inaccuracies.