Sphere 3D Corp (ANY)

[Franz1969]

Here's an interesting article from last year about Dell as it re-invents itself. I particularly like all the talk about acquisitions and the cloud, especially with the developments with Stoney, Dell Drive and Chesterfield:

http://www.inc.com/eric-markowitz/how-michael-dell-could-reinvent-his-company.html


Focus on R&D.

According to a "Dell Special Committee Investor Presentation" compiled, in part, by the Boston Consulting Group and filed with the SEC on July 15, it's clear that Dell has a spending problem. Not that it spends too much--but that it doesn't spend enough.

The report acknowledges that Dell has a "weak position" in "key growth segments" including cloud and software as a service. Part of the problem is that, compared to the company's competitors, Dell simply hasn't spent enough on research and development.

Michael Dell knows this needs to happen. In a letter to shareholders filed with the SEC in April, Dell said:

We anticipate making significant investments in research and development, capital expenditures and personnel additions. This includes hiring additional R&D, services and sales personnel in order to extend the depth and breadth of our capabilities and to increase the number of customers to whom such services and solutions are provided. Dell’s strategy of becoming an integrated provider of end-to-end IT solutions is expected to require additional investments in converged infrastructure solutions, software, cloud solutions, application development and modernization, consulting and managed security services.

Acquire new enterprise companies.

Since 2008, Dell has spent $13 billion on acquiring at least 20 B2B companies. Most recently, the company acquired Enstratius, a cloud management firm. However, the company acknowledges these acquisitions have only resulted in "modest revenue contributions."

Perhaps Dell should take a page out of the Marissa Mayer playbook--find and acquire disruptive, scalable tech companies early in their lifecycle. Dell knows that these types of acquisitions will be necessary ("it is likely that we will need to make additional acquisitions to complete our transformation," he noted in the April letter) but it will be key not to overpay.

Michael Dell doesn't talk specifically about the companies he's interested in, but according to an April 2012 Forbes interview, Dell said he, personally, looks at over 250 companies every year that might fit into the company's acquisition strategy, even if the company only acts on a few. In all likelihood, Dell will focus the company's future acquisitions towards enterprise software companies, which, he says will create "long-term value and growth for our company and for our stockholders."

Invest in the private cloud.

This may not be the sexiest component to Dell's transformation, but it's integral to the company's success. Here's a slide from a recent filing to get a sense of what Dell is after:

Dell is shifting away from public cloud model--a strategy favored by tech companies like Google, and Amazon. This makes sense, given the company's limitations. Instead, Dell will sell OpenStack-powered private clouds that run on Dell technology.

As Slashdot points out: "given the broader trends within the tech industry, any company that refuses to offer cloud-based products risks appearing obsolete (just ask Oracle about that one). But starting up any sort of public cloud infrastructure requires considerable investment, and Dell may lack the internal drive and resources to make such a thing happen at this time."