The IDC European IT Forum in Paris has frequently been the stage for high-profile confrontations, most famously a few years ago, when Bill Gates and Larry Ellison uneasily shared the podium, regaling the audience with their very different views of network computing.
This year it was the turn of Compaq and Dell, both now under the leadership of CEOs called Michael. The two faced off earlier this week, presenting their differing views of the world and, afterwards, sitting alongside one another to answer questions. Compaq’s Michael Capellas, just six-and-a-half weeks in the job, was first on the podium, keen to display a reinvigorated company and its view of the future.
Recent internet history has been the battle for eyeballs, measuring success by the hit rate, Capellas said, whereas from now on he said, the struggle shifts to the field of transactions and the ability to scale quickly and reconfigure dynamically. He described the three divisions into which Compaq is now organized (enterprise, business PCs and consumer) and how each is working with goals shaped by the net.
The enterprise division’s buzzword is ‘Non-Stop E-Business’, with goals encompassing reliability, availability, scalability and manageability and supported by professional services. In this context, said Capellas, both server-attached and stand-alone (SANs) storage has gained a higher priority at Compaq. When Capellas arrived at Compaq, he realized that it hadn’t hired enough storage specialists, a situation he is currently seeking to rectify.
As for Compaq’s place in the world of Unix, he said that the company is going to be everybody’s Unix restricting its Alpha-based Solaris to areas of specific competence such as financial services, high-performance computing and telecoms. In the volume server business, on the other hand, the group is committed to NT on Intel.
In the PC arena, Capellas foresees simpler machines with specialized functions, wireless connectivity and standards for ease of installation, a generation of what he called ‘intelligent clients’ entailing only two plugs, one into the wall and the other into the network.
The third part of the company, the consumer division, is clearly near to his heart, as Capellas repeatedly told people that it had a mandate to make cool stuff …. innovative devices which are more fun and more appealing. To this end, he revealed plans for an alliance with a GSM manufacturer.
Quizzed as to his targets for Compaq’s services business, Capellas said that, apart from the traditional ‘Break and Fix’ side, he wants to step up the company’s strengths in business process re-engineering, as well as customer relationship management in alliance with Siebel, Oracle and enterprise resource planning (ERP) in association with SAP. An overriding concern, throughout, is in enabling the internet infrastructure, he said. We won’t be getting into high-end business consulting, he added.
Michael Dell’s message was more to the point. The internet will BE your business he said. Dell itself is not only already selling directly over the net, but is also developing online support tools, running diagnostics and, with the permission of the owner and a security clearance, online fixes. The aim is to extend ‘e-support’ from the desktop all the way through to the enterprise.
Dell too is upping the priority given to storage, he revealed. While its OEM deal with Clarion is clearly not going to develop any further after the EMC acquisition of Data General, existing projects with the latter’s blossoming storage division will, at least for now, be maintained. Meanwhile, the recent acquisition by Dell of ConvergeNet looks like a repositioning strategy in SANs.
Also like Compaq, Dell is stepping up its service offering, including systems integration, leasing, applications tuning and testing, and consulting. He expects that part of its business to represent revenue of around $2bn out of a total of $26bn to $27bn this year.
While the consumer side of its business has been less important than sales into the SME market, it grew 100% in unit terms last year and now represents around 12% of revenue. Al though his emphasis on this area appeared smaller than Compaq’s, Dell did, like Capellas, acknowledge the need for more innovative designs to replace grey boxes. Apple [with the IMac] gave a wake-up call to the PC industry, and you’ll see a stronger design element over the next 12 to 18 months, he predicted, citing Dell’s own Webster product in this context.
He was gracious enough not to be too disparaging about Compaq in Capellas’ presence. He merely aimed indirect darts at his competitor, such as: if you have perfect information about what your customer wants you need no inventory, but if you have no idea, you need a lot of inventory. As for indirect channels, he said they were headed for a fast exit. In a speech later in the day, made elsewhere in Paris, he was more direct, saying his company’s costs are roughly half those of Compaq and adding that the latter has to lose money, with its current cost structure, to price at the same level as Dell.
Both men agreed on an one thing at least. They are both lukewarm on the subject of Linux. Capellas said that he recognizes that it now represents about 18% of shipments of Unix servers and acknowledged its value for web servers around the periphery and web engines but added that we’re still driving NT into the enterprise. Dell said his company has partnered with Red Hat for Linux, but that the majority of demand won’t be for Linux but Windows 2000. Asked when he though Linux might be shipping 50% of the volume of NT servers, he said he didn’t think it would ever happen.
