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October 1, 2010

No glory, just the money: Q&A with Dell OEM Solutions

VP and GM Rick Froehlich talks to CBR about his $1bn business, and why glory is not the aim of the game

By Steve Evans

Give us a bit of background to Dell’s OEM division.
OEM Solutions as we define it is when we sell our hardware, software and services to customers who are integrating it into their own solutions. They are not in the IT space, we never sell to IT buyers. We sell to companies making medical devices, building control, network security appliances and loads more. Sometimes it’s our brand – if it’s embedded and no one sees it – but often companies put their own brand on it.

We serve 40 different industry verticals and have over 1,500 customers. We’ve been in this business in the US for about 13 years and EMEA for about three. We’re well over $1bn in revenue and EMEA is already close to one-third of that. It’s growing incredibly quickly and now we want to get the name out.

Rick Froehlich Dell

What’s the main driver behind going down the OEM route?
The financial savings is one, but it’s about the realisation that a company is not very good at doing hardware and doesn’t have the infrastructure Dell has. They don’t have to invest in time, energy and cost of hardware engineering, inventory and servicing. They buy it from us and we do the work. It is really about TCO, compared to them doing it themselves or a white box manufacturer. Just look at the amount of testing we do on our products, the failure rates are a lot lower than white boxes. They don’t have to reinvest in testing.

So give me an example of the sort of uses for your products.
Say you’re an IT professional about to catch a flight. You get to the airport and get your ticket out of the kiosk, there’s a Dell OptiPlex running the kiosk. You put your bag through the Rapiscan bag scanner, there’s a Dell server integrated in there. You go to the doctor’s for an MRI scan because you hurt your knee playing basketball because you’re too old for that sort of thing, you crazy guy, there’s a Dell running that MRI machine. There are lots of things running Dell but you don’t know it because it has the name of other companies. You may never see Dell once all day, but you’ll touch it six or seven times.

But there’s no glory in that, if no one can see it is Dell tech.
I don’t need the glory, I just want the money.

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What else does Dell get out of this then?
We’re an incubator for where technology is going – how are these non-IT companies using technology? We can learn from that and create better Dell products. For example we have a fully ruggedized notebook that came from an OEM customer. Then ‘Big Dell’ decided they wanted it and it became Dell branded. That happens a lot. That’s why we want to continue to grow the OEM business. We don’t think it’s a $60bn market, but it could be a $30m market.

How did the division hold up during the recession?
We grew. Growth rate slowed but as a whole we grew.

How do you plan on maintaining and improving the growth?
We’re building out internationally and still have work to do expanding EMEA and certain geographies such as Latin America. We’re also going to be adding dedicated OEM services in addition to the solutions. It’s support that is more tailored to OEM, leveraging some of Perot’s software/application support, whether it is software modernisation or app development.

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