It’s been an interesting week for Dell – from having a decent fiscal 2010 Q3 financially to re-thinking its mobile strategies. The two are related I think, and the financial numbers tell the reason why. I’ll get back to those in a bit, but first let’s take a look at ‘Dell Mobility.’
Dell began its ‘formal’ mobile business last year, but it really began back in 2007, as a pure consumer play. Originally Dell needed to better compete with HP for the home PC market, and it all began there. But mobility was always part of the underlying game plan.
Now here is the important thing – I take Dell’s new move to integrate its mobile products into its other business groups as a sure sign that Dell now understands that mobility is slowly maturing within the enterprise (not from a business perspective – that is still in its infancy, but from a technology perspective), and that the enterprise is going to be where Dell pulls off the mobile win.
Dell is absolutely on the right track with this mobile strategy. Why?
Observations of What Theories Predict
I have a mobile enterprise theory (what will be one of my upcoming top 2011 mobile trends) that permeates Mobile Observatory – it comes together around the notion that the consumerization of the enterprise is giving way to a much more normal order of things – the enterprization of consumer technology. I’ve written various blog posts that elaborate on my theory – for example, Good Heavens, It’s Raining iPads, and my musings on what and why Microsoft needs to focus on the enterprise (in which I strongly suggest that Microsoft and Dell need a very close mobile enterprise collaboration).
Dell’s new push is predicted by my theory. A scientist (especially a particle scientist playing with the Large Hadron Collider and looking for the Higgs Boson) will say that experiments that allow observations in the real world of those things predicted by a given theory are a necessary component to proving the efficacy of that theory – I believe Dell provides that real world observation of my mobile theory that it is enterprization, not consumerization, that will drive mobility forward. Those scientists also require independently reproduced experiments and observations. Along those lines I’m confident we’ll see more such observations in 2011 (and technically, I believe that HP can already be counted here, given where it is going with WebOS, and why).
When Dell began its consumer/mobile push, Android was still in the box and the iPhone was a rumor about to become a reality. Dell understood that there was a significant consumer technology movement afoot, and the company brought in Ron Garriques, who had been the innovation guru behind Motorola’s RAZR and mobile strategies, to make that consumer innovation happen.
It isn’t hard to associate Garriques leaving Motorola with Motorola’s fall from grace shortly thereafter, though it’s murky as to what blueprints Garriques left behind to follow up on the RAZR. I’m pretty sure the plans called for more than blue, red and green RAZRs, but Motorola suddenly found itself rudderless on the innovation front as the iPhone hit the stage, though it is certainly regaining its innovation mojo through all things Droid. Garriques obviously knew that world, and it made sense for Dell to bring him on board.
So, the point of that brief review of history is that Dell correctly assessed that innovation and consumer markets go hand in hand, hence the innovative Garriques’ entrance into Dell. OK, now let’s fast forward to today.
A Window Closes – A Window Opens
One view of things, which isn’t very important, is that Dell took too long to go mobile and that it has seen its window of opportunity for selling mobile devices to consumers close. But let’s not dwell on that (it’s not important!). And let’s not dwell either on how Dell went about the initial launch of its Venue Pro with Microsoft (it went badly, but that’s neither here nor there).
The other view, which is the very important one, is that Dell sees an entirely brand new window of mobile opportunity opening to sell mobility deep into the enterprise and the public sector (government, hospitals, etc). And of course Dell’s consumer group continues to exist – but whatever mobile revenue is derived from the consumer side will now become incremental bonus mobile revenue, rather than the only mobile revenue.
Now, let’s return to the Dell revenue numbers that were just reported.
The Revenue Numbers Tell the Story
81% of Dell’s revenue comes from selling hardware (PCs, servers, data storage etc.) to enterprises and the public sector (e.g. government, life sciences, eduation). At the end of the day less than 20% of Dell’s revenue comes from the consumer side. Now, let’s look at how that revenue distribution is growing year over year.
Commercial sales grew 24 % (to $12.4 billion). Consumer sales rose a mere 4% (to $3 billion). Breaking out the commercial sales a bit deeper, large business revenue grew 27%, SMB revenue grew 24%, and public sector revenue grew 20%. Whew! It doesn’t take a particle scientist to figure out where the money is…
Those numbers make exceedingly clear why Dell’s mobile group is being disbanded and re-orged. Let me paraphrase Dell (the words in brackets are mine):
‘Phones and other mobile devices have grown to be more than a consumer-focused initiative [enterprization!]. Folding these products into Dell’s business units [enterprization!] will better position the company to sell mobile devices to all of its customers.’
In other words, Dell is re-orging its mobile assets so as not to limit sales to consumers, but to significantly strengthen its ability to sell into its core public sector and enterprise customer base. This is the smart move to make. Dell sees the ‘enterprization of mobility’ happening along the same exact lines as my theory. I assume that Dell’s management is ‘imagining’ – as I am – all sorts of ways to bundle mobility with its entire range of enterprise and public sector products. It will help drive mobility as the long term strategy I preach.
Is it really that easy? Hmm…Dell needs a few more things to add to the mix. Enterprises are going to require enterprise-grade applications to begin with (see my blog posts on long term mobile planning as to why), and I believe Dell needs to place not merely a strong but a huge emphasis on delivering the right mobile application development platform (which I know is already taking place).
I’ll be keeping a close eye on things here. For now, GREAT move Dell!
∞
Tags: Business Mobility, Business Process, Dell, Enterprise Mobility, Microsoft, Mobile Devices, Mobile Observatory, Tony Rizzo, Windows Phone 7, WP7
