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Why Dell has its head in the clouds

The company intends to preload computers with more subscription-based functions over the next few months in an expansion of its cloud-computing ambitions

Dell plans to preload computers with more subscription-based functions. The idea: give IT another, presumably less expensive way to access a myriad of systems management functions through the "cloud."

The details are still being worked over but the idea would involve a range of high-end services delivered through the cloud, like remote infrastructure management, or the ability to monitor and proactively deal with malfunctioning assets on a computer network.


"We think that we've sorted through most of those issues. It will work in some customer segments and not in others," said Stephen Schuckenbrock, Dell's chief information officer and head of of its Global Services business. He added that Dell will roll out its announcements over the next three to four months.

Some of this is old wine in new bottles as cloud computing has become a buzzword, covering everything from the delivery of computer services to the hosting of applications off premises. Dell already includes remote data protection services for its new E-series of notebooks. So it is that whenever a lost or stolen laptop gets attached to a network, the system will identify the unit and automatically delete any data on the hard drive.

What's new is that Dell is expanding the scope of its systems management software ambitions. Without oversimplifying, the idea resembles the approach Dell took in the 1980s and 1990s, when it focused on squeezing costs out of its supply line. The upshot was to accelerate the commoditization of PC hardware by helping to drive down prices.

Dell CIO: Stephen Schuckenbrock Dell

Dell's timing in reaching into that same playbook is propitious. With the economy on all fours, the magic words IT wants to hear aren't so much "cloud computing" as "this will save you money."

Schuckenbrock, who formerly worked at EDS as a co-CIO, noted that customers increasingly are frustrated with cost and that when you look at how CIO's and IT organizations spend their money, "a disproportionate amount gets spent on keeping the doors open and running their applications." Of the annual $1.2 trillion that gets sunk into new computing infrastructure in this country--or used to get spent before the current recession-cum-depression--about $800 billion goes just to make sure the hardware runs properly.

In theory, remote infrastructure management and software as a service for systems management should allow Dell (as well as its rivals) to squeeze the associated labor costs. To the degree Dell can help reduce that sort of expense, its push into cloud computing may resonate.

"We're keeping our eye on how the industry evolving," he said. "I've seen estimates that say 25 (percent) to 35 percent of computer consumption could come through the cloud in next 3 or 4 years...You have to look at what it costs to deliver a service in the same way that you looked at what it cost to deliver a PC in terms of configurability, flexibility, or access to industry standard components."

In the last year, Dell has been on a buying spree, acquiring software companies like Message One, Silverback Technologies, and Everdream to build out the technical chops it will need for any future push into cloud computing. In the future, Schuckenbrock indicated that Dell would offer modular components that customers can pick and choose what they want in their computing environments

But as Dell builds out the software stack to compete against the likes of IBM and HP, can it help customers optimize for cloud computing in ways the competition can't?

Schuckenbrock's argument is that traditional outsourcers will have a difficult time taking large revenue streams with long-term contracts and converting to modular services that you can turn on when you want, and turn off when you want. That's because the incentive structures are very different. Thus Dell's idea is to build in the functionality as part of the hardware itself.

"If it came preloaded with all the services inside and all you had to do is go online and click, then you're automatically enabled," he said.

An interesting approach in theory. Let's see whether Dell can make it happen-again-in practice.