'Commodity' not a dirty word at Dell

Company President Kevin Rollins tells the crowd at TechXNY that using commonly available parts to build computing devices isn't making tech run-of-the-mill. Quite the contrary.

John G. Spooner Staff Writer, CNET News.com
John Spooner
covers the PC market, chips and automotive technology.
John G. Spooner
2 min read
NEW YORK--Although more and more computers are being built using off-the-shelf parts, which many in the industry consider to be ordinary commodities, standardization has yet to stamp out innovation and creativity in the PC market, said Kevin Rollins, Dell's president.

Rollins, a keynote speaker Tuesday at the TechXNY conference's PC Expo trade show, used his appearance to argue that the widespread use of standard components, such as Intel processors, is letting Dell increase its market share and profitability while improving the way its customers use PC technology.

"We disagree with the idea that we've entered the twilight of technology," Rollins said.

Although the computer industry is maturing, that maturity isn't causing the market to slow down, Rollins said. Instead, things such as the high cost of managing large numbers of computers show the PC business is still growing.

Instead of creating a bunch of boring products, standard components are making possible innovations such as computing clusters--groups of hundreds or thousands of computers that offer supercomputerlike performance--that were not possible before, Rollins argued.

The Dell executive dubbed the phenomenon, which has let companies like his build devices such as clusters out of standard computers, "the open innovation model."

"As you know, the old model of technological innovation used to be an insider's gain. It required developing a technological edge," Rollins said.

Product innovation has shifted to finding new ways to use standard technology, he argued.

"The open innovation model brings more ideas and perspectives to bear on a problem and brings solutions to the market more quickly," Rollins said.

Ultimately, as technology costs decrease, more companies will be able to put high-powered computers to work, he said.

"Quality goes up, costs go down and the cycle continues," Rollins said. "We passionately believe that the standardization of (information technology) is driving innovation."

Rollins' open innovation concept is also important for Dell as the company works to meet its financial goals.

Dell is looking to boost sales of servers and storage, as well as professional services such as installation and maintenance, to further its goals of doubling revenue to $60 billion over the next few years and increasing its market share.

Dell believes that although its share of the PC market stands at around 16 percent now, the company will be able to use its brand of innovation to increase its share to corner 30 percent to 40 percent of the world PC market in the future.

Following his 30-minute keynote, Rollins said Dell is also eyeing the consumer-electronics market. Dell would like its PCs to be the hub of the home, he said, declining to offer details about the company's plans.

Dell, which currently sells a broad range of third-party consumer electronics, printers and cameras, is expected to announce its full-on entry into the consumer-electronics market later this month. In the past, Rollins has expressed Dell's interest in offering its own versions of devices like LCD televisions and portable MP3 players.