You might think Dell would be happy with its tight grip on the direct-to-consumer market, but you would be wrong.
You might think Dell would be happy with its tight grip on the direct-to-consumer market, but you’d be wrong. The PC retailing giant can now boast growing success in the small-to-medium business (SMB) category. Mark Thompson, vice president of Dell’s SMB Marketing group, talked recently about how the company is taking a successful sales model onto new terrain.
At the moment, how much of Dell’s business is done with SMBs? Is that figure rising?
The SMB segment is one of the fastest-growing segments within Dell. According to current market share data from IDC, we are the technology leader in the SMB market space among companies with 1-500 employees, with just over 30 percent market share in the first quarter of 2004.
Research by the Yankee Group says Dell is the leading hardware supplier among SMBs, ahead of HP and IBM. What’s your secret?
For most of its history, Dell has had a dedicated division for SMB. Today’s SMB division offers products and services tailored for a wide range of companies, from the sole proprietor to the growing medium business with up to 3,500 employees. This structure gives us the ability to offer customized products, tools and services for this unique customer set. Our direct business model gives customers a single point of accountability and helps us better understand the needs, challenges, and opportunities these small businesses face every day.
Today, technology is more accessible and affordable to small businesses than ever before, and Dell is very proud of the role we’ve played in helping make that happen. When Dell enters a market, our direct business model drives standards, efficiency, industry collaboration, and competition, all of which results in lower prices. This is what we call “The Dell Effect,” and it’s contributing to the success Dell is having in the SMB marketplace.
Does that strong showing in the SMB sector take away from your share of the enterprise market?
No. The success we are having in the SMB market is complementary to that in the enterprise. According the first-quarter data from IDC, we hold 44 percent market share in the overall enterprise market space, and we continue to grow that business as well.
HP has had success in targeting SMBs via its reseller network. Does Dell have initiatives along those lines, or will you continue primarily dealing with consumers directly?
Dell’s direct model is the key to our success. Dealing with Dell directly allows SMBs to leverage a relationship with us, and continue to improve their technology infrastructure through the various growth stages of their business.
Through Dell Solution Provider Direct, we can provide Dell-manufactured systems direct to the SP market. However, our primary focus is on establishing direct relationships with our customers.
Dell is bundling some pretty powerful software with its SMB-targeted PCs, including database packages from Oracle. Is this a trend that’s going to continue? Are there other similar partnerships coming up?
We believe that technology is the great entrepreneurial enabler. Market forces are a great benefit for small businesses. In the past few years, many companies have begun to develop product lines and services specifically geared toward small businesses. As more of these products and services come to market, the prices will continue to drop and more state-of-the-art technology will be more affordable for more entrepreneurs.
The software offerings have proven to be extremely beneficial to small businesses. The joint Dell and Oracle initiative, for example, has enabled our SMB customers to purchase, and have factory-installed, a fully scalable Oracle database for less than $1,000. Adoption of this product by small businesses has been very good, and we will continue to look for more opportunities to deliver bundled solutions to SMBs that are easy to deploy, manage, and grow.
Getting away from PCs for a minute, Dell was the No. 1 seller of servers to the SMB market in 2003. Are you maintaining that status this year so far?
Yes. Dell continues to have great success in the small business server market and is the market share leader with 35 percent market share (again, according to IDC’s first-quarter data). We continue to expand on that lead with enterprise services for the SMB market such as network design, data migration, and installation.
At what point, either in terms of revenue or number of employees, do you feel a home-based business needs to move beyond a basic, non-networked computer set-up?
The smallest start-up now has the opportunity to be an instant global business. Information technology enables small businesses, even businesses in rural areas, to reach beyond their backyards, beyond their local markets, to the world at large.
A key advantage of utilizing a server as opposed to peer-to-peer networking is domain name. Would you rather your email address read: Sally Flowers@xyzinternetprovider.com or Sally@Flowers.com? With servers starting at as little as $300, many customers we talk to find it worthwhile to jump to a networked setup on Day 1.
In addition, a server-based network environment offers greater security, reliability, and performance. For example, by mirroring the files saved on the server’s hard drive, customers are able to have multiple copies of company data. All of this can be done simply and with relatively low cost. Dell offers everything a small business needs to establish a networked environment including up-front consultation, a complete set of enterprise services, and high performance, cost-effective servers and switches.
From a computing standpoint, what is the small office of 2010-say, 10 employees-going to be like?
As we look to the future, wireless will be a key focus. It is increasingly imperative that small businesses be mobile. Many of these SMBs operate international import/export, e-commerce businesses and some still work out of coffee shops, for example. With Intel Centrino Mobile Technology, Dell notebooks can be equipped with internal wireless Internet capabilities and take their office on the go without wires, hassles or holdups. Many small businesses also use wireless Axim handheld personal computers.
Wireless technology is essential and will continue to advance in the future. The big difference five years from now will be faster throughput and more ubiquitous coverage from wireless carriers. This will enable small businesses to have mobile broadband speed access from more than just a local hot spot.