Dell’s new services strategy for the Middle East

What plans does Dell have in 2009 for developing markets, and for the Middle East in particular?

Dale:We recently had a briefing from IDC’s emerging markets team, in the last four weeks they have revised their forecasts in terms of IT market growth, and what they are forecasting at the moment is a varied state. They see an overall growth figure of 3% for emerging markets year on year, with the Middle East being the most buoyant market and still growing. So we are seeing 3% growth across the board, with variations by country.

We have had some phenomenal growth quarters, where we grew in excess of 80% and so forth when the markets were growing at 25%, so if the markets are growing at 3% we would still aim to have a 2-3 multiple on the market growth.

As 2008 was a year of two halves, with the first half very buoyant and robust growth, and the second half of the year affected by the global crisis, I think 2009 is going to be very similar, with flat growth in the first half of the year, and economies coming back in the second half of the year, and that is what we are planning for.

Our investments have not been curtailed, we continue to invest in people, services, products, channel, customers, and weather the next two quarters as economies emerge out of the recession that we are in today.

In terms of product lines, we have just launched our E-series notebooks for corporates, there will be an array of new consumer products being launched in Q1, which will strengthen our consumer line, and we will be launching various other client products throughout the year next.

Our services business continues to grow from strength to strength, so in the first half of 2009 we will be launching our consultancy practice business for the Middle East, which will strengthen our portfolio and give the kind of offerings we have elsewhere in the globe.

What sort of consultancy services will you be offering?

Dale:We have a full services portfolio, from being able to conduct managed services for large desktop communities, through to providing remote diagnostic services through our Network Operations Centres, through to providing consultancy on assessment of IT infrastructure and how to reduce costs and optimize implementations. Certainly with the economic climate, offering consultancy services to reduce costs is going to be a requirement in the Middle East,”

What sort of head count and infrastructure in terms of NOCs or similar, will you be putting in place to support this effort?

Dale:We are looking at that at the moment, and as the date approaches for launch we will make further announcements

Are customers in region asking for that full services portfolio from Dell?

Collins:The discussion that we have with medium and large customers classically ends up in a service related discussion. It may very well start with hardware, but it soon ends up with implementation requirements, integration requirements and consulting requirements. There are a number of hot topics whether its migration or virtualization or high performance clusters or the data centre, where most large customers are seeking assistance. Making services our priority give us the credibility in the discussion that customers want to have.

Will services personnel be based in the Middle East, or flown in as needed – what is your strategy for delivery?Collins:It is a combination. We will leverage global resources, and global capability where it is appropriate, because there are some things that are best done centralized, then obviously we will have local engagement, to give a combination of the best people for the job.

Does Dell intend to realign resources from Western markets to the Middle East, or is this just overall global growth? Does the economic situation have any impact on the amount you can invest into new areas like services in the Middle East?

Dale:We don’t take a short term view on investments of this nature. We are a very large corporation, we know that emerging markets will continue to grow, and we know that the next billion users are here, so we are taking a longer term view than the immediate crisis.

There was tough competition in the PC market in 2008, with new players like Asus coming in with netbooks, Acer also took good market share from some of the incumbents – how do you feel competition is going to be in the PC sector this year, and how will you position Dell in a market that is getting tougher?Dale:I think we are going to continue to see the emergence of different devices, with what’s happening in the phone market now, what’s happening in the 9 inch screen market, netbooks, it will be interesting to see how those devices pan out. A lot of the growth has come from the sub 10 inch screen category and the sub $500 category. I think we are going to see an evolution over the next twelve months in terms of devices and categories, what is and what isn’t a notebook. We continually evaluate marketplaces and opportunities – at the end of the day if there is a healthy return to be made for our shareholders, then we obviously look at them.

Are there other areas of operations or geographically in the Middle East that require attention or investment coming up?Dale:Iraq is beginning to open up now, we have seen quite a bit of civilian activity, mainly in the educational sector. Iraq obviously represents a massive opportunity when it opens up, for the whole region.

How will you address Iraq?

Dale:We have partners that have local entities, or companies that are there already, obviously none of the large players have moved into the market yet, but as the situation develops, most of our existing partners want to open offices there also. Collins:There is a lot of activity at the moment, we frequently get approached by Iraqi-based resellers. We have hosted three or four different companies recently in Dubai Internet City for discussions. We are expanding our channel in Iraq with local partners and we have many partners who have been operating into Iraq from outside, whether from Jordan, Kuwait, or from UAE over the years, but obviously it is quite a difficult situation. There certainly seems to be lots of activity, and lot of interest from resellers.