Today's Dell is no longer just a computer company.
Wen 丨 Chinese business Tao Strategy south
Few remember that just eight years ago, the company was cornered.
【Five years of waiting】
On December 28, 2018, Dell Technologies, which has been away from the US stock market for five years, finally re-listed on the New York Stock Exchange with an opening price of $46 per share.
Michael Dell waited five years for this day.
As the founder of Dell Technologies, this Silicon Valley veteran, who was once on a par with Jobs and Bill Gates, is the last CEO of a company that is still fighting in the front line in the IT era, and the last founder of a company in the personal computer era.
He founded Dell in his college dormitory at the age of 19, challenging the blue giant IBM on his own, bringing more efficient, affordable and high-quality personal computers to thousands of users.
Dell Technology, which he founded, not only became the world's largest personal computer supplier, but also became one of the Fortune 500 companies in the United States when it was founded 8 years ago - at that time, Dell himself was only 27 years old, the youngest CEO in the history of this list, and no one has been able to surpass it so far.
However, things change quickly, and how brilliant there is when it is brilliant, how lonely it is when it is lonely.
In 2004, at just 39 years old, Michael Dell chose to take a back seat, and 11-year veteran Kevin Rawlings took over. Unexpectedly, Dale's nightmare began here.
In 2005, there were a number of Dell laptop explosions and fires around the world, triggering a huge crisis of trust among consumers, and as public opinion continued to ferment, Dell finally had to announce a global recall of 4.1 million computer batteries.
In 2006, Dell was caught in the "core changing door" incident in China, and consumers found that the computer used the Intel Core T2300E processor after purchasing a Dell laptop, not the Core T2300 indicated on the order.
Since then, nearly 500 Chinese consumers have reported that the purchased Dell computer was replaced without their knowledge, and Dell was once criticized for "adopting double standards for China".
At the same time as their own quality and service frequent thunderstorms, the market environment for personal computers is also changing dramatically.
Under the impact of emerging devices such as smartphones and iPads, the global personal computer market began to enter a recession, Dell's performance failed to meet Wall Street expectations for several consecutive years, revenue and profit fell sharply, and the financial situation deteriorated.
By the end of 2006, Dell's computer sales had been surpassed by HP, losing its position as the world's largest pc market leader.
In 2007, Michael Dell was forced to re-emerge to advance the company's transformation strategy with the intent to turn the tide.
But the market is not buying it. By 2013, Dell's market capitalization was only $24.9 billion — less than a fraction of the 100 billion market cap of its heyday.
Forced into a desperate situation, Michael Dell once again showed extraordinary business talent.
In 2013, with the help of old friends Bill Gates and Silver Lake Private Equity, Michael Dell borrowed tens of billions of dollars in debt, "bought the company back" from Wall Street, and completed the most amazing privatization transaction in THE history of IT.
In 2015, Michael Dell further leveraged up to $50 billion in debt — the riskiest and most leveraged deal since the U.S. financial crisis — to "snake the elephant" to acquire THE 40-year-old data storage industry leader EMC, pushing Dell back to the top of the industry.
After completing the acquisition, Dell transformed itself from a shrinking PC supplier to the world's largest data storage, server and "hyper-converged" infrastructure company, providing thousands of enterprises with "water" and "electricity" in the era of intelligence.
Today, Dell is no longer the computer brand we are familiar with, it holds EMC (EMC), VMware, Pivotal, SecureWorks and other seven major business groups, in the high-performance storage, virtualization and other businesses, holding the core lifeblood of the entire enterprise information services.
Dell, who has returned to the highlight, has no impetuousness in the PC era, and only looks down and makes a fortune.
No matter the loneliness and brilliance, when people talk about Dell Technology, the most indispensable is the legendary founder - Michael Dell.
Dell Group's business matrix today Source: Dell
【Rise of Talents】
Michael Dyer's legendary early years are well known in the United States.
Born in Texas in 1965, he grew up with the brash, bold, and adventurous nature of Texans. At the same time, as a Jewish, he showed an amazing talent for business since childhood.
At the age of 16, Michael Dell earned $18,000 for orders for the Houston Post — an amount that exceeded the annual salary of his high school teacher at the time.
After he entered college at the age of 18, Dale's business talent was even more vivid.
By buying computer parts directly in the market, manually assembling upgrades and selling them to classmates, Dell made tens of thousands of dollars in just one year, even moving out of the dormitory and renting a small studio in a luxury apartment on the 27th floor.
At the age of 19, Dell resolutely dropped out of school despite his parents' objections, set up his own company, and began to sell computers on a large scale.
In the first month of the company alone, Dell's sales reached a staggering $180,000, and the second month it reached $265,000... Almost in the blink of an eye, Dell has become a well-known computer brand and has begun to enter the global market, with annual sales of more than $70 million.
▲ Michael Dell as a young man
In 1992, Dell computers entered the Fortune 500 for the first time, and Michael Dell himself became the youngest CEO in history to receive the award— a year he was only 27 years old.
At the age of 32, Dale became the richest man in Texas with a net worth of $4.3 billion.
In the 1990s, when the personal computer market exploded rapidly, Dell's revenue continued to grow at a rapid rate of more than 30%, and it became the champion in the PC field.
In the United States at that time, the name "Dell" meant innovative and legendary.
2004 was a glorious moment in Dell's history, when it officially surpassed IBM, the big blue giant who ruled the IT industry for many years, to become the world's largest personal computer company and become the industry hegemon.
▲2006-2012 Global PC market share Source: Statista
However, since 2007, the global market share of Dell computers has declined all the way, from 14.2% to only 10%, which has been surpassed by HP and Lenovo, and has fallen from the global boss to the third. In 2012, Dell's market share of computers was only 10.7%, only 0.5% higher than the fourth-place Acer.
▲1996-2013 Dell's annual revenue change source: Statista
At the same time, Dell's revenue growth has gradually stagnated, and even repeatedly declined, with Dell's annual operating income of $56.9 billion in 2013 – six years ago, this figure was $57.4 billion.
Consumers have distrusted Dell, along with Wall Street. At the time, the headlines used in the hottest headlines were:
"From a computer giant to a debt of 100 billion, the market value has shrunk by 10 times, what did Dell do wrong?" "From glory to decline! Dell's triumphs are a thing of the past" "Dell-style sadness fell to the end of the PC era"...
After a series of emergency rescue policies such as personal computer diversification, improving the distribution system, and increasing brand investment have failed, Dell finally realized that there is no opportunity in the personal computer market.
In 2009, Dell announced a comprehensive transition to enterprise-class information services.
After the personal computer market stagnated, Dell found that the enterprise market was still growing at a high speed. Companies now process more data in a year than they did in the past decade.
The total value of the global IT industry is $3 trillion — $0.25 trillion is in consumer markets such as PCs, and $2.75 trillion is in government and enterprise markets, which is 10 times that of the PC market.
However, despite the bright track, Dell's transformation path did not go well at the outset.
As an IT giant with annual revenue of tens of billions, this transformation is not a general strategic adjustment, but equivalent to reshaping a "new Dell".
In order to make up for its shortcomings in enterprise-level services, Dell has carried out a series of mergers and acquisitions since 2007, spending tens of billions of dollars to acquire more than 20 companies, including: 2007 acquisition of storage device manufacturer EqualLogic for $1.4 billion; 2009 acquisition of IT service provider Perot Systems for $3.9 billion; 2012 acquisition of enterprise management software manufacturer Quest Software...
Mergers and acquisitions require time, effort, and run-in, and Dell's frenzied mergers and acquisitions in just a few years will only make Wall Street investors deeper concerns about Dell.
Within a few years of Dell's announcement of the transformation, Dell's stock price continued to decline, and the market was in a state of pessimism.
By 2012, Dell's stock price had fallen to the bottom, and on May 23, it even recorded its biggest one-day decline in 12 years , 17 %, and its market value shrank to $22 billion, not even a fraction of Dell's peak. Most frighteningly, the momentum of this continued decline has not slowed down.
In 2012, in Dell's darkest hours, Egan Durban, co-CEO of private equity firm Silver Lake, came to Michael Dell's home and said to him:
"You should privatize. The truth is, you don't even need our money because your company is undervalued. ”
Privatization, which "buys" companies back from the stock markets, away from Wall Street's finger-pointing. It was an extremely tempting idea, but it was met with strong opposition from Dell's shareholders.
At the critical moment, Bill Gates, Dell's long-time friend in Silicon Valley, came forward and provided Dell with a loan of 2 billion yuan in the name of Microsoft, solving Dell's urgent needs.
With the help of Microsoft, Silver Lake and four other investment banks, Michael finally completed a privatization acquisition of the company for $24.9 billion in 2013.
After the privatization, Michael will continue to serve as Dell's CEO and hold up to 75% absolute control, clearing the last obstacle to Dell's full transformation.
However, completing the company's privatization and regaining the right to speak is only the first step in Dell's successful transformation. What really saved Dale was a "snake swallowing elephant" style of earth-shattering gamble.
【Successful Transformation】
In 2015, Dell turned its sights to EMC, the industry leader in data storage.
Founded in 1979 — six years before Dell — EMC is the "ancestor" of enterprise services.
In the 1980s and 1990s, EMC revolutionized IBM's "family barrel" approach with new technology models, making the storage system an independent physical form, and thus opening the era of independent storage.
EMC is the world's largest enterprise data storage vendor, with a long-term market share of about 30%, and has acquired many enterprises such as network security, software development, and virtualization software in the past 40 years, firmly controlling the market for enterprise-level services.
However, in recent years, the impact of cloud computing on the enterprise storage market has become increasingly obvious, and EMC's form of independent storage company has become increasingly unsustainable.
In 2014, just as EMC soul Jotus was facing retirement, EMC was sniped by a spin-off of utilitarian investor Elliott Management and had to consider selling himself for self-protection.
One wants to buy, one wants to sell, EMC and Dell are almost a hit-and-shoot. In October 2015, Dell officially announced that it would acquire EMC for $33.15 per share in cash and special shares, for a total of $67 billion.
As soon as the news came out, it almost shocked the entire industry.
If successful, it would be the largest merger in the history of technology and the biggest financial leverage since the 2008 financial crisis.
To raise capital for the acquisition, Dell will raise up to $50 billion in debt on top of the privatized debt.
Even with the big deals that have long been seen in the tech world, the hefty $67 billion deal — more than twice the price of Dell's own privatization — has made the industry feel crazy.
If Dell were still a public company, it would be a huge gamble that would be voted against by all shareholders, but after the company's privatization, Michael Dell had absolute control of the company.
The adventurous blood of Texans boiled in his veins, and the Jewish business genius gave him the sharp and vicious business vision of an eagle.
Dell Successfully Completed the Acquisition and Integration of EMC in 2016.
Moreover, Dell, which acquired EMC, not only did not fall into a super chaotic and bloated huge organization as people feared, but methodically integrated and reinvented it.
In fact, Dell Technologies' collaboration with EMC dates back to 2002. From 2002 to 2008, Dell resold EMC's mid-tier storage under dell &EMC's co-brand, achieving a turnover of $2 billion per year.
Old-friend cooperation is naturally particularly comfortable. Coupled with the high degree of synergy between Dell Technologies' own enterprise services business and EMC, under the cooperation of 1+1>2, Dell Technologies has occupied more than 35% of the market share in the field of enterprise data storage after the merger, firmly controlling this market.
At the same time, Dell Technologies is rapidly promoting the pace of the company's transformation internally, not only comprehensively reorganizing the company's original business, but also greatly streamlining the management team, making the company's income more diversified and balanced, and regaining vitality.
In an interview in mid-2018, Michael Dell replied, "In the 5 years since we were delisted, we have undergone a complete transformation, with 17% growth in the last quarter (the first quarter of 2018) and strong earnings in double digits. ”
"In today's era of 5G, AI and the Internet of Things, we are the winners."
▲ In 2018, Michael Dell spoke at the Dell Technology Summit Source: Dell
On December 28, 2018, Dell Technologies, which had been separated from the US stock market for a long time, finally re-landed on the New York Stock Exchange, becoming another major news event in the global technology community in 2018.
At this time, Dell is no longer the decadent Donald Veteran who was beaten in the PC market.
Today, with seven product lines including EMC (EMC), VMware, Pivotal, and SecureWorks, it has become the world's largest data storage, server and "hyper-converged" infrastructure company.
According to IDC data, in the third quarter of 2020, even under the adverse effects of the global COVID-19 pandemic, Dell Technologies remained the world's largest supplier of external enterprise storage systems, with a market share of 28.8%, and the market share of the second place HPE/H3C was only 10.8%.
▲Dell ranked as the world's first source of enterprise storage systems: IDC 'Global Enterprise Storage System Quarterly Tracker'
Since its re-listing at the end of 2018, Dell's stock price has soared, from $46 to more than $100, the company's annual revenue is approaching the 100 billion US dollar mark, and the market value has soared.
As of press time, Dell Technologies' market capitalization has exceeded $70 billion, and if you add other listed companies such as Dell Group VMware and Pivotal, the market value of the entire group has already exceeded the $100 billion mark.
And those old friends of Dell's PC era, those who have surpassed Dell to become the hegemons of the PC era: HP market value of $35.7 billion, Lenovo Group market value of $13.2 billion (102.4 billion Hong Kong dollars), Acer market value of $2.8 billion (NT$78 billion).
From a pc veteran with a precarious market position and tens of billions of dollars in debt to a big winner who now leads the world's enterprise-level technology services, Dell has completed a shocking reversal in the market's doubts, leaving its old rivals far behind.
The legend continues.
【References】
[1] Dell, the Leader in the Computer World, Jilin Publishing Group
[2]《RISE OF ENTERPRISE》Chaim Gartenberg
[3] "From $244 to $117.3 billion, looking back at Dell's six years," Global Financial Watch
[4] A Review of EMC's History in the Fintech Era
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