Published On: Thu, Apr 10th, 2014

Michael Dell Is Giving The Public Cloud A Pass

Michael Dell / Getty

Now that he’s privatized his company Michael Dell hasn’t stopped running hard. Indeed now he has it to do all all over again, in order to re-establish Dell as a primary force in computing.

Clearly he understands, however, that in the all-embracing competitive landscape out there it is best to pick your spots carefully. So Dell is making it clear he has no interest in chasing Googel, Amazon, IBM, now also Cisco and others to become a public cloud.

In an interview recently with tech site CRN, he said, “I think the public cloud is a crowded space, with lots of guys playing there, ” adding “In terms of building a public cloud to compete with partners, we are not doing that at all.”

He also said that sales at the new Dell are “strong” and running ahead of the plan laid down for the privatization last Fall.

As to clouds, Dell said the market is too congested. Instead, Dell plans to focus on the in-house private cloud market and being a hardware supplier to companies building their own public cloud.

“Instead of competing with all of those service providers and telcos, we are enabling them. There are also a number of firms out there like OnApp that are integrating our hardware platform and allowing VARs to create their own cloud platform.”

Some of Dell’s partners say that Dell is smart not to “bet the farm” on building its own public cloud and instead focusing its attention on the highly lucrative private cloud market.

John Freienmuth, owner of J&J Technical Services, a Rio Rancho, New Mexico-based said Dell partner said to CRN, “The public cloud market has received too much hype with too many companies throwing huge investments at creating their own public clouds. The market is saturated. The capital Dell would need to become a major player with the scale of its competitors would be staggering.”

Dell also says by not entering the public cloud fray, the company enables partners instead of competing with them. “There are a number of firms out there like OnApp that are integrating our hardware platform and allowing VARs to create their own cloud platform, ” he said.

Michael Dell said his company is focused instead on selling infrastructure into the private cloud space. Nevertheless, the public cloud market for IT spending is potentially tantalizingly large. It seems market intelligence firm IDC is forecasting worldwide spending on hosted private cloud services of about US$24 billion in 2016. By comparison, IDC says global public IT cloud services spending is growing much faster, and may exceed US$100 billion in about the same time-frame.

Public clouds have become to IT what Y2K was at the turn of the century to some extent – an enormous excuse to spend money either on hardware, or on the associated services; something however that everybody ends up doing in order not to be left behind, just in case.

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