Dell CEO faces challenges as PC maker shifts strategy

Companies are buying new computers, servers and other research again. An improving economy helped push Dell Inc. to a record third quarter. The company's leadership team shook off a recent setback - losing data-storage maker 3Par to Hewlett-Packard Co. - and is relentlessly optimistic about the company's transformation from purveyor of commodity computers to provider of more profitable data center research and consulting. And in his pocket is a slick-looking phone prototype even Steve Jobs might admire.

But Dell Inc. faces some daunting challenges. As it enters new categories, just as tablet PCs and smart phones, its products must hold their own against Apple's iPad and iPhone. Unlike Apple - a word Michael Dell didn't utter while a recent interview - Dell doesn't control the software that runs on its devices, and recent attempts to build brand lust for its products fell short.

To supply corporations with data center innovation, Dell is up against HP and IBM Corp. Those seasoned rivals have more established reputations and a higher-end selection of servers and other gear.

The same time

At the same time, Dell is revamping the way it makes PCs, which after all account for more than half its revenue. Dell's model enabling clients to pick features and have the PC shipped directly - cutting out the middleman - couldn't compete when other PC makers slashed costs by outsourcing.

On the transformation side, that's in effect about how companies change and evolve and renew themselves so that they can continue to thrive and be great. We're doing a lot of reinventing the business model and the strategies of the company.

The market for smart phones

Dell is entering the market for smart phones and modern tablet devices. What is it like to be launching those products when the bar has been set by longtime rival Apple? And what do you think about the iPad?

Here's the way I think about it. The IT industry, depending on how you define it, is somewhere in the vicinity of $1.8 trillion. It's a pretty big industry. Within that are all sorts of opportunities to provide products and services, and all of that goes into what we call the modern world today in terms of how businesses operate and are productive.

The device level

When you zoom down to the device level, you have all kinds. You have 5 billion cellular telephones. The vast majority are not smart phones, now they probably will be in five to 10 years. and that has all kinds of implications in terms of opportunities in what happens to the network, what happens to the data centers and servers and storage.

When many people hear "Dell," they think "laptop." Nevertheless the Dell of today is evenly focused on the data center. We hear about virtualization and cloud computing, two data center trends that make it possible and more affordable to switch on a lot of computing power, fast. What are the real-world implications?

If you think about data, your cell phone used to have no camera. At the time it had a 1-megapixel camera. Straightway 2 megapixels, at that time 5 mega pixels, well 8 megapixels, at that time 10 megapixels. And all of a sudden you're taking videos with your camera.

The amount of data is approximately expanding

The amount of data is approximately expanding by 35 times while this decade. Inside that data are the answers to the questions that unlock value for individuals, for businesses, for schools or hospitals.

Almost all of can be somewhat expressed in a mathematical sense, however we don't have enough computing power but to solve that.

But computing power is, so what you're going to see is that these problems are going to be solved at a faster and faster rate. You're going to see accelerating progress among humankind.

Michael Dell, chairman and founder of Dell Inc., and the company's leadership team are relentlessly optimistic about the company's transformation from purveyor of commodity computers to provider of more profitable data center research and consulting.