Jeff Clarke is responsible for development and marketing of Dell's enterprise products, including its servers, workstations, storage devices and networking equipment. Clarke, one of three senior vice presidents who manage the different segments of Dell's product group, told us about the company's latest financial results as well as issues such as its continuing reliance on Intel's chips over AMD's Opteron processor.
Q: How much of Dell's revenue comes from the enterprise products, and where do you expect that to go in the future?
A: Enterprise is slightly north of 20 per cent of our revenue. We're going to continue to grow it ahead of the company's average growth, but we don't project it out at any point in time.
Q: Dell's server and storage sales rose 20 per cent worldwide in the company's fourth quarter, and sales to business customers in the US were up 19 per cent. How did that map to your expectations?
A: I think we came in right on our guidance for the quarter. The company grew 17 per cent overall, and enterprise was up more than 20 per cent. As I said, our goal is to grow the enterprise business ahead of the company's average. The strategy is to show that it's a diversified technology company and that it's more than a PC business.
Q: What's your response to the view that Dell isn't a big technology innovator?
A: Everybody's entitled to their opinion. What we focus on is what our customers' requirements are and what they expect from us. Our view of the world is, "Look at these technologies. How can we bundle them together in a product?" We were one of the first companies to put lithium-ion batteries in a system. Did we invent lithium-ion technology? No. Did we think of packaging it in a system? Yes. That's our approach to innovation, and our customers continue to vote with their wallets.
Q: Why are you still holding off on using Opteron in servers?
A: Our product plans are Intel-based, and that's what we're shipping today. We're always evaluating new technologies in our labs, and there are points in time where one part is faster than another one. The question is whether that advantage is going to be sustained over time.
Q: What about the breakdown between Intel's Itanium chip and its 32-bit x86 processors with 64-bit capabilities?
A: We're very, very strong proponents of the 32-bit chips with 64-bit extensions. We do have an Itanium-based system because customers have asked for one. But the vast majority of our products are based on the 32-bit chips, and they will continue to be used in the vast majority of our products. That's our view of the future: a scaling of the enterprise that's done in a cost-effective manner. On high floating-point applications, Itanium is a very good processor. But we find that to be a very small part of the market.
Q: We heard last month that server shipments were being affected by shortages of some disk drives, but Dell said it wasn't being affected. Is that still the case?
A: We're not seeing any shortages. We know how to run our business. We have a great understanding of supply and demand, perhaps in advance of our suppliers.
Q: Have you been able to hold the line on pricing, despite the short supply?
A: We did not raise prices, if that was your question.
Q: Where does Linux fit in your server plans?
A: At least by our count, we're one of the top vendors of Linux on servers. In fact, the last data that I saw said we're No. 1 in terms of the number of servers running Linux. It's integral to our strategy for things like high-performance computing and mainframe-to-Linux migrations.
Q: Does Linux account for a big portion of your overall server shipments, compared with Windows?
A: It's significant. Linux is on about 15 per cent of the servers that ship from our factory, and it has about a 23 per cent or 24 per cent share [on our machines] worldwide, if you count operating systems that are installed by customers.
Q: What about Linux on the desktop?
A: We factory-install it on all of our workstations. At the PC level, we don't see a strong demand for it.
Q: What are you doing to try to take advantage of HP's ouster of Carly Fiorina as its CEO?
A: We're focusing on our customers and trying to drive the best value to them. Our strategy remains very consistent.
Q: How do you see HP as a competitor now?
A: They're a strong competitor.
Q: Less strong than they were before Fiorina was fired?
A: Sorry. You're not going to get the kind of answer you want from me on that.
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