Dell unveils its icebreaker strategy against and with Microsoft

AUSTIN, TEX. – Attendees at the 2015 Dell World conference were expecting to see a senior leader from EMC at this year’s show. Instead, they got a surprise visit from Microsoft CEO Satya Nadella.

Given that Dell just made a massive $67 billion acquisition of EMC, coupled with Microsoft moving more onto Dell’s turf with its new Surface Book device, customers have been curious about the status of the vendor’s long-standing partnership with Microsoft.

Both Dell CEO Michael Dell and Nadella confirmed they remain friends in the marketplace and they signaled that with a new agreement on hybrid cloud that will see the release of Cloud Platform System Standard or CPS Standard, a new addition to the Microsoft Cloud Platform System line. CPS has been built on Dell’s modular infrastructure with pre-configured CPS software and Azure services.

But both CEOs acknowledged things have changed, and this is not the same partnership from the 90s.

Michael Dell said that the new Surface family of devices is pushing the Windows 10 platform into new spaces and driving more adoption to that platform. He added that Dell is interested in furthering that strategy, while also competing with Microsoft using what he called the “icebreaker” strategy.

“The Surface helps to drive the Windows 10 ecosystem and the new Surface Book is a nice product and it comes at a high price. It also does not do a lot of volume. So we look at it as an icebreaker and then Dell can come in behind with a more affordable product offering,” Dell said.

Nadella said: “At the core we are friends but it’s all about servicing the customer and Michael and I live the customer reality. It’s not about the geopolitics of our industry. What is concrete is that Windows 10 will grow the ecosystem and the demand for new PCs. The Surface Book also creates new categories of computing.”

As for the new hybrid cloud partnership, Nadella said the EMC/Dell combination would only further CPS.

Michael Dell said there will be a world of many clouds with public cloud, private and on premise with virtualized workloads. “So the ultimate answer is hybrid cloud,” he said.

Nadella admitted that public cloud adoption is taking off and Amazon Web Services is the clear leader. But he also said that Microsoft holds the No. 2 position with an $80 billion run rate.

“We are a big SaaS company and we have good traction. The question is will the future be all public cloud? I think that’s too narrow a view,” Nadella said.

He added that from his information, 10 per cent of customers believe in public cloud and 10 per cent are on premise. “That leaves the rest and so the rest could be hybrid.”

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