Yesterday Jo Maitland, GigaOm Pro Analyst, published a pretty damning post in which she characterized both Dell and BMC as, essentially, the living dead. Her view was that the move to privatize the companies (a done deal for BMC, in progress for Dell) is a last-gasp effort to resuscitate a couple of almost dead companies. In her words:

That’s a pretty harsh comment and needs to be seen in the light of a couple of interesting pieces of news for one of those companies, Dell, in the past couple of days.

Yesterday came the news that Dell was acquiring Enstratius, the cloud orchestration vendor that has been seen for years as the home of the most innovation, the highest degree of thought leadership and the epitome of what a modern and progressive vendor needs to do to stay relevant. Now some might characterize the acquisition as simply a last ditch effort, but it needs to be seen in light of all the other similar software-based moves Dell has made in recent times. As my friend Alex Williams pointed out:

The acquisition gives Dell another way to provide end-to-end-cloud solutions. Offering enterprise solutions is part of Dell’s larger plans to transition from its dependence on personal computer sales and move deeper into the myriad opportunities that are coming as companies recalibrate their data centers to more automated, elastic infrastructures

The Enstratius deal filled up the tweet stream of most of the cloud insiders. art of this is, of course, because Enstratius has, over the past year or two, sucked up much of the cloud talent – big hitters like James Urquhart, Bernard Golden, John Willis et all have joined the company and created something of a dream team. But it’s not all inside baseball causing the excitement – Enstratius have built a truly compelling offering. At an NDA analyst session at the OpenStack summit a couple of weeks ago, one huge profile company was there to talk about it’s use of OpenStack but spent more time talking about how great Enstratius fits what they’re doing. This is a theme that is repeated elsewhere. As Gartner’s Lydia Leong said:

So, yes, partly the Enstratius deal is exciting because it means some of the Clouderati get a good exit, but it’s also a genuinely smart move on Dell’s part and the way they’re talking about the company, and the benefits it brings to Dell, indicates a real understanding of what their future needs to look like:

As enterprises increase their use of public, private and hybrid clouds, the need for controls, security, governance and automation becomes more critical. Dell, together with Enstratius, is uniquely positioned to deliver differentiated, complete cloud-management solutions to enterprise customers, large and small, empowering them with the efficiency and flexibility in the allocation and use of resources.

Yes, that’s marketing talk. But it’s not talk that even remotely related to a legacy hardware business. Dell has done a lot of work moving to a software world – Project Sputnik, Crowbar, the acquisitions of Quest and Gale – all point to Dell strongly realizing where its future really lies. And today we see that story told again with the release of the latest version of the Boomi integration platform that Dell acquired a year or two ago. Already a strong provider of integration services, Boomi is now moving into the API management space that is white hot at the moment – in the past couple of weeks alone we’ve seen massive action in this space with Mashery being acquired by Intel, Layer7 by CA and a big funding round for 3Scale, and now Boomi moves further into the space as it recognizes that application integration is only part of the integration solution moving forwards and that a broader API management layer is going to be increasingly important.

As one would expect of an API management layer – the API aspects of Dell Boomi allow customers to monitor, measure, secure, throttle and scale their enterprise APIs – essentially it allows enterprises to control the plumbing behind application integrations to both protect against denial-of-service attacks but also to shape the way their API load is borne. It allows them to shape quality of service behind the actual integrations that Boomi enables.

Of course the API management space is busy, and there have been cases of vendors rolling out solutions that for whatever reason haven’t really succeeded in the marketplace ( most notably Alcatel Lucent) – Dell Boomi and its API play may not prove successful – but in the context of Maitland’s assertion that Dell is dead, it counters that view and shows a company that understands that it needs to provide a holistic offering totally apart from its traditional hardware business. It’s not all going to be plain sailing for Dell – but I’d be reluctant to write them off just yet. Final word to Simon Wardley, an individual who spends his time looking at innovation in the context of organizations and their lifecycles:

Dell is a company who if they did nothing would die because the market is fundamentally changing. We all suffer from inertia to change but many companies are disrupted not by random and unpredictable market changes but instead highly predictable ones which can be planned for and inertia resolved. Dell, had all the hallmarks of a company which was going to be disrupted by predictable changes. It acted in a way (as many do) that the changes around cloud were somehow unexpected. It’s inertia was compounded by a lack of preparation.  In recent times they have seemed to act in a manner which suggests a greater realisation of the war that is occurring. Whether they will survive this depends upon the ability to act, how courageously they act, how willing they are to deal with inertia in a short period of time, their situational awareness of the environments and most importantly their strategic game play.

As they say, watch this space.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

  • Ben…you’ve caught another lazy analyst drinking the Kool-aid of Wall Street and other lazy analysts. My take on why Dell is going private can be found here:

    Thanks for making the effort to look beyond the rhetoric. We agree about Dell.

  • Dell and its rival HP seem equally confused about their go-to-market cloud strategy and both of them have been plagued by inappropriate acquisitions and under-performing management. So for the sake of the “cloud thought leaders” at Enstratius, I hope the Dell check doesn’t bounce, but really, is there anything Dell won’t buy? I understand Dell wants to be an enterprise player like HP and needs a convincing software portfolio and consulting arm but who is going to put that kind of trust in Dell?

  • Let Dell die!

  • Dell Lives |

    I applaud Ben for having the guts to write an article about a company who may not be incredibly fashionable right now and easy to pick on by acknowledging the positive progress forward being made at Dell.
    Any journalist that only focuses on the downward trend of Dells PC business and is ignorant to the upward trend in their enterprise servers, storage, security and services business as well as all the proofpoints coning from product development, analyst quadrants and customer testimony, is missing the biggest tech transformation occurring in our day and likewise the biggest story and deserves to be left out in the cold sensationalizing old news…get a life Jo.

  • A little harsh Tim on Dell , who isn’t on the spending-spree (as you describe) but a (discerning) product-gap -filling exercise that displays a clear understanding of the cloud. Especially compared to the “cash-splash” HP rashly carried out with Autonomy (and EDS). One approach shows a clear Cloud understanding and strategy the other … not.

  • The thought leaders at enStratius are fantastic, and the solution is targeted to enterprise, and is the best suited to task. The GUI and customer facing features are still trapped in 2011. A long promised facelift to the interface has been postponed quarter after quarter in favor of work on the back-end infrastructure. For example in 2011 or early 2012 migration of the enStratius database from mysql to Riak was completed. On the API front, longer suffering developers tackled the wily VCloud API, which like a horror movie figure keeps coming back in new and scary forms. I see a lot of potential to integrate the product with Dell acquisitions like Boomi, Bitkoo. The challenge I see every day in enterprise Cloud management is that line of business likes AWS, and it’s not an easy sell to get them to trade the AWS console for enStratius. I believe enStratius has been working on a stealth suite of features that neither customers nor others have seen as enStratius may have made a strategic decision to keep its upgraded product in stealth mode until it secured the kind of funding and branding that a firm like Dell can provide. While it will be difficult for the company to transform from a largely bootstrapped and customer funded operation and to provide the kind of experience enterprise expects, I believe the sale was for the best.

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