Techaisle Blog

In 2013, during my presentation at an Intel offsite in Chandler, Arizona, one of the topics of discussion was 2-in-1, demand for which was tepid. Techaisle research had shown that PC OEMs marketers had done a good job of building initial awareness for the devices. With the notable exception of micro and very small businesses, awareness of 2-in-1s was relatively high. What was not high, was consideration and purchase preference for these devices. For two hours I presented arguments, supported by research and analysis as to why the 2-in-1 market demand was forecast to low for several years.

Since the last 3 years I have been listening to Jeff Clarke, Dell’s vice-chairman of Operations and president of Client Solutions, and his team talk about innovation within Dell and how XPS-13, Dell’s flagship, initially consumer-focused and now business-ready notebook, is one of the most innovative laptops in the market. I must confess that after every meeting I walked away with a bit of cynicism. Every single time I had questions but no answers. Did a borderless InfinityEdge display define innovation? Did premium materials explain innovation? Did high-performance describe innovation? What about the issues that small businesses really cared about – improve productivity, provide security, easy manageability, exceptional support and low price? These would certainly count towards innovation. But then many of these improvements are usually driven by underlying software and not the hardware.

I have been a ThinkPad user for most of my working life – from my IDC days in Hong Kong to present time at Techaisle. Except for the time period when I was at Gartner. I am not a case of old-habits-die-hard but I have had a genuine admiration for the IBM & now Lenovo ThinkPad series. It never needed any support, except for that one occasion when I foolishly crushed it that cracked the screen. There was also a period as an analyst when I maintained three different brands. HP notebooks to bring to meetings with HP, IBM/Lenovo for their respective meetings, and Dell for meetings with Dell. However, I realized that a ThinkPad brand was one of the most non-controversial notebook to bring to meetings & presentations without evoking any sarcastic banter.

Full disclosure - one day, two months ago, Dell sent me an XPS 13, fully-loaded with the Intel 7th gen Core i7 processor, 512GB PCIe Solid State Drive, QHD InfinityEdge Touch Screen, and 3 years of Premium Support services. Within a few days of using it I realized the meaning of innovation. Innovation in design. Innovation in support. Innovation in marketing.

Let us begin backwards. Innovation in marketing. XPS 13 has become synonymous with notebook much like MacBook or ThinkPad. I do not even know what brands of HP have the same level of desirability and emotional connect. Some may say HP Spectre, but I do not think so. And ThinkPads are not even targeted at consumer segment, they are not usually available in technology retail stores, so they miss out on the small business market. If price is not the only purchase criteria then XPS 13 is the brand to own. Dell’s marketing has also been bolstered by the numerous awards XPS 13 has been winning which feeds back into its marketing motions. XPS 13 also tends to be first to market with new technologies and gets more frequent refreshes than Dell’s business laptop products. And it also helps how the model is displayed in a retail store – makes it look real cool. So far, I have not experienced any complaints from PC OEMs when fishing out the XPS 13 from my bag for presentations.

I also experienced innovation in support. Not willing to take help from my IT to configure my new notebook to my exacting specifications I decided to call Dell’s premium support. A quick connect with technician, Brandon A, made me realize that my support request was very unique and was not included within the knowledgebase. I was ready to give up but the technician stayed on the call, spent the next two hours and successfully replicated XPS 13 configuration with that of ThinkPad. I also learned that Premium support includes a proactive support feature, SupportAssist, where Dell support experts actually contact the user if they detect an issue.

This type of support is ideal for SMBs. Latest Techaisle survey shows that smaller businesses use friends, internal non-IT personnel or channel partner for support, almost always reactive. Larger small businesses use internal IT but data shows that they would rather be focused on strategic IT issues than supporting PCs. 57% mention that managing newer PCs is significantly easier which allows unmanaged IT businesses to run their business without disruption and businesses with IT staff are able to efficiently reallocate the staff’s time to other initiatives. Interestingly, 56% also agree that new PCs reduce overall maintenance costs. And if SMBs opt for Dell's ProSupport and even ProDeploy they may gain even better advantages.

Design is an important element of a mobile device. But like every other SMB executive, the design should contribute to improved productivity and better mobility experience. I am one of those 39% of SMB employees who spend 20+% time away from primary workplace. Being an analyst and a data hound I constantly work on spreadsheets, data visualizations, analytics and presentations, typically seated in tight places – the airplanes, United Club lounges and occasionally in the back seat of ride-sharing vehicles. The placement of cursor in the precise location on the screen is very important to me. The XPS 13’s precision touchpad with integrated glass is much appreciated. It is responsive, not overly sensitive to slight movements and gets my work done without having to erase and retrace. In contrast, I have had to disable the touchpad on ThinkPad and only use the red trackpoint. By the way, has anyone tried using the trackpoint while munching on snacks in airplanes or with the laptop on the lap? The trackpoint assumes a track movement of its own.

The Dell InfinityEdge display also gives me a bright and clearly visible real estate to view and play around with massive amounts of data or create crammed-with-data PowerPoint slides. The chiclet keyboard with “just–enough” shallow depth also helps, although the too-narrow arrow keys are annoying. I really do not use the touch screen a lot but the few times I did use I found the display hinge to be stable enough to avoid exasperating shaking.

I consider myself to be a very organized person, but recently I did the unfathomable: I flew to the east coast for a 2-hour client presentation but forgot to bring my XPS 13 power adapter. By the time I returned the following evening from my coast-to-coast flight there was still enough battery power left in my notebook to reply to emails before plugging it back into the adapter for charging. By the way, one must buy the add-on Power Companion which extends the notebook’s battery life and also charges other mobile devices simultaneously. Living dangerously is not my calling so I made a note to get a spare charger. But if I ever make that grievous error again, then at least I can take comfort in the battery life of XPS 13 and the Power Companion.

XPS 13 is somewhat heavier than the ThinkPad I have been using, I can easily make out the difference as soon as I pick up the notebook in one hand. The Power Companion and the necessary Adapter to connect USB-C port to HDMI or USB 3.0 makes it a little bulky, occupies space and adds to the “carry weight”. But they are not inconvenient.

Collaboration is essential to me and video collaboration is integral when traveling. The placement of the webcam on XPS 13 throws me off but I understand that in the newly announced XPS 13 2 in 1 version the webcam has been put back in its rightful place, at the center.

All of the above experiences point to a device that improves productivity, especially mobility-enabled productivity. Techaisle’s survey also shows that 62% of small businesses experience better mobility with newer PCs thus empowering their workforce. Nearly identical percent say that newer applications run better, and more applications can be run simultaneously contributing to less frustration and improved productivity.

When purchasing a laptop, competitive benchmark comparisons are important but they are certainly not the deciding criteria. Millennials have a different selection criteria; I listen to them as well. After all, 51% of US SMB employees are millennials. Even within my household, when my son and daughter, both millennials, wanted to replace their respective notebooks, they were clear in not getting an HP brand. “No HP decision” was driven by – previous painful product experiences, prolonged and unpredictable support, not-so captivating design of recent products and unflattering word-of-mouth from my son’s fellow college friends.

I took my son and daughter, on different days, to the Microsoft Store and bought each one of them a Dell XPS 13. It was an easy decision for them. Last time I checked, they were very happy. I hope that my initial euphoria stays intact and there will not be any reason to retract and redact my new connect with XPS 13. As of now, I will retract my cynicism.

On 8th February 2017, Dell EMC debuted its shiny new channel partner program, made shinier by the use of precious metal names as partner tiers – Gold, Platinum and Titanium. In addition, Dell EMC introduced Titanium Black, a subset of the Titanium tier population. In a conversation with Cheryl Cook, SVP, Global Channels & Alliances, Dell EMC, I asked her if this program could be classified as Dell Channel 2.0. She smilingly replied that it is actually Dell EMC Channel 1.0. John Byrne, President, Global Channels, Dell EMC, said that it was just the beginning, the work is not done, not by a long shot.

To be sure, Dell has been making strides in the channel community. Techaisle’s latest survey of SMB/midmarket channel partners found that Dell’s likeability was up to 61% in 2016, from 53% in 2014 and 26% in 2013. Additionally, during the same time period percent of channel partners who said Dell has cutting edge technology increased to 40% from 31% in 2014 and 21% in 2013.

Prior to the merger, channel represented more than 60% of EMC business and more than 40% of Dell’s business. Now as Dell Technologies, channel accounts for more than US$35B in revenue, almost half of the company’s revenue.

Partner tier eligibility is based on revenue ranges and takes into account larger and smaller partners as well as regional thresholds. Within the revenue ranges, a key line item is percentage of revenue derived from services. More importantly, any customer that has done business with Dell or EMC channel partner will be designated as a partner-led account, a departure of revenue-based hard deck policy at EMC and a narrow list of named accounts at Dell. Dell EMC plans to review the revenue range thresholds at six-month period to continue to evolve the partner program so that it is not onerous to the channel partner community.

The new program, built on three core tenets - simple, predictable, profitable – aims to reward partners for brand exclusivity (in North America & Latin America), sales aggressiveness, relentless execution, services selling & portfolio expansion. At the same time, it aims to foster peer-envy and create a path for up-leveling.

For the last six months, in the run-up to the program debut, Dell EMC channel team has spoken with many partners, presumably with very large partners, to seek their inputs. A majority of midmarket and SMB focused channel partners are hungry for communication and direction from Dell EMC, specifically revolving around the partners’ solution portfolio, competition, margins, discounts and sales support. There are also many questions and trepidation about the importance of VMware in portfolio mix.

Needless to say, the next few months are very crucial for Dell EMC to actively communicate with its partners, alleviate their fears, minimize ambiguity and motivate the community. Many SMB and midmarket focused partners are legacy Dell partners and do not want to be overshadowed by their larger colleagues. Any transition responding to the level of complexity resulting from the Dell/EMC deal is bound to create uncertainty. And this is the type of uncertainty and disconnect that John Byrne hopes will be alleviated when the channel partners begin to absorb the program details.

To begin with, a unified partner program should make the program participation simpler for partners. Dell EMC launched one partner portal on February 20th, with one deal registration process taking cost and friction out from the selling motion. An introduction of a simple MDF program (both proposal-based and earned) that will not change every single quarter should also help the partners. In fact, Dell EMC has committed an 8% increase on MDF YoY. The Dell EMC partner program structure is all about giving partners the runway they need to grow the business including semi-annual rebate eligibility, two paths to profit, and simplification of product categories from 26 to 9. The new partner program also includes stackable rebates and payment of incremental rebates when partners accelerate beyond their target. The rebate targets are 100% and 120% for growth rebate and additional rebate for selling services. Techaisle believes that these are powerful incentives, but would be better if Dell EMC addressed the gap between its loyalty incentive program and competitive offerings. Nevertheless, Techaisle’s channel research shows that 40% of channel partners are comparing incentive programs, especially, as channel partners have an average of 3.3 vendor partnerships. The incentive structure being offered by Dell EMC will definitely give it a leg up.

Dell EMC’s partner program is designed to reward exclusivity (albeit only in North America and Latin America) by allowing Dell-only partners to receive free training (and potentially free certification). Although Dell and EMC both have had exclusive partners, this is not (at all) the norm in the channel. It is Techaisle’s assessment that exclusivity will not be a preferred option for the vast majority of partners, and that this focus will not result in any significant bump in sales volumes for Dell EMC. SMB/midmarket focused partners see it as a conflict because their objective is to work on behalf of the customer, and providing options increases the customer’s belief that the partner is focused on delivering the best product at the best price, and not simply acting as a sales agent. Additionally, exclusivity can be challenging for partners because SMBs typically demand that the partner offer different price options, and are likely to have installed infrastructure and existing warranties that will drive them to different options in order to maintain platform homogeneity and reduce cost of integration or management complexity.

The Dell EMC partner program also encourages and rewards individual certifications – a carry-over from EMC’s program. Techaisle believes a program should emphasize ‘just in time’ rather than ‘just in case’ knowledge. At some level, certification is a cost to the channel partner company, and may well have negative downstream effects: it forces the channel partner to sell specific products to recoup certification investments (rather than aligning directly with customer needs), and may drive increases in both employee wages and turnover. Most importantly, certification has almost zero impact in sales motions within midmarket businesses. Certification gives the information and rarely SMB/midmarket customers ask for certifications. Nevertheless, certifications are relevant, even mandatory, in some government contracts, and also within large enterprises as they have all kinds of compliance requirement for certifications. In general, vendors like certifications because it increases a partner’s investment in them, but partners view certifications as an outdated requirement that is misaligned with today’s market.

John Byrne says, “services are a pot of gold”. Quite true. A “by the numbers” review of the Techaisle’s state of the SMB channel survey finds that revenues from products and services are approximately equal, and that services revenue is as likely to be derived from transactions that do not include products as from product-inclusive deals. Channel respondents report that 58% of 2016 revenue was attributable to services-led contracts. It is worth noting that while measures of this type provide a very useful benchmark for channel businesses, they require some interpretation in their application. For example, the proportion of business attributable to services is only part of the issue that channel management is wrestling with: what kind of services (for example, cloud or managed or maintenance?) is an important consideration in evaluating the impact of a channel services revenue stream. Techaisle believes that more specific measures are often more helpful to channel management. For example, firms that are migrating to a cloud model will want to understand (and build) the proportion of their overall business derived from cloud. Working with this and related data, Techaisle finds that it is reasonable for SMB channel firms that are looking to be part of the “cloud channel” to be targeting from over 20% of services revenue derived from cloud in 2015 to more than 40% before 2018.

The new Dell EMC partner program is a step forward for the company, cementing its relationship with its partners. For now, channel partners are asking as to how Dell EMC will help them in transitioning their businesses: does Dell EMC understand the challenges they face? Is Dell EMC aligned with the opportunity areas that are essential to continued channel viability? And what support Dell EMC can provide to help them grow their business? Generating new business is going to be highly incentivized and channel partners need support from Dell to acquire new business – cold, warm and hot leads. Although a channel partner has its own sales team, a large portion of their sales leads comes from IT vendors. The Techaisle survey shows that 42% of partners are planning to spend more resources on lead generation activities in the next one year. The same survey also showed that 35% of partners consider vendor’s lead generation as a top five important partnership criteria. To be fair, the responsibility also lies with channel partners to gain mindshare of the IT vendor so that when a lead does come into the IT vendor it is passed on to them. Techaisle data shows that average length of sales cycle to SMBs varies from 6.4 weeks for a VAR to 9.1 weeks for an SI. And sales support during this period is very crucial for the partners. In fact, pre- and post-sales support is the second most important partnership criteria at 42% behind training at 45%.

In the post-transactional market, there are many gut-wrenching shifts happening within the SMB channel community. Many channel businesses will be ‘consolidated out’, absorbed by firms looking to consolidate their hold on the diminishing product-oriented transactional business, or by firms who want to apply post-transactional methods to established customer rosters. It’s important to note, though, that the future is hybrid IT – a mix of traditional and cloud-based infrastructure and capabilities. Traditional channel firms may need to work to absorb the mantras associated with the new market reality, but they have existing relationships and knowledge that are also important to future success. Channel executives who can integrate existing attributes with emerging imperatives – and partner with customers who also need to span conventional and emerging IT service delivery models – have an opportunity to position their businesses for long-term success in the post-transactional IT market. Dell EMC is poised and primed to tackle the hybrid IT reality. Dell EMC channel partner program 1.0 is promising and beneficial channel partners, yet unpolished and unfinished. The next versions could be even more valuable.

Candid conversation with Dell Cloud-Client Computing chief strategist

Jeff McNaught, Executive Director & Chief Strategy Officer, Dell Cloud Client-Computing and co-inventor of Wyse thin client had a candid conversation with Techaisle on his new product initiatives, focus on security, building solutions for small and medium businesses and renewed attention to channel partners. Jeff is deeply involved in software solutions which includes partner software - Citrix, Microsoft and VMware and is responsible for the cloud-client business which includes devices that Dell build’s exclusively for Citrix or VMware as well as new products and software security offerings. One of his major new initiatives includes simplifying and securing virtual workspaces better than anyone else.

Dell VDI converging on security, cost, complexity and channels

Based on extensive primary research with SMBs and the channel partners, Techaisle forecasts the US SMB VDI market to be US$13 billion in 2020 as VDI penetration increases to 34 percent from the current 26 percent and an increase in number of seats from users who have already deployed VDI. Most of the midmarket firms that have invested in VDI are still experimenting with the technology, and most small businesses are still several years away from even this level of preliminary adoption.

The allure of VDI is clear – but the technology itself and the path to realizing its benefits is still mysterious to many small and midmarket businesses. Techaisle research shows that there is a need for VDI vendors to embark on a messaging exercise that includes - real-world examples of successful deployment of VDI, ease of VDI implementation with the least pain for SMBs & simplification of understanding VDI technology by removing fear and complexity.

Over the last two years Dell has been trying to build a momentum to remove the mystery and reduce deployment complexity. Along the way it has had more successes than missteps and it seems that Dell has reached a stage where it reasonably understands the needs of the end-customers and how to work with channel partners to win business and deploy solutions. Dell has architected multiple VDI solution delivery models for SMBs of all sizes and levels of technology adoption.