Techaisle Blog

BROADENS RANGE OF OFFERINGS AND INCREASES NUMBER OF SMB CHANNEL PARTNERS

On March 13th, 2012, Dell announced the acquisition of SonicWALL, a leader in Unified Threat Management (UTM), further broadening its portfolio of security offerings, especially for SMBs and branch offices. By acquiring SonicWALL, Dell gains on multiple fronts.

• Broaden its Portfolio of Products and Services for SMBs. While SonicWALL has added enterprise-level offerings in recent years, for a long time it was known primarily as SMB-focused company and one of the leaders in UTM for SMBs. Known primarily for its security appliances, it offers SMBs gateway security to protect their networks as well as web and email security, secure remote access and continuous data protection (secured at remote locations). Most of these offerings would supplement Dell’s existing products and enable SMBs to purchase more of their products from a single source.

• Expand its Channel Partner Base. SonicWALL sold almost all of its products through a loyal base of channel partners, who benefitted not only by selling SonicWALL appliances but also earning ongoing service revenues from managing those appliances as well as off-site continuous data protection (CDP). In that respect, SonicWALL was a step ahead of the industry in offering remote services and would fit in well with Dell’s cloud ambitions. While there may be some overlap between the channel partners of the two companies, and Dell may not grandfather all of SonicWALL’s partners to resell Dell products, Dell would still significantly increase the number of its channel partners (including many MSPs) and broaden its footprint in the SMB market.

• Enter a Fast Growing and More Profitable Area. SonicWALL accounts for less than one-half of one percent of Dell’s revenues but it is growing much faster. While Dell’s revenues, including revenues from various acquisitions, have essentially remained stagnant over the last five years, SonicWALL has grown by almost 30% during the same period. Its net profitability is 2-3 times higher than Dell. By selling SonicWALL’s products to its current customer base, both directly, through Dell Services and through Dell’s PartnerDirect members, this profitability will increase further as selling through Dell will help reduce SonicWALL’s sales and marketing expenses (which account for 35-40% of its total revenues)

Dell has acquired several companies in recent years that had developed products primarily for SMB customers. After acquiring them, Dell has not only increased their sales to SMBs but, in many cases, also sold those products to branches of its large customers. If Dell follows the same strategy for SonicWALL’s offerings, its latest acquisition will be a win-win situation for Dell, SonicWALL, their customers and Dell’s investors.
Anil Miglani

 

This week, Dell unveiled its Ultrabook, XPS 13 featuring an edge-to-edge glass, near “frameless” display, all-day battery life, and the latest innovative technology for a superb overall user experience. Starting at 2.99 lbs and less than a quarter-inch at its thinnest point, the XPS 13 sports the latest Intel technology, such as Rapid Start and Smart Connect, to enable users to be productive, connected and responsive anywhere.

While Dell did not participate in this year’s CES, Dell’s announcementwas a pre-planned set of announcements by Intel’s OEM partners to unveil their new UltraBook PCs, Intel’s response to Apple’s MacBook Air. What made Dell’s announcement stand out was that while the new ultrathin PCs like MacBook Air have generally been targeted at consumers, Dell has added features and functionalities for businesses, including the ability of IT staff to manage the XPS 13 efficiently and effectively. These include features like standard Trusted Platform Module for BitLocker Data Encryption and optional remote and on-site managed services (i.e. ProSupport after-sales service and Configuration Services such as custom imaging and asset tagging) that allow SMBs to proactively manage their IT
devices and applications, avoid downtime and increase their IT infrastructure availability.

Also while, Dell XPS 13’s starting price point is the same as Apple’s MacBook Air, Dell delivers much more at $999 than Apple does at the same price.

The obvious question that arises is why would Dell adapt a (presumably) consumer-focused product launched primarily at a consumer-oriented show, to also meet the needs of businesses? The answer lies in Dell’s increasing focus on the SMB market since the creation of its new SMB Business Unit a few years back. While SMB business lies under the CSMB group (Consumer & SMB), until recently headed by Steve Felice, SMBs’ needs seem to be getting ingrained into Dell’s DNA.

Dell has increased its focus on SMBs on a worldwide basis and this is also being reflected in Techaisle’s SMB tracking studies. In Techaisle’s recentstudy on purchase intention of Ultrabooks, SMBs rated Dell as their number 1 choice for Ultrabooks, even before the products were announced. Techaisle expects that at least 3.6 million Ultrabooks will be purchased by US SMBs in 2012, resulting in 1 in 5 PCs (desktops and laptops) shipped to SMBs. With increased mobility, size and weight of mobile PCs have become important factors for road warriors, who want to be able to work from anywhere and everywhere they go. While Ultrabooks are considered more stylish and cool as compared to other form factors, including tablets, SMBs also value their long battery life, lightweight, built in security features, ability to run Windows 8 and fast boot times.

Techaisle Survey showed that Dell had even a better preferred status for the upper mid-market SMBs, that is, from 250-999 employee size businesses which are less price-sensitive than their smaller counterparts. Additionally, 47 percent of SMBs plan to purchase directly from a manufacturers’ website, which gives Dell an added advantage, given its history of success in selling through the web.

The introduction of Ultrabooks by Dell could not have come at a better time. With increasing mobility among SMB employees, UltraBooks fill in the gap between the lighter (but also somewhat limited in their functionality) tablets and the traditional heavier laptops. Ultrabooks can perform all the tasks (and more) of the traditional laptops but with much greater convenience.

Anurag Agrawal
Techaisle