This looks to me like 180 degree turn for Dell...they used to put together simple PCs and sell them on very small profit...funding R&D requires higher margins, very different strategy, very different business model
As described, the "Research Division" sounds more like a "skunk works" than an echo of Bell Labs or IBM Research. "Skunk works" are cheap -- you just need a few really smart people who work well autonomously, with minimal management. Every organization that designs things should have a "skunk works" IMO.
I agree...every decent size organization should have a skunk works lab or formal CTO organization...but that is not the reason to call it research division...I wonder how many people are allocated there? Kris
Dell itself is calling this a research division, although the rest of us may challenge them on that moniker. Clearly, this indicates a new direction for them. They have never been much into R&D in the past, and this allows them to get into network infrastructure in an aggressive and ambitious manner. We'll see what they come up with.
How do we know that Dell is about to layoff its workers? From this interview alone, it would seem that they are looking to invest more across the board and that may mean more employment opportunities at Dell down the road.
@zewde yeraswork:How do we know that Dell is about to layoff its workers?
We don't, but it's a good bet.
Historically, Dell competed in the PC, server, and networking market on price. They started with a direct sales model, and later sold through retailers as well as direct (with an interesting time reassuring retail partners that Dell would not compete directly with them by trying to convert retail sales to direct customers.)
They didn't do a lot of R&D because little was needed. They were selling standard products into an established market, not developing new ones.
As the market contracted, Dell was hit by the same issues as every other US PC maker: the market was "lowest cost ptoducer wins", and Dell wasn't a lowest cost producer.
Dell reacted by going private in an LBO, to escape market demands for returns it couldn't provide. But while that took them out of the market's eye, it didn't solve their problems. There are substantial costs to an LBO, and Dell must still satisfy participating private investors rather than public ones.
This looks like a strategic shift for Dell. Instead of selling standard products into an established market, they are looking at developing new products that will tie into existing infrastructures (and presumably sell for higher prices and much better margins.)
We'll see if this is a "too little, too late" move on Dell's part that they arguably should have done years ago. But meanwhile, layoffs would be no surprise. It will be a while before any fruits of the skunk work's operation will be salable products, and meanwhile, Dell's existing business is still hurting. When you're in that state, you lay off staff to held bring expenses in line with shrinking revenues. Dell may hire in the future is the new shop comes up with salable products, but the folks laid off now likely won't get rehired - the new products will require a different skills mix the laid-off workers may not have.
While we don't know the numbers I agree with Resiston, Betajet and Kris that this is less a division and more a small team. That said Menon is a smart cookie and seems to have some good ideas a few of which may come to fruition.
"Predictive security will be one of several focus areas for Dell Research, said Menon, using the example of firewalls that can modify their settings based on threats perceived in other regions." Sounds intriguing. Maybe Dell should take a look at this predictive security analytics tool Umbrella Security Graph, which is will be offered free to researchers
I spoke with Jai Menon this morning, and he briefly discussed how Dell will measure the sucess of this research group:
- How the group impacts Dell's overall business
- How useful does the rest of the company find the research division?
- External leadership (e.g. how often does Menon get invited to do keynotes, how much press the team gets)
"The thought leadership we provide is already having that kind of influence. [Our focus on] network functions virtualization is... already having an influence that's really driving Dell to do more things in partnership with the telcos," he said.