Dell goes public again…

Dell emerges with an end to end story, unlike its competitors

Kathleen Maher
Having it all: The new Dell is much more than a company selling computing equipment. It has three major divisions Infrastructure (ISG), Client (CSG), and VMWare. (Source: Dell presentation)

Usually, when a company goes private it’s because its fortunes have shifted and not in a good way. That was partially true for Dell when the company went private in 2013. The PC market had performed a remarkable swan dive in response to market declines, an unfortunate operating system cycle from Microsoft starting with Vista, and the rise in tablets – attractive, low-cost (usually), lightweight alternative to PCs. 

As a leader in the PC sector, Dell was in a decent position to navigate the changing PC market, but the company was bedeviled by stockholders who had their own ideas about what Dell should do. Shareholders are not the types to recommend doubling down in a time of crises. Michael Dell is. 

Michael Dell and his executives decided to pull the company from the market with the help of Silverlake Partners and Microsoft in a $25 billion buyout. The move was breathtaking but characteristically audacious and it left some hard feelings. However, the company has grown and transformed itself, which Dell executives insist would not have been impossible as a public company. 

After a spectacular period of building and investing including the giant acquisition of EMC for $67 billion. Michael Dell and his executives have announced their readiness to return to the market through VMWare, a public company acquired that came with the EMC deal. When Dell acquired EMC, it helped pay for the deal by issuing EMC shareholders Class V tracking stock that represented a controlling interest in VMWare. Now, those shareholders are getting their payday. The company’s shareholders have approved the conversion of Class V stock into shares of Dell Class C common stock at a rate of $109 dollars per share of Class V stock. According to Dell, the deal “represents an equity value for Dell’s DHI group of $48.4 billion and total consideration to holders of Class V shares of $21.7 billion.” The Class V stockholders can also choose to receive $109 per share in cash (not to exceed $9 billion). In the company’s statement, Dell says they believe this approach is the most advantageous for the Class V shareholders. The deal goes through on Friday, December 28.

The company that is re-entering the market is quite a bit different from the company that left, but there are constants. The company has continued to build its PC business and is a leader in monitors and displays. The company has been able to aggressively fight for market share using several levers including price reductions. There have been many times including the acquisition of EMC and introduction of new products that Dell has said their position as a private company has given them the maneuverability to make those moves.

Dell invited analysts to cold, cold Chicago to prepare the ground for the new Dell. Executives and guest customers described trends, investments, and programs for Dell in the digital world. 

Dell Technologies Capital 

Dell’s Investment arm, Dell Technologies Capital, has a $15 billion market cap and is headquartered in Palo Alto in Silicon Valley as an outpost to maintain a connection to the “external innovation ecosystem,” says Scott Darling, President, Dell Technologies Capital. He said that 90% of the company’s investments are series A&B and the company takes a board position when companies are working in areas where they already have interests. He says the investment group has seen several successful exits and says there is a direct correlation between the success of Dell’s investments and the success of the company. 

Where is Dell investing?

At the analyst meeting, Dell highlighted several of the company’s investments as a way of highlighting trends for the company’s ambitions. All are involved in AI in some form and include Graphcore, Zingbox, Jask, and NoodleIO. AI is the connective thread that runs through all these investments. 


Graphcore, based in Bristol, England is one of several semiconductor startups that have emerged to tackle the compute-intensive workflows driven by AI/ML and big data. (Peter McGuinness, author of JPR’s VPU report, notes WaveComputing and ThinCI are traveling similar developmental paths.) The company has reached unicorn status with a series D investment of over $200 billion. In addition to Dell which has put in $50 million, Microsoft and BMW have also anted up. 

At Dell’s analyst meeting, GraphCore and Dell revealed their AI appliance based on GraphCore’s Colossus GC2 IPU processors. The appliance includes 8 C2 IPU PCIe cards, each bearing 2 Colossus processors. Nigel Toon, Graphcore’s CEO writes that “demand for the product is high,” and that early access customers have filled the company’s order book for their first batch production silicon and C2 hardware.

GraphCore’s CTO Simon Knowles, a founder and veteran of several semiconductor startups (and exits) told the audience that the development of GraphCore represents thinking for the next 20 years of computing beyond the early day tasks of training and inference. The big idea for IPUs is to keep the processing within the processor by making large reserves of memory available for compute processes thereby reducing the overhead of moving data back and forth to memory.
Knowles told the audience that massive progress has been made over the last five years in classification, but all that adds up to baby steps. He said, “we are still at the absolute beginning” when it comes to building processors that have something that could be called common sense, that can make intuitive leaps and learn, but he promises, “things we think are uniquely human, will be possible from machines.” 


Last year Dell invested $22 million in Zingbox, an IoT company addressing the need for security in IoT networks. The company‘s flagship product is called Guardian. CTO and co-founder May Wang is inspired to fight attacks such as the WannaCry attack that brought down hospitals in the UK. She notes that medical devices are particularly vulnerable because they’re keeping people alive. It’s not possible to shut them down or take them off the network in response to an attack. Zingbox’s system can analyze traffic for anomalous behavior. Also, says Wang, hospitals tend to buy more equipment than they actually need in order to be sure to have them on hand in emergencies. Using a safe IoT network enables Zingbox to analyze the actual use of devices. She also mentions that machines such as imaging machines may be Windows-based, tempting people to use them for web browsing, playing games, etc. Zingbox can also detect that sort of unusual behavior. 

Wang says the differentiator for Zingbox is that the company understands the medical device industry. She said that in order to secure an IoT device you have to know the device and what it's supposed to do. 

Dell is just as interested in the edge as it is in the cloud and in the server. When Dell announced its intention to invest in IoT, Michael Dell talked about the need for things to be able to compute at the edge for security and the speedy response required for functions such as autonomous driving and device security. Dell has described the idea as “distributed core.” The company sees their VMWare technology as an enabler for this emerging market. 


Founded in 2016 by Greg Martin and Damian Miller, security system veterans (ArcSight, HP, IBM). Jask is an automation tool for the security operations center. has built a security automation platform that leverages AI and humans to hunt and neutralize security threats. The goal of the company is to automate the security operation center (SOC). Greg Martin notes that attacks are coming so fast, that AI is needed to help sort through data, identify threats, and organize them to help human analysts in the SOC. Martin believes human analysts will continue to play an important role even as they build an autonomous SOC. “Humans are the best cyber defense that we have,” he told the audience at Dell’s analyst meeting. 

The company, based in Austin and San Francisco, has been inspired by video games and they’ve hired engineers from Blizzard to gamify data processing for security. As it is now, says Martin analysts must manually scroll through threat alerts. It is soul-killing work and typically analysts burn out within a year. By automating the most tedious aspects and creating an inviting and communicative interface, Jask hopes to motivate analysts to hunt for threats.

Noodle Analytics Inc., based in San Francisco is building AI as a service. The company is an up-and-comer rated number 4 in LinkedIn’s list of Top Startups.  The trick for AI says CEO Stephen Pratt is that every company is different. Noodle AI is online service built from a suite of applications can be adapted to suit customers’ specific challenges and requirements. Clients input their data to, and the company creates an application that’s tailored to the type of data they have and their goals. Customers then subscribe to the application. The company says it takes data from the edge to the data center. 

Michael Dell has said that if your company has data and you’re not using AI, then your company is not living up to its potential. A company like can help companies who don’t have the resources to make use of their data. 

The New York Times recently ran a graphic and revealing story about the data being collected about us and what kinds of inference can be drawn from that data and of course, we’re learning more and more about how the data Facebook and other social media companies gather is being used in ways that are in nobody’s interest. has countered with their own take, believing firmly in AI for good and for growth.

Summing up

The PC decline rode along with the market crash that reverberated through the tech industry from 2008-2010. Suddenly, people were realizing they didn’t need a new computer every two years and maybe they didn’t need a new computer at all. At that time all PC companies restructured. Some companies like IBM jettisoned their PC business completely and Lenovo has been the beneficiary. HP has created two divisions: HP Inc. for PCs, printers, and related equipment and HP Enterprise for the server, storage, networking, and cloud. Ironically HP Inc. is doing pretty well and the company is innovating in workstations and printers. The story isn’t quite so rosy for HP Enterprise. Over at Dell, the Client Services Group, which includes PCs is still the company’s largest source of revenue, though Infrastructure Services is close on its heels. 

Michael Dell is arguing that a successful company needs to reach across the enterprise to the edge. AI is helping make Dell’s case. Data comes from everywhere and in the digital age, it flows through everything. 

Michael Dell told the audience that no one else can provide products and services from the edge, to the core, to the cloud but that’s precisely what’s important. He says it’s necessary to put computing where the data is. 

The companies Dell chose to highlight at its analyst conference all address AI and computation from various points along the information continuum. What they have in common is an interest in maintaining data within consistent environments, so computation can adapt as new insights are formed. For Graphcore, this is literal as its processor architecture seeks to maintain huge amounts of data in memory. For the cloud enables large memory resources and compute resources and as the company creates applications for one company it learns and adapts to create applications for related companies. 

For Dell, the challenge is to be where the problems are. We’re in the middle of the digital transformation. Yes, the pipeline has been digitized, and data is flowing through giant fire hoses. It’s an apt analogy. Michael Dell says the process demands fluidity, “customers change their minds about where they need analysis to happen, and they need it to be fluid and movable.” Dell believes that in the near future, more computing will happen at the edge than in the cloud. 

So Dell has responded not by breaking up but by building up. 

Dell’s revenues at the time of the Class V transaction are at $88 billion. For 2019, the company is targeting revenues of $90.5-90.2 billion. At the time it went private, the company had a market cap of $21.7 billion.


What do we think? 

One of the first thoughts that might pop up about Dell’s reemergence as a public company is what happens when stockholders get pesky again? What Dell has accomplished in its private years is the construction of a very big boat that is carrying a load of debt, approximately $52.5 billion. Dell says not to worry, a chunk of it is long-term and Dell’s rising revenues and potential make the balance look manageable. Analysts agree according to a story in the New York Times. But, a big chunk of debt is going the limit a company’s ability to sell itself. 

More to the point, Dell and his executives are communicating that all is going according to plan. Michael Dell likes to say, if AI is your rocket ship, data is your fuel. 

The new Dell is a company built for the future, with the ability to scale as the new information age takes off.