Michael Dell: Data Is AI Fuel, Cloud Is More Expensive

At the Fortune Brainstorm Tech conference in Aspen yesterday, a number of tech company CIOs outlined a very positive view of the future, despite many changes happening in the technology industry.

Dell Technologies CEO Michael Dell and Silver Lake Managing Partner Egon Durban discussed their company's transformation following last year's $67 billion purchase of EMC. The two had met at this conference five years ago, which set the stage for Dell and Silver Lake taking Dell private.

"We see ourselves as the essential infrastructure company," Dell said, noting that he saw four big transformations changing the industry—digital transformation including the internet of things, machine intelligence, and AI; IT transformation to a cloud-like model; a workforce transformation; and increased emphasis on security. By combining Dell with EMC, VMware, and Pivotal, he said the new organization was best positioned to help its customers adapt to these changes. "No other company has the breadth of capability we have."

Durban said the company saw a lot of disruption and believes scale is fundamental to succeeding, with market leading companies taking market share. He talked about the two being "together forever" and said public companies find it harder to invest on a long-term basis.

Durban said Dell is storing more data than anyone else, and selling more servers than anyone else, and said the company was getting more of its customers to consolidate its purchases, so it gains market share. In the first quarter, he said, Dell had a billion dollars more revenue than it had planned for, and said the company has gained shared in the client business for the last 18 quarters, starting right from when it went private.

Durban was particularly bullish about the need for more storage as the number of nodes increases in the Internet of Things and as AI applications proliferate. "If the rocket is AI, the fuel is data," he said. He noted that a lot of the data for autonomous cars is stored on Dell storage, apparently referring to Tesla.

On the subject of the cloud, Dell talked about the partnership between VMware and AWS, saying more would be announced at next month's VMworld conference; but also said VMware was working on Azure and GCP as part of a multi-cloud strategy. Still he said, "We don't see cloud as a place, but as a way of doing IT." He said that the company sells a lot to public cloud providers, but said the public cloud was not the right place to put predicable workloads, saying that when you modernize and automate your on-premises and co-location systems, such workloads will cost less in your own data centers than in the public cloud. He said that companies with a cloud-first strategy will "wake up" and discover that it was more expensive.

Michael J. Miller is chief information officer at Ziff Brothers Investments, a private investment firm. Miller, who was editor-in-chief of PC Magazine from 1991 to 2005, authors this blog for PCMag.com to share his thoughts on PC-related products. No investment advice is offered in this blog. All duties are disclaimed. Miller works separately for a private investment firm which may at any time invest in companies whose products are discussed in this blog, and no disclosure of securities transactions will be made.