Editor’s note: Ezra Gottheil of Technology Business Research explains how Dell Technologies is shaping its future around the Internet of Things. This is the first of a two-part report.
Dell Technologies (NYSE: DVMT) put the spotlight on Internet of Things (IoT) at a two‐day media and analyst event in New York City. Dell is using IoT effectively to tell its corporate story. One year after the Dell EMC merger, the sprawling and diverse company presents, in its messaging at least, a coherent vision of a comprehensive provider of IT infrastructure products and services. Providing infrastructure for IoT is in keeping with Dell’s vision of the company’s future role, a role Dell has been describing for some time: Dell helps IT be flexible and responsive to the rapidly evolving needs of innovative new applications of technology in business. Specifically, IoT makes the best case for a distributed fluid infrastructure. TBR believes the company’s new emphasis on IoT will help drive additional growth, not just for IoT, but for the whole collection of innovations often termed digital transformation.
This approach benefits Dell in two ways: by driving IoT business, and by creating a template for other innovative technologies. CEO Michael Dell defined Dell’s offering as “IT infrastructure for IoT.” The same infrastructure will serve for many other new applications, such as the ones often subsumed under digital transformation. TBR believes that in many organizations, IoT adoption will lead to additional applications, both IoT and non‐IoT. If Dell can establish itself as a customer’s IT vendor for IoT, it will probably be selected as the vendor for other digital transformation applications.
Innovation infrastructure is Dell’s avenue to future growth; PCs, infrastructure hardware and software, and services are the company’s current business. The company reported continued growth in PC revenue and profit, despite a stagnant global market. Like its main competitors HP Inc. (NYSE: HPQ) and Lenovo, Dell benefits from consolidation in the PC industry, and in 2Q17 the company claimed first place in revenue and profit, if not in market share. Dell reported success in expanding consumer sales in gaming PCs and workstations, as well as expanding consumer sales in seven additional countries. TBR believes the company has adopted an overall strategy of concentrating its investments in both specific markets and specific PC features, and that this strategy is paying off.
Dell’s IoT‐driven architecture: From edge to cloud via the ‘distributed core’
The trend in recent years has been the ongoing concentration of compute and storage assets in the cloud. TBR believes that IoT’s requirements have led to a more decentralized architecture, or a multi‐tier architecture we have referred to as “hybrid IoT.” At the New York event, Dell presented its version of this decentralized approach, which includes three main tiers: the edge, the distributed core and the cloud:
The edge includes devices and sensors, as well as gateways, PCs or small servers that connect to devices and act on incoming data. In many cases, summarized data is forwarded to other on‐premises servers, to remote servers or to the cloud.
The distributed core is Dell’s term for on‐premises servers, either in data centers or distributed to be closer to the data and the edge.
The cloud includes the public cloud, hosted private clouds and on‐premises private clouds.
Where data is stored and processed depends on the application. Transmission and storage of large quantities of data, such as the direct readout from device sensors, is expensive and often unnecessary. Transmitting all data to the cloud for analysis and reaction may introduce unwanted delays (latencies). Increasingly, edge processing both reacts to and summarizes data. Data from IoT installations is often merged with other data, including both centralized company data and data from other edge applications.
The Dell architectural vision is one in which data and processing can be located wherever is best for the application. Virtualization and cloud software make it easy to relocate data and processing as requirements change. While Dell participates in all three tiers, the company’s greatest interests are in the edge and distributed core, which play to the company’s strengths in building computation and storage devices of all sizes and specifications, including edge gateways. Dell wants to play well with the cloud, but make the “distributed core” and edge more attractive for many applications.
Because IoT solutions are more diverse than other types of applications, and because IoT incorporates edge devices capable of generating enormous quantities of data, an IoT infrastructure architecture should be very flexible, with the ability to adjust capacity quickly. IoT potentially makes the greatest demands on infrastructure, so an architecture that can handle multiple IoT solutions is capable of handling most other application requirements. This is one reason for Dell’s use of IoT to represent its innovation infrastructure initiative; the other reason is that IoT is now top‐of‐mind for both management and IT.
Part Two: IOT and PCs in the future