In 2024, companies are seizing the opportunity of AI to bring employees back to the office. Few large companies have embraced these trends more than PC manufacturer and cloud storage provider Dell. BI spoke to the company and analysts about Dell’s biggest developments of the year.
Dell made a name for itself in the 1990s as a trusted brand for office PCs.
Since then, the company has evolved into a leading server vendor and data storage provider, but outside of the technology industry, the company has largely retained its original reputation.
This past year, as Dell celebrated its 40th anniversary, it became clear that a new transformation was underway at the Texas-based company, positioning it as a major player in the AI game.
The company is also embracing another major business trend this year: the return-to-the-office movement.
Business Insider spoke to the company and technology analysts about Dell’s biggest developments of the year.
Dell AI Transformation
AI adoption has been at the forefront of most business strategies this year, including at Dell.
The company rolled out AI across its internal operating model over the summer, with a mission to help all companies achieve the same.
“Our real objective is to accelerate the adoption of AI by our customers,” Vivek Mohindra, Dell’s senior vice president of corporate strategy, told BI.
Bob O’Donnell, president and principal analyst at Technaracy Research, said Dell has been “aggressively” bringing to market all the infrastructure and services needed to deploy AI.
Dell’s product suite, which the company calls the “Dell AI Factory,” includes AI PCs, GPU-enabled servers, storage products, networking solutions, and advisory services.
Mohindra said Dell’s PowerEdge server lineup has doubled this year from five to 10 servers. Six are air-cooled and four are direct water-cooled.
These are exactly the energy-efficient, high-density systems that businesses need to run their own models on-premises. If our servers can power heavy AI workloads, our data and cloud-based products can help streamline and scale your data workflows.
Patrick Moorhead and Michael Dell at the SXSW 2024 Conference and Festival in March. Errich Petersen/SXSW Conference and Festival (Getty Images)
Patrick Moorhead, CEO and Chief Analyst at Moor Insights & Strategy, said this nuanced service allows Dell to reach very large customers such as Morgan Stanley, Bank of America, Pfizer, and Vultr or “Tier 2 CSPs.” ” helped them capture the market. .
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Moorhead, who has followed Dell for 14 years, said the company has performed even better this year than he expected. He said they were able to capitalize on the proliferation of companies wanting to run their own models and store data on-premises and optimize the service by adding deployment services to their engineering excellence.
“This was a smart strategy, and we didn’t necessarily expect it to be this successful so quickly,” Moorhead said. “They’re trying to put it all together and make it happen for businesses.”
Dell also partners with major Silicon Valley companies. We already work closely with Nvidia, Qualcomm, and Intel. In June, the company announced it would provide hardware to power a supercomputer being developed by Elon Musk’s company xAI.
In November, Dell and Meta partnered to provide on-premises AI infrastructure using Llama 2 AI models and Dell hardware.
These partnerships show Dell is expanding its reach and represent an opportunity for the company, O’Donnell said.
“The fact that they can cater to the requirements and demands of someone like Meta is a great sign,” he said.
Monitor conveyor belts with quality control technology powered by Dell and Nvidia. Joan Cross/Null Photography via Getty Images
The success of Dell’s AI strategy is evident in its latest quarterly earnings.
Revenue in the infrastructure solutions group, which includes AI servers, storage and other networking functions, surged to a record $11.4 billion in the third quarter, up 34% year over year.
Specifically, server and network revenue increased 58% year over year. The company’s stock price has now skyrocketed from less than $34 in September 2022 to around $117 in late December 2024, giving it a market capitalization of around $82 billion.
“No company is immortal, but Dell’s breadth of products, strong supply chain and scalability will position the company for continued success,” Moorhead said.
“They’re one of the few companies in the world that sells all of these products, so I think they’re in a pretty good position,” he said.
Mohindra is equally positive. “I say to the team, stay strong, because next year there will be even more change than this year.”
R.T.O.
As we rolled out our products for the future of AI, Dell was also making some big changes internally.
In August, the company implemented a large-scale business restructuring that included layoffs. Dell also promoted a steady RTO policy related to AI throughout the year.
“As we enter a new world of AI, direct human interaction will be more important than ever,” an internal memo from September said.
The policy blocked promotions for some employees and began tracking employee attendance. For more than a decade, Dell had allowed some of its staff to work remotely, but many employees were unhappy with the change.
BI obtained employee data showing that nearly 50% of Dell’s full-time employees in the U.S. have chosen to work remotely.
Employees at Dell’s Round Rock, Texas, headquarters are being asked to return this year. Brandon Bell/Getty
In September, another RTO policy required sales staff to return to the office full time. “It became clear that there were significant benefits to having salespeople together in terms of learning from, training and mentoring each other,” Mohindra told BI.
Several employees told BI they had heard privately from administrators that the five-day mandate would be extended to other departments in 2025. When asked if that was true, Mohindra said Dell is a “continuously learning organization.”
O’Donnell and Moorhead said Dell has been more aggressive about RTOs than most of its competitors, but they don’t think RTOs will have much of an impact on the company.
“Their policies don’t seem fundamentally different from what a significant number of tech companies are starting to do,” O’Donnell said. “I don’t think Dell will lose a ton of talent to HP or Lenovo.”
“I think it’s good for growth, especially in product development,” Moorhead said.
