Michael Dell: We're Seeing Public Cloud 'Boomerang Effect'

Mitch Wagner
5/8/2017
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LAS VEGAS -- Dell EMC World 2017 -- Public cloud isn't everything, says the man who runs a company that's doomed if the public cloud becomes everything.

Enterprises that adopt a "public cloud first and only" strategy are missing out on competitive advantages available from hybrid and private cloud, said Michael Dell, Dell Technologies chairman and CTO, on Monday.

Amazon Web Services Inc. (AWS) predicts that all workloads will move to the public cloud, which would be a headshot to Dell and its competitors. Dell and its competitors depend on selling equipment to enterprise data centers. (See AWS CEO: Enterprise Data Center Is Doomed.)

These companies can survive and even thrive in a world of private and hybrid clouds. But if everybody moves to public cloud, then Dell and its competitors would be fighting for business from a few, big hypercloud providers like AWS, Microsoft Azure, and so on.

And the hypercloud guys need Dell and its competitors a lot less than enterprises do. Hypercloud providers build a lot of their own equipment.

But Dell says companies that go public-cloud only will find it difficult to compete.

Michael Dell delivers a keynote at Dell EMC World.
Michael Dell delivers a keynote at Dell EMC World.

"Cloud is not a place, but rather a way of doing information technology," Dell said. We are already in a multicloud world -- public cloud, private, hybrid, software-as-a-service (SaS) and managed services, Dell said. Enterprises need to optimize workloads, move them securely and manage them efficiently. Public-cloud-only doesn't deliver the full value of that kind of optimization and efficiency -- optimizing private infrastructure is necessary to achieve that kind of agility.

Dell said customers tell him public cloud is twice as expensive as on-premises, particularly for predictable workloads, which comprise 90% of workloads.

"We've seen a boomerang effect, or repatriation, of customers saying, 'We thought it was going to save us money and all of a sudden we're seeing it's costing twice as much,'" Dell said at a press conference Monday afternoon. "We think it's going to be a multi-cloud world, and we're going to make the on-premises systems very competitive," Dell said.

Companies have built up decades of legacy infrastructure, which needs to be optimized. The savings from transformation can fund the transition to cloud-native apps and "digital transformation," Dell said.

Add "digital transformation" to your buzzword bingo cards. "Digital transformation" is the latest marketing catchphrase for using the cloud, mobile, and other advanced technologies to transform business. David Goulden, president of the Dell infrastructure solutions group, defined "digital transformation" as using IT to drive business. That's something the tech industry has been evangelizing for more than 20 years, but now it's the new hotness again.


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Dell is not alone in advocating hybrid cloud and multi-cloud as the future of IT. Cisco uses a similar pitch. Hewlett Packard Enterprise talks about "hybrid IT," which it defines as public cloud, hybrid cloud, and legacy IT combined together. (See Cisco Faces Up to Public Cloud Threat and Cloud Rains on HPE Earnings.)

Dell, HPE, and Cisco are the leading providers of cloud infrastructure, according to recent analyst research. (See Dell, HPE, Cisco Top Cloud Infrastructure Market – Analysts .)

Also, Google Cloud Platform sees itself as a multi-cloud platform. (See Google's Big Enterprise Cloud Bet-- registration required.)

Related:

— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Friend me on Facebook Editor, Enterprise Cloud News

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Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
5/10/2017 | 2:12:09 PM
Re: Cloud
Yeah, on-prem IT is here to stay for the foreseeable future. 

Dell's comments are self-serving, but no less true for that. 
Ariella
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Ariella,
User Rank: Light Sabre
5/9/2017 | 8:51:44 PM
Cloud
<Cloud is not a place, but rather a way of doing information technology," > I like that formulation. Of course, for some people, you also need to clarify that cloud does not remove physcial data locations from the equation. 
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