Dell Aims To Take A Bite Out Of Cisco With New Enterprise Talent

Dell is moving to grab enterprise share from rival Cisco Systems after luring away the technology visionary behind Cisco's wildly successful Unified Compute System (UCS).

Dell's decision to bring on board former Cisco Vice President and General Manager of Computing Systems Paul Perez as chief technology officer of the Dell Enterprise Solutions Group is a sign that Dell is ready and willing to lay down an enterprise technology architecture challenge to Cisco, said partners. Perez was one of the driving forces behind Cisco's revolutionary UCS architecture.

"There is no question that Dell is betting big on their strategy to grow faster in the enterprise business by bringing on talent like Perez," said Bob Venero, CEO of Future Tech, a Holbrook, N.Y.-based Dell and Cisco partner. "Dell is on a tear on what they are going to try to accomplish in the enterprise. You have the guy who understands UCS inside and out leaving to join Dell. Is Cisco vulnerable? Yes."

[Related: Cisco Partners Hope Networking Giant Will Make Big Moves In Hyper-Converged Market ]

Perez's departure comes at a critical time for Cisco -- one of the few server vendors that does not have its own hyper-converged infrastructure offering. As the hyper-converged market gains momentum, partners said, Cisco needs to build, or buy, new technology to establish itself as a bona fide player in the space.

In contrast, Dell in February expanded its hyper-converged infrastructure appliance line with two new models based on its latest server hardware combined with Nutanix's software stack. Dell's original Nutanix-based hyper-converged infrastructure appliances shipped starting in November based on Dell's 12th-generation servers.

Dell isn't just adding top technology talent to fuel its enterprise challenge to Cisco, the company also is adding top channel talent. At the same time it hired Perez last month, it brought on board former AMD CEO Rory Read, a 30-year industry veteran with deep channel expertise, as COO and president of Worldwide Commercial Sales.

The hiring of Read and Perez signals that Dell Enterprise Solutions Chief Commercial Officer and President Marius Haas is building an enterprise "dream team," said Venero.

"Marius has brought on two top industry generals to provide a more robust enterprise attack and grow the channel business," said Venero. "Both Read and Perez are very smart guys. For them to make a move to Dell shows the writing is on the wall as to where Dell is today and where it is going to be tomorrow."

Venero said his Dell business is on the rise and his Cisco business is in decline. He said customers are embracing Dell's open standards in compute storage and networking as opposed to Cisco's proprietary offerings. "With the knowledge and breadth Perez has of Cisco UCS, I see Dell bringing its open standards to another level," he said.

In a prepared statement after his appointment on March 23, Perez said he sees Dell's "best days" ahead. "It’s very clear the industry is moving towards software-defined data centers running on industry standard x86 servers, and Dell, with its strength in compute and storage, and growing networking portfolio, is poised to lead this transition," he said. "I am thrilled to be at the center of architecting and designing the solutions that enable customers to achieve this vision and to do so powered by Dell."

Cisco, for its part, would not comment specifically on what impact Perez's departure will have on the company. But it did acknowledge that UCS has driven dramatic sales growth for the company.

"Cisco UCS is one of the company’s all-time strongest success stories," said Cisco in a prepared statement. "In just six years, UCS has reached an over $3 billion run rate with more than 41,000 customers. Eighty five percent of the Fortune 500 has chosen UCS because of its innovative architecture, and last quarter saw a 40 percent growth year over year, demonstrating how Cisco’s differentiated approach continues to resonate with customers."

Cisco sold about $770 million worth of servers fourth quarter of 2014, up 19.1 percent, according to market researcher IDC, giving it a fifth-place position for the quarter.

Dell, meanwhile, captured the No. 2 spot in the quarter, selling $2.4 billion worth of servers, up 11.9 percent over the same period last year, according to market researcher IDC.

Stephen Monteros, vice president of business development and strategic initiatives at SigmaNet, an Ontario, Calif.-based Dell and Cisco partner, No. 119 on the CRN SP500, said the addition of Perez and Read is proof positive of Dell's channel resolve."This says, in fact, that they are going to move more to the channel," Monteros said.

Perez, Monteros said, "implemented a great [channel] program at UCS, and I think he's going to be able to integrate some of that at Dell."

It isn't a surprise that Dell was able to attract executives like Read and Perez, given the gains Dell is making as a privately held company, said Monteros. "Look at the results," he said. "When they went private, people thought [Dell founder and CEO] Michael Dell was crazy, but he's been able to execute. They've been able to execute on a strategy, and that's very appealing. Their pitch is that they're growing faster, and they offer more opportunity."

Dell is now SigmaNet's second-largest vendor, up from the fifth-largest some four years ago. That said, Cisco is SigmaNet's biggest vendor, Monteros said. "Each one has a position in the market, and each one is a market leader in certain types of business," Monteros said. "Cisco would love us to sell only Cisco, and Dell would love us to sell only Dell, but not one manufactures best-of-breed for everything."

Michael Goldstein, CEO of LAN Infotech, Fort Lauderdale, Fla., said bringing on top talent like Perez and Read shows Dell is ready to take advantage of changing conditions among its biggest competitors.

"They're putting skin in the game, just like they said they would," Goldstein said. "They're looking to monopolize on the moment with changes happening at HP, at Cisco and at Lenovo, and they are going to keep the pedal to the metal. Dell is a one-stop shop for computing and security needs. HP is separating; there was the IBM-Lenovo split. From Dell, we've seen a consistent message and consistent products."

LAN Infotech does more than 30 percent of its hardware business with Dell, said Goldstein. "They have a compelling story to tell today," he said. "They're in the right place in the right time, and people who were the cornerstones of the computing marketplace are scrambling."

Dell's Haas, for his part, said the hiring of Perez moves the technology discussion around Dell's future-ready architecture to "an even higher" level.

Besides Perez, Dell recently brought on board Jim Ganthier, the former vice president of global marketing for Hewlett-Packard's server division, a 23-year industry veteran, as vice president and general manager of engineered solutions and cloud.

As for the hiring of Read, Haas said it will open the door for Dell to be much more aggressive with the channel ecosystem. "He brings a tremendous amount of experience and great relationships to Dell," said Haas. "He is going to allow us to become much more educated on how we cover all of the market with a very strong omnichannel approach, and do that at a much more accelerated rate," he said.

The addition of the top talent comes with Dell growing its business faster than competitors in every region in the world, said Haas. "There is clearly market momentum in our favor," he said. What we want to do is double down on that opportunity and the momentum we are generating. The way to do that is to bring in great talent that ups the playing field for us and makes us even more competitive in that market."

Mark Haranas, Steven Burke and Kevin McLaughlin contributed to this story.

PUBLISHED APRIL 3, 2015