No. 10: Dell solutions get superpowered

PC-maker adds to its bag of tricks with supercomputing, prime contracting, services

Dell Inc.

Prime IT contracting revenue: $1.6 billion

Location: Round Rock, Texas

Leader: Kevin Rollins, president and CEO

Employees: 65,200

URL: www.dell.com

2006 revenue: $55.9 billion

2006 net earnings: $3.6 billion

2005 revenue: $49.2 billion

2005 net earnings: $3 billion

Fiscal 2006 ended Feb. 3.

Troy West, head of Dell Federal, said the Texas company is trying to shed its image as just a low-cost PC-maker.

Rick Steele

Four years ago, the Japanese Earth Simulator supercomputer was the most powerful system on the planet, causing Congress to wring its hands over the prospect of U.S. scientists falling behind in the world.

Today, there are six supercomputers ? all in the United States ? that are faster than the Earth Simulator, according to the Top500 list of supercomputers. One was built for Sandia National Laboratory by the same company that made its name building inexpensive PCs to order: Dell Inc.

By the time Sandia flipped the switch last year on its new Thunderbird supercomputer, Dell had sold the Energy Department lab more than 4,000 Power-Edge 1850 servers and linked them to achieve a peak performance of 65 trillion operations per second. The Earth Simulator tops out at 41TFLOPS.

High-performance computing is one area where Troy West, head of Dell Federal, said the Round Rock, Texas, company will continue enjoying success in government contracting while it sheds its image as a low-cost PC-maker.

The company ranks at No. 10 on the Top 100 list with about $1.6 billion in prime contracting revenue.

"Customers are increasingly turning to standards-based clusters for high-performance computing, and we're simplifying advanced computing with systems, software and services that address performance needs as well as, or better than, legacy mainframes," West said.

Dell is the only hardware vendor in the Top 10 list of federal contractors. In 2005, the company pulled in $1.6 billion in prime revenue, down from 2004 revenue, but nearly twice what it was in 2003. Overall, the company had revenue of $49.2 billion in fiscal 2005, up 18.7 percent from 2004. Its fiscal 2006 revenue, which the company reported in February, was $55.9 billion.

Dell's vacillating prime-contracting numbers reflect the new ways that West and his team are approaching the government market. (Dell's overall federal revenue remains more than $2 billion, the company said.) In addition to selling direct and working with integrators, Dell increasingly is popping up as a subcontractor on large-scale IT management procurements.

West said Dell now has a dedicated team for working with integrators. As a result, it's getting in on several high-profile wins, such as with EDS Corp. and the Navy-Marine Corps Intranet, and with Harris Corp. and the recently awarded, $600 million Census Bureau project for automating the 2010 Decennial Census.

Dell also has seen significant interest in its year-old Letter of Supply program for small-business contractors, West said. The program lets small businesses offer Dell products through their General Services Administration schedules. It launched with 10 partners in April 2005 and has grown to 14 through what Dell called a careful vetting process.

"We're really finding that [the program] is meeting the needs of customers by offering unique capabilities and custom solutions," as well as meeting some of the requirements for using small businesses and disadvantaged businesses, West said.

In addition to focusing more on partnering, Dell is bulking up its successful professional services arm. One of the fastest growing segments in the company is services, said Jennifer Smith, Dell's civilian and intelligence sales vice president.

"When it comes to services contracts, Dell is better able to do that now than it was in the past," said Shawn McCarthy, program manager for U.S. IT opportunity, government and education at McLean, Va.-based research firm Government Insights, a division of International Data Corp., Framingham, Mass. "People are paying attention, and it makes a big different for them."

But is Dell worried about competing with its partners?

"That is the fine line that we walk," Smith said. "But the kinds of work that [integrators] like to do are not the areas where Dell brings tremendous value and cost-effectiveness."

Last year, Dell Services spent six months with the Pacific Air Force Communications and Information Directorate, helping it streamline its incident response and help desk capabilities. The result, according to the company, has been a 20 percent reduction in the time it takes Air Force administrators to resolve IT problems.

Dell also is looking to its expanded product line to win more government business. The company's foray into enterprise printers has been one of its most unsung success stories. Dell entered the printer market in 2003. By 2005, it was the top-ranked printer maker in J.D. Power and Associates' Printer Customer Satisfaction Study.

But Dell isn't straying far from its bread-and-butter business of supplying built-to-order systems and servers to large enterprises. Among its 2005 wins was a Federal Aviation Administration award of a $100 million blanket purchasing agreement, which grew from a previous relationship with the FAA, Smith said. Under the new BPA, purchasing agents throughout the Transportation Department can access Dell desktops, notebooks, servers, storage devices and peripherals.

And Dell continues to scale its business. Last fall, it opened its largest manufacturing facility to date ? a $100 million plant in North Carolina ? with an eye toward serving its federal customers even faster.

"Having a factory on the Eastern Seaboard allows us to get products to our East Coast customers, including the many customers we have in [Washington] D.C., much quicker," West said.

Additional 2006 Top 100 Profiles
  • No. 1: 12 times the fun for Lockheed

  • No. 2: Northrop takes aim on health IT

  • No. 3: SAIC prepares for public debut

  • No. 4: Revving the acquisition engine

  • No. 5: CSC holds a lure for a buyer

  • No. 6: Raytheon works the system

  • No. 7: L-3 cuts bigger slice of govt pie

  • No. 8: For EDS, steady as she goes

  • No. 9: Booz Allen adapts to stay on top

  • No. 10: Dell solutions get superpowered

  • No. 11: BAE keeps acquisition fires burning

  • No. 12: Despite sale, Anteon's vision lives on

  • No. 13: Intelligence work fuels CACI's growth

  • No. 14: Verizon-MCI combination packs a punch

  • No. 15: Restructured IDS lets Boeing help clients

  • No. 16: ITT Industries aims for the sweet spot

  • No. 17: IBM Corp. steps up as a subcontractor

  • No. 18: Sprint Nextel goes for convergence

  • No. 19: For SRA, the profit is in its people

  • No. 20: It's always mission possible for Unisys

  • Overview: The Billion-Dollar Club

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