A year ago, I used this platform to talk about Dell Technologies’ vision to become the most essential technology company for the data era. To say it’s been a consequential year is an understatement. I’m proud to say our team continued to deliver in extraordinary ways for our customers and it showed in our record first-quarter financial results.
But what 2020 made clear to the world is the important role technology plays in keeping us connected, working, learning and living. It will only accelerate from here, propelling us closer to our vision and creating differentiated value for our customers, partners, team members, shareholders and communities.
Industry opportunity
Consider the macro industry trends. The total IT market is a multi-trillion-dollar opportunity. We service only a portion of it today with lots of opportunity to grow our core businesses and flex into new and emerging facets of the industry.
Equally important, the industry is growing. Businesses everywhere are doubling down on their digital transformation agendas and it’s driving a broad and sustained technology investment cycle spurred by the do-anything-from-anywhere economy. According to IDC, IT spending is projected to grow $250 billion in calendar 2021 alone.
Tighten the aperture a bit to our core businesses and the opportunity gets even clearer. Our served addressable market is growing 2x gross domestic product over the next four years.
In 2019, the total addressable market (TAM) for the broader PC ecosystem was approximately $600 billion. Fast forward to calendar year 2025 and it jumps to a projected $750 billion thanks to investments in a hybrid and remote workforce and increased systems per household.
The same is true in infrastructure. The 2019 TAM was approximately $150 billion; we expect it to be $200 billion by 2025. That means growth in areas like servers, storage and networking where we are strong, and hyperconverged infrastructure where we are innovating for the future.
This past year also reinforced our view that the future is multicloud and our customers need a partner like Dell to help them navigate the world of cloud operating environments. We’re no longer in a tech era that rewards customer vendor relationships. Customers need a trusted partner with the expertise, portfolio and ecosystem to help them bring it all together and make it work to their competitive advantage.
Net-net—the industry opportunity is huge and growing, as is multicloud, and we are positioned to win.
Laser focused on growth
Our long-term growth strategy remains unchanged but, as we’ve always done, we continue to evolve and lean into growth areas when and where they arise. We see enormous opportunity to drive growth and subsequently create value for our stakeholders by focusing on three key areas:
• Consolidate, grow and modernize our core businesses: PCs, servers and storage. In our first fiscal quarter, all of our core businesses grew and, importantly, we took share in mid-range storage—a target market for us as we look to expand our buyer base and storage leadership. We also launched our first APEX offerings, our portfolio of IT-as-a-Service solutions. The APEX brand marks a step change for Dell as we re-imagine and modernize our business around customer outcomes, but that doesn’t mean we’re new to as-a-Service. We’ve been helping customers like GE deliver solutions in this type of model that are making the world work more efficiently, reliably and safely.
• Innovate, integrate and partner to build the technology ecosystem of the future. This builds on our philosophy of customer-driven innovation and choice and, coupled with our size and scale, it is a competitive advantage for Dell. When we talk about the ecosystem of the future it includes our ‘first and best’ alliance with VMware—soon to be formalized in a commercial agreement in the pending spinoff transaction. But it also includes innovating and integrating across our ecosystem of value-added partnerships, like our new collaboration with Equinix, an infrastructure company working with us to deliver a public cloud experience to customers while maintaining control over their own data.
• Lean into high value growth opportunities where we have a unique right to win, like with hybrid and private cloud, edge computing, telecom and data management. Collectively, these areas expand our addressable TAM by another $75 billion today and these markets are growing in the mid-teens. We made news recently with our new edge solutions and open, cloud-native telecom infrastructure and ecosystem. These are the first of many solutions to come as we help customers, like Vodafone and DISH Network, get more value from the edge opportunity headed our way. Gartner predicts 75% of enterprise data will be created and processed outside the data center or cloud by 2025. It’s the next battleground in tech and we’re positioned to lead in this space with our global reach and expertise in distributed computing capabilities.
Stakeholder value
As we go after these promising growth opportunities, we are also laser focused on creating shareholder value through disciplined capital allocation and consistent execution. We have an owner’s mindset, which tightly aligns us with the interests of our shareholders. We expect to achieve an investment grade corporate family rating following the close of the VMware spin transaction. Going forward, we will be reinvesting in growth opportunities, returning capital to shareholders, and pursuing M&A that accelerates our strategy—all while maintaining an investment grade balance sheet.
I’ve been at Dell 24 years and I’m proud of how we’ve continually innovated and evolved to meet the changing needs of our customers. We have reinvented categories and ourselves many times before. And we are doing it again. What Dell did for the PC in the 80s and the datacenter in the 90s, we will do again in the data era.
And the time is right. Technology has never been more relevant or more central to the way we live our lives. The global economy is rebounding, and the IT market is growing. The macro is creating a tailwind for Dell and we are bullish on our ability to execute our strategy, grow and achieve our vision of becoming the essential tech company of the data era. And when we do, we’ll create differentiated, sustainable value for our stakeholders around the world.
