May 5, 2021
By Bob O'Donnell
Sometimes all it takes to trigger a big move is to take the first step. With its latest APEX “as a Service” offerings unveiled at Dell Technologies’ TechWorld event, it looks like the company is doing just that. To make sense of it all, let’s put it in context.
Anyone who has been following trends in IT-related technologies for the last few years has undoubtedly come across the “as a service” moniker. Originally introduced as a radical new way to sell business software (SaaS, or software as a service) in the early 2000s, the as-a-service concept has exploded across not only all areas of IT, but even into mainstream consumer life. Groceries as a service? Try Amazon Fresh and Instacart. Music as a service? How about Spotify and Apple Music. You get the idea.
One of the last holdouts to the flexible consumption model that underlies various “as a service” offerings has been enterprise IT-focused hardware that lives within the walls of an organization. Sure, we’ve seen cloud computing services from the likes of Amazon’s AWS, Microsoft’s Azure, Google’s GCP, IBM’s Cloud, etc. grow enormously over the past decade or so, and particularly over the last year.
However, even with that amazing growth, it is well understood that the vast majority of business-focused computing still occurs within corporate data centers or other private locations. The exact percentages vary, but even a conservative estimate of 75% onsite and 25% in the cloud highlights how incredibly important “local” computing efforts still are. Of course, this reality has also led to the explosion of interest in hybrid cloud, which attempts to unite these two groups of computing resources into a cohesive whole.
An important characteristic of all this local computing infrastructure—which sometimes gets generically relabeled as private cloud—is that most of it has been purchased in a traditional manner. That is, the company running or managing the data center makes a capital expense (capex) purchase of the necessary equipment, takes ownership of it and, in most cases, takes on the responsibility of installing, managing, and maintaining it. That’s the way things have worked for decades, but based on these new Dell APEX offerings, the times, it seems, are a’ changing.
With its greatly expanded array of APEX services—incorporating storage, compute, networking and more—Dell is giving its customers the ability to move to an operational expense (opex)-based model for using its storage, servers, and other IT equipment. Through the combined portal of its new APEX Console, customers can now directly purchase access to various types of storage, computing, and other hardware resources on either an as-needed, consumption-driven basis or a subscription basis (depending on the offering). Specifically, Dell Tech expanded its range of APEX Data Storage Services and debuted new APEX Hybrid Cloud and APEX Private Cloud offerings (both of which are built on Dell’s existing Dell Technology Cloud offering). In addition, the company renamed and repositioned some of its consulting, remote management, and flexible usage offerings under the APEX brand. Collectively, these new services move Dell Tech into a more cloud computing-like business model.
Of course, a significant difference with Dell’s APEX offering (as with HPE’s conceptually similar Greenlake products, or for that matter, with hardware-based private cloud offerings such as AWS Outposts or Microsoft’s Azure Stack) is that Dell has to send equipment to a company’s location, set it up, attach it to a company’s existing IT resources and configure it for use. So, instead of being ready for use in 5 minutes, it can take up to 14 days. Given that most of the efforts leveraging these types of technologies will be more premeditated activity and less spontaneous experiment, the additional time is not likely to be a big concern.
In one of its announcements at Dell TechWorld, the company also discussed a partnership with Equinix, a leading co-location facility with numerous sites around the world. Leveraging that connection, interested parties could potentially get access to these “as a service” offerings even faster, since Dell will be stocking these facilities with the necessary hardware. The Equinix connection also allows companies the flexibility to try these “as a service” offerings without any interruptions to their existing environments. In addition, for the new range of edge computing-focused applications that the company also announced at TechWorld—including updates to its Dell EMC Streaming Data Platform and a new Manufacturing Edge Solutions built in conjunction with PTC—the expanded choice of 220+ possible hosting sites available through Equinix will offer other benefits. In particular, using these sites can help companies build applications with lower latencies by processing and analyzing data closer to the point of its creation.
A few interesting, but not necessarily obvious, similarities that the APEX model has to public cloud offerings include the ability to quickly ramp up capabilities as needed. Though the initial install takes longer, Dell provides hardware that has more capabilities than a customer initially requests, giving it the flexibility to immediately turn on additional storage, compute power, etc. as requested. In addition, as with public cloud providers, Dell plans to offers performance guarantees, provide the ability to monitor the performance of workloads, and upgrade the hardware as necessary.
To be clear, Dell will continue to sell its hardware in the traditional manner for the customers who continue to want to purchase it that way. Given the wide-ranging nature and intensity of the announcements, however, it’s clear that the APEX strategy represents a significant pivot for the company. Realistically, initial take-up of the APEX model may only represent a modest percentage of its total sales, as companies experiment with the opex, consumption-based model on a few projects here or there. Still, Dell seems to have seen the writing on the wall in terms of how modern IT departments have begun to work and is making this shift a key part of its future direction. With the often more conservative IT approach that many Dell customers have used up until now, these announcements become that much more important. Even technology laggards are bound to take notice of this new approach and, in the post-pandemic tech-focused era we seem poised to enter, will likely be much more willing to take these steps forward.
A full-scale switch to hardware-as-a-service certainly won’t happen overnight, but it does look to be taking some big steps forward.
Here’s a link to the original column: https://www.linkedin.com/pulse/dells-apex-brings-hardware-service-mainstream-bob-o-donnell/
Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.
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