Michael Dell Says Public Cloud Is Important, But It’s Not Everything

Jul 17, 2017

Dell Technologies CEO Michael Dell says he's happy for his company to sell technology gear to public cloud providers like Amazon and Microsoft. But he argues that his company's bet to continue focusing on technology that corporations run internally is paying off.

Dell made the remarks at Fortune's Brainstorm Tech conference in Aspen, Colo. on Monday.

As exemplified by Amazon (amzn) Web Services and Microsoft (msft) Azure, public cloud is a model in which companies move data and software to data centers run by a single provider, instead of building more of their own facilities. Public cloud is seen as the way new information technologies are being deployed.

In Dell's view, however, this is not a one-way trip.

"There's a boomerang of companies moving to public cloud [coming back]," Dell said. "We're not against it, but it's not the right place to put all workloads."

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For 90% of a company's computing tasks, running them in-house or in a co-location center costs less than public cloud, Dell said. A co-location center is a data center used by many businesses, each of which controls their own hardware and software.

"AWS gets expensive when you scale it up," Dell said, a contention that Amazon would likely dispute.

Public clouds typically rent their resources by the hour and by the amount of storage used, so they suit spiky work loads. But owning your own resources may be better for steady jobs, Dell noted. "If I come to Aspen for one or two nights, I stay at the St. Regis. But if I come a lot maybe I buy a house," he said.

Related: Michael Dell Makes His Case for Dell Technologies`

Dell appeared onstage at the conference with Egon Durban, managing director of private equity firm Silver Lake, whom he first met five years ago at Brainstorm Tech. In 2013, Silver Lake took Dell private, under the rationale that privately held companies are under less short-term shareholder pressures than private companies.

On Monday, back in Aspen again, both executives said big bet has turned out well for them. It's difficult for investors and executives in public companies to take risky and gutsy decisions, Durban said.

Dell's $67 billion buyout of business technology giant EMC last year would have fallen into that risky category. Dell characterized that transaction, which included EMC's constituent companies VMware (vmw), Pivotal, and RSA, as "probably the most complex technology M&A integration in history."

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