Partners looking for evidence of the divergent impact the COVID-19 pandemic is having on the channel don’t have to look too far beyond the latest first quarter results from Dell Technologies.
The Client Solutions Group at Dell saw a 2% increase in revenue ($11.1 billion) year over year, which included double-digit unit and revenue growth in commercial notebooks and high-single-digit revenue growth in mobile workstations.
In contrast, revenue for the Infrastructure Solutions Group ($7.6 billion), an 8% decrease year-over-year. Storage revenue was $3.8 billion, down 5% year-over-year, while servers and networking revenue was $3.8 billion, a 10% decline year over year.
Dell like most PC vendors saw a surge in demand as organizations invested in mobile computing systems to better enable their employees to work from home.
Client product orders sold through the channel were up 12% year over year, while server and storage sales through the channel dropped 3% and 10%, respectively, says Cheryl Cook, senior vice president of global partner and embedded and edge solutions marketing at Dell.
Overall, channel orders grew 6% year over year, which indicates channel partners are riding a wave of PC upgrades to mitigate lost IT infrastructure opportunities resulting from the temporary closing of so many data centers. Dell partners delivered about 15,000 net-new or reactivated customers, adds Cook.
Partners that have a VMware-based practice are faring better than those that don’t, notes Cook. VMware orders increased 89% year over year. For the first quarter, VMware generated $2.8 billion in revenue, a 12% increase.
It’s hard to say at this point how much of that VMware revenue is being driven by new licenses for its core virtual machine software versus storage and networking software. It’s also too early to determine to what degree that revenue may have been driven prior to the onslaught of the pandemic, which in the last few months has accelerated the rate at which application workloads are moving into the cloud. Some of those workloads will clearly continue to run on a VMware stack as organizations embrace hybrid cloud computing, but not all.
It’s also not clear to what degree the boost in PC sales is sustainable as more organizations start to bring employees back to the office.
As a result, Dell is not able to really make any forecast about the current quarter, says Cook. However, the lockdown on major markets was longer than anticipated and there is currently a resurgence of the pandemic across much of the U.S.
In the short term, partners need to focus on managing cash flow wisely, which Cook notes is a major reason to rely on Dell for financing.
“Cash flow optimization is critical,” says Cook.
Regardless of what lies ahead, Cook says Dell remains confident channel partners are making investments in the future. Dell issued more than 15,600 partner credentials in the first quarter, notes Cook.
The challenge for partners, of course, will be making sure those credentials apply to solutions their customers still find relevant.
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