IDG News Service: What's Dell's applications strategy? Applications was one of the four focus areas you talked about last year, along with systems management, security and data analytics. You offer hosted products from Salesforce.com, Adobe and Pardot, you were going to add Microsoft Great Plains and Intuit Quickbooks. What's the plan now?
Swainson: It's an area we haven't figured out yet, quite honestly. We made one change between then and now: we decided it was more of a services play than a software play, so we moved the hosted business I had over to the services division. The hosted applications market looks like it has a lot of potential but it's taking a long time to take off. What I decided to do after a year of experimentation was to focus on the three other businesses I had that were growing faster. So Dell is still thinking about hosted applications, but I'm not.
IDG News Service: It just seems like such a good fit with your focus on small and mid-sized businesses.
Swainson: The challenge is that it's a different customer, it's a different selling cycle, it's quite heavily fragmented, and the only real way to make money out of it I think is to own your own IP [intellectual property], and the IP is very expensive. Those were the conundrums we faced as we tried to figure out how to make money from this.
IDG News Service: People have talked about Quest as the glue that binds your other software acquisitions together. How do you view Quest? There seems to be technologies you can apply across all the other different areas.
Swainson: That's what makes it so attractive for us. I sometimes described [Dell's software business] as not really a company, it was more like a VC company masquerading as a business. You had all these acquired businesses sitting there more or less unconsolidated. They had consolidated their IT systems and things like that, but the development teams and the product teams were still sort of sitting there in virginal form, and that provided us with an enormous base to build on. They had a data protection business and we put that together with ours and now we have a $200 million data protection business. They had a relatively small endpoint management business, we had quite a big one and we put those together and now we have a $150 million endpoint management business.
IDG News Service: Having that many products is a blessing and a curse. Have you done much paring back? You have a few different data protection products, a few virtualization platforms.
Swainson: We had four data protection products, several virtualization, a bunch of performance management. The first time we did the count we decided we had something like 200 products in Quest alone, and after we went through in gruesome detail and eliminated the obvious overlaps. We've got about 40 or 50 products.
IDG News Service: That's a big paring back.
Swainson: A lot of this was features that were masquerading as products. So things that should never have been products, like utilities, we'd merge back into the performance management product and have a suite instead of trying to sell it separately. Some of it was straight overlap. In storage management, we really did have four data protection products, so now we're going through the technical process of taking the best of each product and putting it together, on a common framework. That's the long hard way to do it but sometimes it's worth it because there's a $200 million revenue stream and it's worth protecting.
IDG News Service: Which one wins, the one with the most customers?