Steve Jobs and Michael Dell recently met informally over lunch to have a chat without handlers, press or investment bankers. Dell reached out to Jobs with the idea of the meeting and Steve graciously accepted the invitation. Michael and Steve felt a kinship in that both were founders and pioneers in the technology business who returned to run their respective companies during times of turmoil.
As good fortune would have it, we were sitting at a table nearby and were able to create a rough transcript of their conversation, unbeknownst to either of them. Here’s what we heard.
MD: Hi Steve. Congratulations on all your recent success. Thanks for taking the time to meet and talk.
SJ: My pleasure, Michael. I was happy to see that you stepped back into running Dell. Your replacement was making a real mess of it there.
MD: Yeah, it was a difficult decision since I handpicked my successor, but my name is on the box, after all. There is no question many mistakes were made after my departure as CEO. However, we still have a healthy core business that people don’t really give us credit for and I’ve still got a great deal of energy and experience to bring to the company to get it back to prominence in the industry. I see you’ve done an exemplary job of creating a media halo for Apple since your return.
SJ: Halo?! I wouldn’t call it that! They jumped on us for using DRM in iTunes, for “stealing” the iPhone name from Cisco, for using AT&T as our carrier and for reducing prices too quickly. It’s murder out there!
MD: Come on, Steve, it’s just us here!
SJ (grins): Well okay, so people are in love with Apple again. Who can blame them? Have you tried our machines? (grins some more)
MD: I only use computers that I build myself. That’s how I got here.
SJ: Well then, why are we having lunch?
MD: Steve there’s no question Apple is on a roll. But there’s much more to do and Apple isn’t well positioned everywhere. I’m thinking we might be able to help each other.
SJ: If you’re talking about taking over our hardware business like those geniuses at Gartner Group suggested in 2006 you are out of your mind. And don’t take it the wrong way but I don’t think our stockholders would be enthusiastic about a closer association with Dell.
MD: Steve, I’m talking about much bigger things than making boxes; that’s done. We are at the beginning of a huge investment cycle that will be the result of the shift to cloud computing but also the convergence of the real and virtual world. More Apple stores will be visited by real people in virtual space rather than on 59th Street.
SJ: What do you think the iPhone is about? It will revolutionize how we live, work and play. At least a million people see this already but more don’t yet realize it. The operating system, interface and the massive application base that will emerge will change the way we interact with the online world in our daily life. We’re just scratching the surface with our technology. We’ve got a lot of great ideas and patents in the pipeline. Ten years ago the Blackberry was a specialized niche product. Now many people spend more time with their Blackberry than their computer. We’re going to pass RIM like they are standing still. It’s the key wedge that will separate enterprise users from Microsoft. Once that happens, it’s a free-for-all and we win big.
MD: That’s exactly on the path of where we are going. Apple is a strong position in the mobile and client space. But the heavy lifting is set to go on by the servers, storage and networks that enable very powerful cloud-based services. More real interaction is shifting to virtual worlds. The compute power and software required for this is an immense business opportunity.
SJ: We sell servers and online services! And we understand how to deliver technology and entertainment services like iTunes, AppleTV and MobileMe. Anyway, isn’t Google going to handle all that? Why would I want to compete with them?
MD: You may not have a choice Steve. You’re going to find your market limited if you allow them to own cloud-based technology services. Besides they clearly have their own vision of the mobile internet and are trying to drive Android into the picture. Not to mention the fact that after years of effort you’re still struggling with MobileMe.
SJ: My staff gives me briefings on all this stuff every day. At least you didn’t bring up Adobe; those guys bug me. We’re doing extremely well, the iPhone is a Trojan horse and we have a great pipeline of new products. What exactly are you talking about doing? (a little exasperated)
MD: It’s still early days in these markets Steve. Although the spotlight today is on the consumer space, the wave of enterprise adoption is going to be huge. Google still has a small footprint in the enterprise. We are big there in both systems and storage. You are largely absent from the high end gaming market but Dell is there. While Microsoft, Sony and Nintendo fight for the consumer market in gaming we can own the next generation of interfaces, interactivity and applications in the enterprise.
SJ: We’re making progress in the enterprise. Some very large companies are starting to roll out the iPhone now. That’s the first domino to fall and then we can infiltrate the base.
MD: Surely but too slowly. Industry data suggests that an amazing 25% of enterprises want to incorporate Apple hardware but only 8% have plans to do so. That’s a lot to leave on the table.
SJ: But we will be getting them faster than they think. Those numbers keep moving up. Of course, we’d love to have the full 25% that want to have Apple be able to do it. What’s stopping them?
MD: These guys aren’t buying computers to organize their music libraries and photo albums. (smiles)
SJ: Very funny. We make very powerful systems and do have large enterprises running on our infrastructure. Many of the creative industries have long had us as their standard.
MD: Steve, that’s true but I’m talking about companies like Federal Express, Citibank, GE and the rest of the global 5000. Many are installing the most advanced computing infrastructure in the world. But they need suppliers who fit with their business practices and operating model; delivery, support, escalation procedures, interoperability, management and a raft of things that require a focused approach. It’s something that we know well and rank near the top of the field.
SJ: Yeah okay so we can be more corporate. We know that. It’s not like we aren’t moving in that direction. We prefer to do it with radical new offerings like than iPhone rather than playing golf with executives.
MD: These days your golf game doesn’t really enter into it. Many of the big deals in the space are even done via auction. It’s a tough business but we know how to do it as well if not better than most of the players. In addition we’ve been investing heavily in technology that can run the modern interfaces and applications that you see in games today but will increasingly be a common feature in the enterprise. At the same time we are expanding into the SaaS and social computing space in the IT space.
SJ: I appreciate your prowess in some of these related areas but it doesn’t translate into why we should be working together. We have been working on quite a bit of this ourselves and you know there are other companies out there like IBM and Hewlett Packard that you may have heard of. (smiles)
MD: We overlap in some key areas, more so than we did in 2006 now that Apple is on Intel. We also complement each other very well. There’s a Yin and Yang here that could make up a potent whole.
SJ: I’m not Yin, and sure as hell no Yang. I hate all that corporate enterprise crap. Reminds me of guys like John Sculley. (winces, then drinks some water as if to wash a bad taste out of his mouth)
MD: Dell could help integrate Apple into the next-generation of enterprise infrastructure. It’s going to be a big wave of investment that will embrace not just service-based or cloud computing but also virtual reality. It’s going to have a dramatic effect on business. As partners we could do way more, much faster than companies like HP, IBM or Cisco even though they have a lead in some areas.
SJ: Yeah, I’m still listening.
MD: We’d have to work out the details, but my idea is to become the enterprise arm of your business. We would work closely with companies who want to incorporate Apple to provide the pieces they need. We’d also incorporate Apple technologies into our high-performance and corporate cloud computing solutions. And we would both work together to pioneer virtual stores in places like Second Life.
SJ: Okay so tell me Michael, what’s in it for Dell? And why do you think Apple should be interested?
MD: First of all we’d be selling your great computers. (smiles slightly sardonically) But seriously it would serve to further differentiate us from traditional enterprise vendors like HP, IBM or Sun. Secondly it gives us a way to participate more in the mobile internet space which is where most of the growth on the client side is going to be. I can certainly see the disruptive power of the iPhone and how it could well eclipse other offerings, but to do so it will need to do well in the back office of large companies, not just in the hands of a user. Lastly I think we are both leaders in what we do best but are facing some serious competition from the old guard. Together we can shake things up and bring them down more quickly.
SJ: Interesting. Go on.
MD: And it’s no secret that virtualization is now an enterprise strategy. Apple is now on Intel chips which means that the Windows OS and other components can run easily on any Apple HW. Of course I’d also like to get Apple SW components integrated on Dell HW. Doing so would mean a much bigger opportunity for Apple SW inside the cloud.
SJ: Alright, alright I can see that we may have something here.
MD: We can let Sony, Microsoft and Nintendo have the game console in the home but we can’t leave the business market to them. As more activity moves online into virtual worlds we need to be there to capitalize. The servers, storage, services and software should all be Apple/Dell.
SJ: You’ve got our names in the right order there. (smiles) We actually have some work and patents in the immersive virtual space around shopping that we picked up years ago. But until now there hasn’t been much of a market. We launched AppleTV because at least the video market is real.
MD: These things grow slowly for a long time and then all of a sudden they’re huge. We’re seeing real movement now and there are signs of what the future world is going to be. Look at the amazing success of devices like the Wii, the growth of social computing and online communities. These elements are coming together now. IBM and Cisco are already very active and investing here.
SJ: It would be a shame to let a big opportunity like this slide by.
MD: Let’s consolidate our individual strengths into a powerhouse. Apple is the only player who has major positions and assets in software, the mobile internet and online entertainment. Dell brings the enterprise-class capability along with scale, storage solutions, online services and immersive computing. We can exploit the movement to virtualization and the cloud to marginalize the impact of competitors like Microsoft, Research in Motion, Hewlett Packard and IBM. Maybe we will also be able to keep the great Google at bay.
SJ: For a guy who still knows how to use a soldering iron you have some good ideas. (smiles)
MD: We’ve both come a long way Steve. We’ve also both got much farther to go. (smiles back)
[This interview is purely fictional and has been produced purely for entertainment purposes. Any resemblence to an actual conversation between Steve Jobs and Michael Dell in the past or the future is purely coincidental.]
