Newsmaker: Dell at your service

Dell became a PC behemoth by making the process of buying a computer as simple and predictable as getting lunch at a fast-food restaurant.

In the past few years, the Round Rock, Texas-based company has turned its operational abilities in winnowing costs out of manufacturing to the services business.

Dell Services is now one of the fastest-growing units in the company. Can services, which require humans to help other humans, be racked, stacked and packaged? Gary Cotshott, vice president of Dell Services, says they can. And he's not alone. Tata Consultancy Services, Infosys Technologies and other Indian giants have been growing at more than 30 percent a year by doing this.

Cotshott, who at close to 6 feet 6 inches is one of the tallest guys in IT, recently spoke with News.com's Michael Kanellos and Charles Cooper about Dell's plans and the demise of the all-you-can-eat model.

Q: Why don't you give us the quick rundown on Dell Services?
Cotshott: I think you know that we're pushing towards our $60 billion objective, which we put in place some years ago. We're a little bit ahead of schedule.

As a matter of fact, we cast a new objective for the company, which is to reach $80 billion (in annual revenue) in the next three to four years, and obviously there are various components to that. One of those is services, which has continued to grow very aggressively. In this past quarter, we just finished up at about a $4.4 billion annualized run rate. We are growing at 30 percent year on year.

What sort of engagements are you looking for?
Cotshott: We've continued to evolve it, but yet stay focused on what's important to Dell. We're not trying to be the next HP or IBM Global Services, no need to, no, thank you. We address about $90 billion out of a $600-plus billion services market in the world.

I think the days of the big buffet table, "all you can eat" outsourcing are dead.

We obviously deploy and support the products that we put into the market. In addition, we provide a suite of professional services: Unix to Linux migrations, Unix to Microsoft, Exchange migrations. Some customers have deployed an infrastructure fairly inefficiently, and so they expect that they need to consolidate it. We sell a lot of high-performance systems as well, so we do a lot of systems optimization and tuning.

Services seems sort of "un-Dell," because you're not talking about efficiencies in manufacturing.
Cotshott: Well, so we see the world differently, right? We believe there's an "S" curve of standardization and commoditization for services. Many of our competitors want to keep services up on the proprietary level. You know: Lock you in, high margin, you can't get away from me.

But over a period of time, you've seen certain services that have come down that commoditization curve. There are processes and approaches that can be utilized, that are highly efficient.

We also have a very significant partner ecosystem that we use as part of our business model. We always have a certain amount of competency in everything we do in Dell Services, but we make very important decisions around how deep the competency needs to be. In some cases, it's deep. In other words, we provide almost all of it, but

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