Dell Launches New Unit to Provide Social-Media Strategy to Brands
Dell is eyeing a new revenue stream in what's already a crowded space: social-media strategy.
The PC giant is launching a social-media services group that will be competitive with digital agencies, startups such as Dynamic Signal or Crimson Hexagon, and enterprise giants such as Salesforce and IBM as it attempts to transform away from PCs and toward business services.
Dell has been providing both social "listening" and strategy services to 10 clients on a test basis over the past year, including the American Red Cross, Aetna, Caterpillar, Kraft Foods and Clemson University. Now it's planning to make its services available to both new and existing Dell clients.
The idea was borne out of Dell's experience as a social-media practitioner over the past seven years, according to CMO Karen Quintos. She pointed to the 2010 build-out of a "listening command center" at Dell's Round Rock, Texas-headquarters to monitor the company's roughly 25,000 daily social-media mentions as a product it will incorporate into its new business offering.
"Customers regularly request our support to build and scale their own social efforts based on what they have seen us doing in this sphere," said Ms. Quintos in an email.
Dell has been making obvious strides toward becoming a more services-centric company since at least 2009, when it acquired the IT-services provider Perot Systems for $3.9 billion. Dell's services division now has 42,000 employees, most of whom came from Perot, according to Richa Verma, Dell's director of social-media services.
"They want to reposition themselves away from being the PC-based hardware provider into a more strategic business services provider," said Peter O'Neill, a principal analyst at Forrester. He noted that Dell competitors such as Hewlett-Packard and IBM are moving in the same direction, largely due to the fact that it's become difficult to convince enterprise buyers of PCs to switch brands, since the underlying technology is increasingly similar.
Ms. Verma says the social-media space looks like a solid opportunity for Dell based on what it's seen to date.
"The deal sizes may be small, but if you're looking at margins, they're pretty much in line with what we see in the IP services industry," she said.
The business of social "listening" -- monitoring and reacting to what is being said in social media -- is a baseline service already offered by myriad agencies, startups and big enterprise and consulting firms, such as Accenture. If Dell wants to add related activities such as community management, lead generation or the infrastructure to manage brands' social-media presence, it may have to make an acquisition, Mr. O'Neill said.
"I think most of the large enterprises have done their homework on [it], though there's definitely still pent-up demand for this knowledge in the mid-market," he said. "But I think within [the last] 12 months, all the large enterprises -- and that really is Dell's target , companies like themselves -- have already been through the process."
Dell declined to say how many people are working in its social-media services group, but Ms. Quintos said in an email that most have thus far come from marketing and services groups.
To the extent that it now competes with agencies, Dell's new business unit could put it in competition with its own agency holding company partner, WPP.
"I think it's primarily focused on their own customers, so I wouldn't necessarily say they're competing with us," said Paul Dobson, a spokesman for WPP Team Dell.