Michael Dell: 'A Big Second Half'

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What potential do you see in cloud computing?

We're also powering some of the largest cloud computing companies and Web 2.0 companies—Facebook, Microsoft, Amazon (AMZN), and Yahoo. We created a whole new business just to build custom products for those customers. Now it's a several-hundred-million-dollar business and it will be a billion-dollar business in a couple of years. It's on a tear … All those Superpokes—that's a lot of servers. Throwing sheep—you need a lot of servers.

How are international sales going? Everyone talks about the BRIC countries, but what about the Mideast? What kind of growth are you seeing there?

We see the massive growth as outside the U.S. It's becoming more of a population-driven phenomenon like the cell phone. We're really focused on winning in the emerging countries … . In April, I was in Dubai, Saudi Arabia, Israel, and Jordan. Morocco's becoming a great market—all of Africa is growing really fast. All former Soviet republics are growing fast as well. Inside Dell we call it "BRIC plus 10." The "plus 10" includes Egypt, Indonesia, Vietnam, Ukraine, and Columbia. Follow the money—it's pretty simple.

How are you making sure the PC stays relevant in places where a lot of computing can be done on a cell phone?

If you think about these two massive spaces, you have 4 billion cell phones and 1.4 billion PCs. And in the little pond in the middle you have some amoebae popping up called smartphones, netbooks, mobile Internet devices, and ultramobile PCs, and terms that people make up in meetings that don't mean anything. From 2 inches to 12 inches, there will be all kinds of different devices that will be opportunities [for Dell]. … One of the first things we see when we see those devices is the infrastructure requirement—server farms and storage farms that we build. The line between what's a smartphone, what's a mobile Internet device, what's an ultramobile PC—it's all going to disappear.

What are some of the changes you've made in the way you're selling to the small and midsize business market?

When we would show up at a customer two or three years ago, we'd say, "Hey, we've got a new shiny box. It's got this many gigabytes, this many terabytes, and this many slots and processors." But that's not generally the way the product is sold now. It's, "OK, tell me about your problems, what are you trying to accomplish, and let's talk solutions." Customers are saying, "I don't care if it costs a little bit more or a little less than the other guy, I have to believe that you really know what the hell you're doing." So ramping up the solution quotient for us has been really key.

Along with this comes the growth of our services business. We have a fast-growing services business, roughly a $7 billion business now. We've acquired some companies to add onto that; we'll probably acquire more. We also have a lot of partners. There are a lot of companies out there that are natural partners for Dell, and probably even more after the [Electronic Data Systems (EDS)] acquisition by HP.

Obviously, you're cutting jobs. But are you hiring a lot more elsewhere?

If you're an engineer or you work directly with customers, we're hiring you. And we're hiring you all over the world. If you're not creating new products, you're not building new services, you're not innovating in the technology areas where we're growing, or you're not building customer relationships—we're figuring out how to make all those other jobs as efficient as we can.

Ricadela is a writer for BusinessWeek in Silicon Valley.