An Inside Look: Dell’s R&D center in Israel
One of the largest technology corporations in the world, Dell, has a presence in Israel that is not at all related to desktop computers or laptops. We went for a tour behind the scenes to look inside
A little known fact: Many international high-tech companies maintain development centers in Israel. Israel’s human capital talent and its large number of startups has managed to turn a lot of heads from around the world. Subsequent exits of a number of leading Israeli startup companies served as the bridge head to establish research and development centers for the acquiring companies in Israel. As part of a Geektime’s an Inside Look series, we will visit some of these development centers looking to understand the scale of these companies’ presence in Israel, what is their role and how do they affect their respective company global operations.
Dell is a privately held international company that develops, sells, repairs and provides support for computers and related products and a host of solutions for business customers. Among Dell’s products can be found, personal computers, servers, storage devices, network switches, computer accessories, televisions, cameras, printers and electronics built by other manufacturers. One third of the company’s business comes from laptops and PC’s, one-third stems from enterprise applications, network systems and communications, and the remaining third is dedicated to other consumer based hardware or software products.
Dell was founded in 1984 by Michael Dell for whom it was named. The company is base out of Round Rock, Texas and is one of the largest technology corporations in the world employing no less than 103,300 people worldwide. Up until last October Dell was a publicly traded company, at which point on October 30th it was bought back by Michael and others in one of the more complicated transactions of recent times. Dell is a permanent member of the Fortune 500 and was ranked in 2012 as the world’s third largest PC manufacturer after HP and Lenovo.
Not many people know that the company also has an Israel based R&D center. Since 2008 Dell has acquired between 15-20 companies, including two Israeli companies; Exanet and World Quest. Presently, the Company’s operations are managed by CEO Shlomy Quartler, partnering with some 15 distributors and resellers. Development and operations of the company take place at two centers focusing on systems and products that Dell sells to the global marketplace.
Exanet: From Bankruptcy Court to growth and stability
Dell acquired Exanet in February of 2010, a deal that saved the company from total collapse after shutting down operations in 2009 following a cash flow issue and an inability to pay its suppliers. It all began when the company was unable to repay a $10M loan from Kreos Capital and its cash problems continued to grow from there. They eventually went to court along with 50 of the 62 employees in Israel and brokered a deal with CEO Mark Weiner to appoint attorney Erez Hebber to break up the company.
To make a long story short, during this time three of the investors of Exanet – Eitan Wertheimer, Evergreen Venture Capital and Giora Yaron – blocked a $20M investment in the works for the company. Instead, Dell acquired the company for $12.5M as part of a joint venture. After the acquisition, the company restarted operations as Dell Israel, which according to Yossi Ben-Shoshan, director of Dell’s R&D center in Israel, was an old dream of Michael Dell.
After the purchase Exanet’s product, an operating system software for NAS servers, has become the operating system of Dell’s storage products called Dell Scalable File System. After acquiring the company known as Compellent, Dell changed changed its name to FluidFS system, and continued to develop it in Israel to work with its various storage products, PowerVault, EquaLogic and Compellent. At the time of the purchase Exanet numbered about 40 employees, mostly developers. Today the company employs about 130 workers, 110 of whom are located in the development center of Dell Herzliya, and 20 more are working abroad.
Dell’s development center in Israel has a unique storage lab, one of three storage labs of its kind operated by the company around the world, and the only one outside the United States. “We build customer environments where computers run various applications and tests, such as Extreme Stress Testing, Performance and Availability. Our goal is to simulate what the customer does every day, every hour and at every load level, and to be a few notches above the worst case scenario,” explains Gil Nadel, Chief Architect at Dell Dell Israel’s storage lab. “The customer experience comes in the form of hardware in the end, but what we do here in Israel is to make sure the software inside is running properly.”
During my visit to Herzliya, one thing really stood out: At Dell’s center you don’t find any gaming machines, luxury cafeterias and robots that clean the hallways. What they do exude is a humility and an extremely dedicated work ethic: “Our employees are hard-core developers, mostly C++ people. We don’t allow ourselves to take on employees who are too young and green with no real experience. Dell has a very high level of reliability making experience a top quality of the programmers who work there,” says Yossi Ben-Shoshan, “To come and work for Dell you need to have between 3-5 years of experience at the very least.”
Quest – Dell Software: How to be acquired for $2.4B?
In July of 2012, Dell acquired the global software company Quest for $2.4B in one of the biggest deals of recent memory. Quest Software develops database management, server management, user environments, access, performance monitoring and other systems that process large amounts of data. This part of the Israeli development center started as a startup called Neptune, which developed a unique data collection technology for Oracle databases. The company was acquired in 1999 by Quest who established their development center in Israel. Like the story of Exanet and Dell, Neptune was also suffering from cash flow problems and was acquired in a Talent Acquisition transaction toward the end of her run.
Quest began operations anew in Israel with only three people and quickly grew, hiring additional employees and integrating its activities with Quest. The technology Neptune had developed at that time for Oracle gave customers a way to collect performance data from Oracle in a fast and inexpensive manner, relatively speaking. After the acquisition, Quest wanted to make this technology into a product in its own right and so it was released to the general market the year 2000 under the name SQL Lab as a diagnostics software for Oracle.
Israel Kalush, whom I interviewed for this article, joined Quest in 2001 as director of development. Since Kalush joined the company, Quest began extensive operations in software. The company grew from 3 people to 20, and in 2001 developed in Israel a Quest business analytics solution for Oracle called Performance Analysis For Oracle. In 2003, Kalush was appointed CEO of Quest, to replace Moti Darwish. After several years, the company launched a joint product with Quest Global called Foglight For Databases. The enterprise product was intended to provide a comprehensive monitoring solution of databases around the clock.
Foglight for Databases is a product under Dell’s corporate monitoring platform that allows for the 24×7 monitoring of diagnostics of the IT environment including detection and warning of emerging problems and failures in practice. The product supports workflows for both novice and experienced DBA’s alike. The Israeli branch is responsible for initiating, designing and developing modules responsible for monitoring databases such as Oracle, SQL Server DB/2 & Sybase. Additionally the product serves as a development engine of algorithms on Foglight for Pattern Recognition and prediction performance.
Performance Analysis for Databases is suite of products that combines the content world of BI and Big Data with the content world of performance analysis database. The product allows you to drill down into sophisticated BI data to identify performance bottlenecks, tuning options, performance comparisons etc. The product uses complex Hacking techniques to collect the data directly from high-speed databases without Overhead.
“The idea behind buying Quest was clear to everyone”
In 2012, Dell purchased Quest and Kalush says the idea behind the acquisition was clear: “At the time, the idea was to buy Quest and make it the base of Dell’s software division.” Dell began to promote its software division, called Dell Software and went on a shopping spree worldwide to find companies that could contribute to its business objectives. “Dell decided to enter the game with the intention of a quickly growing to a competitive position within the space, so one of its obvious choices of purchases to help meet that objective was Quest.” A the time of the sale, Quest employed approximately 4,000 people worldwide.
“For Dell, the acquisition of Quest resulted in an impressive portfolio of products with synergy in its product line. It also acquired the development infrastructure of a large and well-established mechanism of a software company that was both mature and independent. To attempt to build these things on its own would have taken Dell a long time, assuming it was even possible. “Since then, Quest was based as the core of Dell Software, specifically the Israeli operation. Currently, Dell’s R&D center in Israel is based in Or Yehuda where they have 75 programmers working there.
“Most of our activities are in the area of Database. This is our bread and butter. All of the main solutions are developed in this country. Performance monitoring, diagnostics of all kinds of products; we have solutions that are sold today throughout the world to both large and small customers.” According to Kalush, what has remained the same in terms of the startup spirit of the company is the freedom of ideas and the innovation: “One of the nicest things here is that most of the innovation process and brainstorming of the product till its final manifestation is done in this country. If Dell wants something new, they know exactly where to look.”
Somewhere, you would need to adapt to the ‘New’
Dell is a big company with a huge customer base and it has a lot of implications. I think the biggest advantage of Dell being in Israel specifically is that its presence here is not particularly large so at the national level, an individual’s ability to stand out and influence is very large relative to other international companies with a large presence in the country. On the one hand I can not tell you I feel like I belong to a start-up working here at Dell, but I still have a lot of room to Innovate. If Dell wants something new our job is to find out for them what this ‘something new’ is.
“The potential of a product that comes from our hands is very high because it has the backing of a big company behind it. That’s a very significant difference from what startups go through in terms of their product development. A startup company has to chase after customers. Here my problem is not customers but the level of performance and the quality of the finish. Products coming out of our operation today, tonight, tomorrow morning, can have thousands of customers. In such a situation our commitment is very high and the margin for error given to us by the market is almost non-existent. If we put out a product that is not really finished and ready for the market the damage is immense, despite the fact that most of our customers I don’t know, nor will I likely ever meet them.
“Additional articles in the Inside Look series: