[Editor's Note] As the AI market expands rapidly, building AI servers designed to process large-scale data is essential. The more storage a server has, the more data it can store and process, and the faster it generates results. To address this, global big tech companies, including Dell Technologies, are releasing various AI solutions. Daol TS, acting as an official distributor for Dell Technologies, has been focusing on penetrating the AI market and supporting corporate AI infrastructure strategies since its establishment in 2020. We met with Daol TS CEO Hong Jeong-hwa to hear about plans to support customers' AI businesses and her future aspirations.
■ Please introduce Daol TS.

Daol TS is an 'IT solution specialist company' established in 2020.

We have signed distribution agreements with global IT companies such as Dell Technologies, SUSE, and KAYTUS, and are collaborating with various domestic IT solution companies.

To broadly meet the diverse requirements of customers, including cloud, virtualization, and artificial intelligence (AI), we supply hardware such as servers, storage, networks, PCs, and workstations, as well as software and solutions to companies like VMware and SUSE.

Compared to its history, the company has achieved rapid growth in terms of sales volume and organization since its establishment. Over the past three years, it has shown an average annual sales growth rate of 18%, which is considered remarkable as it is 7 to 8 percent higher than the industry average. In 2022, it recorded sales of approximately 212 billion won, and the number of employees has more than doubled since its founding.

Daol TS has been operating a separate AI business team for the past two years to expand its AI business. Last July, the company established an AI Infrastructure Strategy Office directly under the CEO and is focusing on targeting the AI market.

■ I understand that the storage business division, in particular, is playing a pivotal role in driving revenue growth. Could you please explain this?

Storage is a small-scale but extremely important business within Daol TS.

Storage, a device for storing digital data, is becoming increasingly important in proportion to the recent surge in digital data. Digital content, which is easily created and shared on social media, is also widely utilized in corporate business. Storage is an essential IT infrastructure device required for companies to store and manage vast amounts of data.

Daol TS has been making continuous investments in the storage business since its founding. Three years ago, upon launching the storage business, the company formed a dedicated team and recruited personnel, and conducted aggressive marketing by holding incentive programs and regular partner seminars during the early stages of the business.

As a result of continuous investment, the storage business was able to drive growth indicators over the past six quarters. In particular, the data protection solutions and unstructured data storage sectors recorded growth of approximately 250% and 120%, respectively, in terms of revenue during the first half of 2023 compared to the same period of the previous year.

In the fourth quarter of last year, annual storage revenue grew by more than 100% in 2022 compared to 2021 as it secured numerous large-scale projects in the public and financial sectors.

■ The outlook for the server and computer market for the second half of this year and next year, and Daol TS's response plan to it
In fact, companies supplying IT infrastructure servers and clients enjoyed a boom during the COVID-19 pandemic. As many companies and organizations implemented remote work, the demand for laptops, PCs, and other devices increased. However, since the onset of the pandemic, the demand for these products has been on a downward trend.

On the other hand, I believe the GPU (Graphic Processing Unit) server market has infinite growth potential as the AI-related industry, which can be considered the biggest issue in the IT industry these days, grows rapidly.

Due to the nature of AI-related businesses, most require high-performance IT infrastructure and necessitate expert assistance for system configuration. Since the launch of OpenAI’s ChatGPT, the demand for servers has been increasing as the demand for adopting AI in all fields has grown, so the future outlook for the server market is expected to be bright.

Daol TS plans to secure the entire lineup of AI servers, including Dell's newly released top-tier GPU server, and expand its market by collaborating with AI solution providers.

In addition, there has recently been an increasing trend, primarily overseas, of companies returning from the cloud to on-premises environments (Cloud Repatriation).

This phenomenon stems from companies deciding that it is better to build their own on-premises server infrastructure directly due to the exponential increase in cloud usage fees, and as a result, the demand for on-premises servers is predicted to continue growing in the future.

■ Daol TS identified specialization, differentiation, role maximization, and sustainable growth as its strategic objectives for 2023. Based on these, how were the results of the first half of the year?

The four Strategic Initiatives are Daol TS's core competencies and strategic challenge plans. They represent areas that will be pioneered independently with a sense of initiative.

The first is specialization. It is a strategic plan to focus on developing the company's specialized fields rather than simply acting as a distributor. As mentioned earlier, Daol TS emphasizes that it is an AI specialist company, and Dell Technologies also recognizes Daol TS as an AI specialist distributor and is collaborating with it. Through this, Daol TS recently became the first to supply NVIDIA H100-based 8GPU servers.

In this way, we are defining our scope to establish ourselves as a specialized company, and since areas of expertise change with the times, we intend to take the lead by formulating proactive plans.

The second is differentiation. First, as a distributor, Daol TS is the only Dell Technologies distributor to operate a nationwide sales and logistics organization, handling all enterprise and consumer products.

Since last year, Daol TS has been collaborating with domestic AI solution providers to help them become full-stack providers by supplying hardware as an OEM distributor. In the future, we aim to achieve both specialization and differentiation by expanding into the PC service sector (PCaaS).

The third point is maximization. We provide direct pre-sales assistance to resellers partnering with Daol TS, going beyond simply processing orders. We participate in proposal work and are expanding our role in the technical domain beyond simple installation and support to include professional services.

Finally, for sustainable growth, we are in the process of identifying and adding complementary items to Dell Technologies—that is, products that generate revenue growth. For instance, we intend to continuously reinforce infrastructure software and solutions such as SUSE. We also plan to build an ecosystem that fosters greater mutual growth with our partners.

Daol TS is considered to have recorded positive growth even amidst an economic slowdown, based on four strategic tasks.

■ Please introduce the AI business you are focusing on this year, and what are your future plans?

The AI market has been steadily expanding in application fields such as autonomous driving, smart cities, and IoT technology. Since the launch of OpenAI’s ChatGPT last year, the AI market has expanded rapidly as the demand for productivity enhancement through the construction of generative AI systems utilizing Large Language Models (LLM) has surged. Various systems, such as conversational AI based on LLM, are expected to develop and be applied to businesses.

To develop and operate such a system, not only high-performance GPU servers but also high-performance storage systems and networks are very important.

Daol TS is the first to secure the latest hardware and software technologies to support partners with customer PoCs and benchmark tests.

This includes high-performance GPU servers, hyper-converged infrastructure (HCI) solutions such as PowerFlex, and AI-optimized high-performance storage such as PowerScale, which can fully guarantee high processing speeds and stability in the AI field.

Based on its strategy to target the AI market, which it has been building for the past three years, Daol TS continues its efforts to meet diverse customer needs and advance systems through partnerships with excellent domestic AI solution partners.

thank you