Dell Forges Ahead With New Focus on IT Enterprise Solutions
Last year, we saw a bit of a fall from grace in Dell’s PC business. The PC giant is on the decline, it seems, when it comes to PCs; in 2011 their consumer revenue dropped 6 percent, losing some ground to escalating companies like Lenovo. Much of this can be attributed to a decline in the PC itself: given the modern-day mobile realities of tablets, smartphones, and laptops, the PC isn’t quite what it used to be when it comes to your average consumer and your average business – both want to be on-the-move.
However, Dell’s 2011 revenue in their IT enterprise solutions division saw a jump of 8 percent, proving that when it comes to catering to the needs of businesses, Dell isn’t just doing well – Dell’s a rising star.
So it should come as no real surprise that Dell has recently announced an increased focus on IT enterprise solutions, software, and servers. Apparently, these will be a crucial player in the company’s long-term growth strategy, which makes sense given that 31 percent of Dell’s overall revenue now comes directly from enterprise-based services. Enterprise solutions apparently account for a full 50% of Dell’s gross margin.
They aren’t the only company looking in this direction. Competitors IBM and HP have similar goals in mind; declining sales of the PC are hurting them, too. For Dell’s part, they have very specifically stated that in the last several years, they’ve begun to focus on end-to-end IT. The message is that Dell, quite simply, is no longer a PC-focused business. It hasn’t stopped selling PCs by any means– PC sales still account for a significant amount of its gross margin, 21%— but there is definitely a shift in priorities.
What does that mean for Dell? Well, for starters, a significant portion of Dell’s hefty $700 million Research & Development budget will be going to development with IT enterprise solutions in mind. They’re far from the only company doing this; with the advent of the cloud, IT is likely to become highly competitive.
In May, Dell opened its 11th Solutions Center in New York City. In addition to a very broad range of offerings, including business intelligence, end user computing, services targeted to specific sectors (such as finance), and storage, Dell’s Solution Centers are designed to cater to a variety of needs and scenarios, including security, mobility issues, etc. We can only assume that given the stated focus on IT enterprise solutions, more of these are to come.
Dell has been making strategic acquisitions to bolster its offerings. Among eight other recent acquisitions, they’ve recently taken over major player Quest Software, which provides a broad range of award-winning IT management. Last year, they acquired Force10, a US-based networking company.
It’s not been entirely smooth going, though. The cloud-based analytics service that they hoped to release in August has dealt with numerous delays and is now slated for an early 2013 release date; their Microsoft Azure-based PaaS (platform-as-a-service) is well behind schedule.
Even with these delays, the cloud is opening up the market to new approaches to IT enterprise solutions. If Dell can stay abreast and forge onward, they may become to enterprise what they were to PCs.