The pioneering tech firm returns to the public market, transformed as a bundled IT provider and ready to tame the wild frontier of cloud computing.
Cloud computing services from big providers like Amazon and Microsoft connect companies to a smorgasbord of software and hardware as individual cloud-based services. Depending on its size, industry and other factors, a company may use a hybrid cloud setup with an in-house server, or keep all of its software and data in the cloud. But sorting and selecting from countless IT options in an effort to capitalize on every technological advancement has become the bane of chief information officers and chief technology officers. If complexity is a problem, could simplification be the next big thing?
Michael Dell believes it is, and his plans for the future of Dell Technologies, the eponymous PC maker he founded in 1984, are based on it. Texas-based Dell already has a place in history as the first to successfully sell PCs directly to consumers. Now Dell’s mission is to breathe new life into the company by expanding its software and cloud offerings. On December 11, Dell received shareholder approval to begin trading on the public market again, effective December 28.
Dell took the firm private in 2013, when the PC market was rapidly losing ground to mobile devices and Asian manufacturers. With revenues and profits slipping, it was time for Dell to regroup. In the five years since, Dell has invested more than $13 billion in software and cloud integration. In 2016 it struck a $67 billion deal to acquire EMC, a provider of data storage devices and cloud computing software – the biggest technology acquisition to date.
It is still early days, and so far Dell is still incurring losses, “but its growth engine is at last fired up”, The Economist observed. Quarterly results from November 29 show improvement, with revenues up 15% and a year-on-year gain in cash flow from $2.4 billion to $7.7 billion. Annual revenues are on course to rise from $80 billion last year to upwards of $90 billion. Dell is also enjoying the success of its Palo Alto, California-based subsidiary, VMWare, a profitable maker of virtualisation software.
Dell’s transformation into a bundled IT provider is welcomed by IT managers. The chief information officer of a big British bank that is a customer of Dell says he values its ability to provide “converged infrastructure” that bundles multiple IT components such as servers, data storage units, networking switches, and the software that makes it all work together, into a single package.
Dell also anticipates wider adoption of hybrid cloud models, as companies grow more wary of putting all of their sensitive data on third-party clouds. In 2017 Gartner predicted a “massive shift toward hybrid infrastructure”, with 90% of organisations using hybrid clouds by 2020. Further, Dell believes that the IoT will make demands that the public cloud cannot meet. Simon Bolton, chief information officer of Jaguar Land Rover, a Dell customer, cited the hefty requirements of autonomous vehicles. “Decisions must be taken absolutely in real time, a car is a data centre on wheels,” he said. Getting out in front of it, Dell created a new IoT division last year.
