For one thing, as cloud computing really starts to catch on, it is getting hard to tell the difference between innovation and consolidation. Dell’s “Active Infrastructure Family” of computers is a result of acquisitions the company has made in the past few years in storage, networking and software. Many of those companies would have been purchased by Dell’s competitors if Dell hadn’t got there first. Moving into the new era of cloud computing also involves rolling up the old era of separate computer businesses.
That is not necessarily a bad thing. Speaking at an event in San Francisco, Dell executives noted that coming into the business with newly acquired companies means it doesn’t have legacy businesses to sustain, which means it can focus research and development dollars on new products and services.
For another, everybody is headed for the cloud, and pronto. Dell aims this product mostly at small and medium-size businesses, or what the tech industry calls S.M.B.’s. What they get in this consolidated system acts in many ways like a larger cloud system, and offers access to cloud computing as needed. Longer term, Dell expects to move more S.M.B. computing to its own big cloud and sell computing as a service.
Which raises another issue: How quickly companies like Dell have to move now. Servers, networking and storage brought in just $2 billion of Dell’s $15.7 billion in revenue last quarter. Personal computers were over $8 billion, and that business is under extreme pressure, as people turn to smartphones and tablets.
Marius Haas, a well-regarded executive who came to Dell six weeks ago after stints at Hewlett-Packard and private equity firms, says Dell is moving fast to “a transformation to higher-margin products, and selling solutions rather than point products.” In other words, things that aren’t like PCs. Where he talked about the PC of the future, it was in the context of a cheap “thin client” device that is connected to the cloud.
Mr. Haas said that Dell would continue to focus on S.M.B.’s, which generally produce higher profit margins for Dell than the consumer or giant corporation sectors. But the things Dell is putting together and learning in those businesses, he said, would also go into proving itself in the largest and most demanding commercial computing environments, for example, on Wall Street.
While Dell seems to know what time it is, part of its challenge may involve educating its S.M.B. customers. “A significant part of the market doesn’t understand why this matters yet,” said Matt Eastwood, an analyst with IDC. “Dell is trying to show more hardware capability, and increase software and services,” he says, but at a scale that isn’t yet facing most of its customers.
The bet seems to be that the flood of computing everywhere, thanks to cloud computing and cloud-connected devices, will soon force those customers to buy more computers to keep up with the world. It seems like a smart bet.