Dell’s biggest problem, I would argue, is still the cloud and the buying and architecture patterns it has inspired. In a couple years’ time, Amazon Web Services will likely be a larger business than Dell servers, Dell storage and VMware, combined. The cloud businesses at Microsoft and Google are growing like mad, too
According to IDC, Dell is holding its own or leading in market share for servers, storage and cloud infrastructure market share. That’s good news, but revenue is also holding relatively flat or even decreasing across those areas. And in cloud infrastructure, IDC estimates
that ODM manufacturers account for more market share and revenue than any individual vendor, while the “other” category of vendors is both the largest and fastest-growing.
Machine learning and private cloud (yes, it’s true!) are both growing areas, but Dell will have to work harder to capture them in any meaningful way. Acquisitions of Dell’s venture portfolio companies (e.g., Graphcore) might provide a short-term revenue boost, but could serve to lessen the importance of Dell servers in the long run. Dell is the majority owner of Pivotal, which is doing well for itself in the private cloud space
, but, I’m not certain there’s a real technological incentive to running Cloud Foundry or any of Pivotal’s software on Dell gear.
I don’t claim to have the answer for how Dell should capitalize on the trends it clearly has identified, but it seems like more active investments in some of them might be one way. Rather than relying on venture investments, partnerships and even majority ownership, Dell could actually try to stake its claim in a new area and own it.
Amazon used to sell books. Google used to be just a search engine. Dell used to sell PCs, servers, storage and networking gear. What’s its bold bet on the future?