Dell, the personal computer company founded by Michael Dell in Texas, has undergone a major transformation in recent years through significant investments in software and cloud capabilities. By taking the aging PC manufacturer private and investing over $13 billion in R&D, Dell has expanded into higher-margin enterprise IT solutions and services.
Dell’s acquisition of EMC strengthened its position in cloud and data storage
In 2016, Dell acquired EMC, a major provider of data storage and cloud computing software, for $67 billion. This was the largest ever tech acquisition and allowed Dell to expand its offerings into areas like virtualization, cloud infrastructure, data analytics, and data protection. Specifically, Dell gained ownership of VMware, a pioneer in virtualization software that runs seamlessly across multiple machines.
Transitioning from a PC company into a broad provider of enterprise IT
Over the past decade, Dell has focused on transitioning its business from a commodity PC maker into an enterprise IT powerhouse. Beyond hardware, it now provides solutions around servers, networking, storage, services and security. This includes both public and private cloud offerings for global businesses. According to Michael Cusumano of MIT, very few firms have successfully pulled off such a sweeping transformation.
Strong growth and profits expected from software and cloud investments
As a result of these substantial investments and strategic acquisitions, Dell is projecting over $90 billion in annual revenues, up from $80 billion last year. Margins and growth potential are much higher in enterprise software and cloud compared to the PC business. If executed successfully, this multi-year transformation could restore Dell’s profitability and cement its status as an IT innovator.
By heavily investing in R&D and acquiring major software and cloud players like EMC and VMware, Dell has dramatically expanded its business over the past decade beyond PCs into higher-margin enterprise IT solutions. This sets the stage for strong growth and a potential IPO down the road as Dell becomes a dominant, full-service IT provider.