How Dell Has Reinvented Itself in the Last Five Years

By Chris Preimesberger  |  Posted 2011-04-15 Print this article Print

Texas-based computer hardware maker is fast becoming a full-service IT systems maker, with all the software and services that must go with that identity. And it's making the data center -- along with private cloud systems -- its No. 1 priority.

It's pretty well-known by now that Dell is determined to change its whole approach to providing IT products and services. But its evolution in the last five years-and especially in the last 18 to 24 months-has been nothing short of stunning. 

The company that originally was called PC's Unlimited (pictured) and that made its mark by selling personal desktop computers over the phone has come a long way from Michael Dell's dorm room at the University of Texas in 1984 to one of the world's largest suppliers of computers of all types. But it is hardly satisfied with that distinction.

The Round Rock, Texas-based computer hardware maker is fast becoming a full-service IT systems maker, with all the software and services that must go with that identity. And it's making the data center-along with private cloud systems-its No. 1 priority.

To morph into the all-everything IT one-stop-shop that it wants to become, Dell has had to dig deep, gather investment capital and go out and find the right pieces of the puzzle to reshape the company for its next  25 years.

Dell has made no secret of the fact that its strategy for the next few years is to invest in hardware, software and services for new-generation data centers that will contain private cloud computing systems. The company is doing this through a combination of acquisitions and partnerships.

Because it has been the world's largest seller of personal computers and among the market leaders in servers and storage arrays, Dell hasn't had to add much on the hardware front. Its largest acquisition thus far in this area has been iSCSI storage appliance maker EqualLogic in 2007 for $1.4 billion, an amount that many analysts thought staggering at the time.

EqualLogic, however, has justified Dell's investment. Its secret sauce in storage networking and virtualization has brought in satisfactory profit margins in the midrange storage market.

The December 2010 buy of another key storage independent, Compellent, for $960 million, bought the company another progressive-thinking young storage company with a huge upside. Compellent specializes in virtualized storage arrays with automated data-management features, including tiering and thin provisioning.

Improvements Mostly in Services, Software

On the services side-an area that the company is also making a large investment-Dell in September 2009 bought Perot Systems, a provider of information technology services and business solutions for its largest-ever acquisition at $3.9 billion. However, it, too, is paying off big time; Perot Systems is bringing Dell an additional $8 billion per year.

Using some of its newfound profits, Dell recently announced plans to spend $1 billion to build 10 new data centers, in an effort to build its own cloud-services backbone.

In software, Dell has been busy filling in its data center needs. Smaller acquisitions of Scalent (data center automation), KACE (application virtualization), Boomi (SAAS integration) and SecureWorks (cloud security) all have taken place within the last 14 months.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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