In addition to the attention it is devoting to the fast growing corporate tablet market, it is also delving even deeper into the lucrative and exploding cloud computing segment. Case in point: Dell recently bought a specialist in desktop virtualization, Wyse Technology, for around $1 billion. Wyse makes thin client devices which connect to cloud servers and function as virtual desktops. This fits in with Dell’s cloud computing strategy because it can now offer its substantive customer base a viritualized desktop environment. This will enable them to slash costs since all local computing costs disappear. The only remaining cost in such a setup is the central server.
As substantial as the Wyse acquisition is, Dell also announced that it plans to acquire two cloud computing firms: Make Technologies and Clerity. Dell intends to fuse the two acquired firms into existing Dell Services operations. The goal is to migrate clients’ traditional applications on mainframes to more cost-effective and newer cloud-based systems.
These are quite exciting moves by Dell and reflects a change in the Austin TX hardware giant’s strategy. Dell obviously noticed that businesses are increasingly shying away from the previous standard of individual computing hardware to centralized systems using the cloud. This is a solid move by Dell since, according to projections by IDC, firms’ spending on cloud computing is expected to hit a massive $72.9 billion in 2015. The “thin client” portion of that market alone is estimated to be worth around $3 billion by that time.
As decisive as Dell’s move into the “thin client” and cloud computing segment, it has also made known its intention to reduce its dependence on its traditional main source of revenue-personal computing devices. This, too, fits current trends since HP and Dell are losing market share in this mature market. During the last quarter of last year, Dell shipped 200,000 fewer units compared to the prior year’s figures.
While Dell’s move into the cloud is based on its solid ability of spotting trends and effectively capitalizing on it, things aren’t necessarily all blue skies in the cloud space-there are already formidable competitors in that market. Dell’s number one competitor is Amazon. The Seattle ecommerce giant already provider cloud-computing and IT infrastructure services to a large number of customers via Amazon Web Services. Other big names in the cloud computing space include VMware, EMC, and Cisco.
Still, Dell’s acquisitions position it well to benefit tremendously from the rapid shift to a cloud based computing system. Local storage and software will continue to give way as more enterprises head to the cloud. If current trends persist and Dell continues to solidify its position, expect Dell stock to ride the change upwards.