Dell Plots Midmarket Expansion With £624m Fund

Dell continues to plot its strategic direction going forward with the news that it is turning its attention – and a lot of money – to the midmarket sector.

This is according to its CEO Michael Dell, who in remarks made at an analyst conference, said that the company would pour $1 billion (£624m) into acquisitions of midmarket companies in an effort to better serve businesses with up to 5,000 employees.

“Acquisitions will continue to be critical focus of strategic investment activities,” the Financial Times reported Dell saying.

Acquisitive Nature

Dell and his executives detailed how the acquisitions and shift toward newer technologies is pushing the company toward a goal of being an IT services company in the same vein as Hewlett-Packard, IBM and Oracle.

The company has already snapped up 11 companies over the past two years in pursuit of this strategy, including EqualLogic and Compellent, cloud company Boomi and security firm SecureWorks and services company Perot Systems.

In the next year, Dell plans to focus on three areas, which include data management, IT services within the growing world of cloud computing and revamping the company’s traditional user computing model by selling more software and services to these customers. The business customers of No. 2 PC maker Dell helped the company finish its fiscal 2012 first quarter ahead of estimates, with net income of $945 million (£590m) on revenue of $15 billion (£9.4bn).

While the revenue figure was up 1 percent from a year ago, net income was up 177 percent.

“Through the purchases of Compellent, SecureWorks, Boomi and KACE, Dell has inorganically positioned itself to take on competitors such as IBM and HP, who can address large-scale buildouts of integrated hardware and software with their services and software portfolios,” wrote Technology Business Research (TBR) analyst Greg Richardson, in a 17 May report. “By offering hardware and software that enabled the development of virtualised environments, as well as design, implementation and support services, Dell further positions itself as a solutions provider.”

Positive Outlook

Dell also is positive about the coming quarters, and offered second-quarter guidance of 5 to 9 percent, which it acknowledged is slightly above the norm and attributed in part to stronger spending among state and local government and education customers as they close their fiscal years.

The company recently rolled out its PowerConnect 5500 and 7000 switch families to support SMB infrastructure deployments, offering simplified management as well as an energy-efficient design and Power-over-Ethernet capabilities. The PowerConnect 7000 is aimed at midsize companies, distributed environments and larger server farms, according to Dell.

The switches offer connectivity support to the new PowerEdge R210 servers and Dell’s EqualLogic storage arrays. The 5500 series offers 1GbE switches for SMBs and remote locations.