Dell targets $5bn software business

Desktops

by CBR Staff Writer| 23 July 2012

Focus on mid-sized businesses and emerging markets

Dell has unveiled plans to increase the size of its software business by five times to $5bn, expanding its business beyond computer hardware.

Dell's new software chief John Swainson was reported by Reuters as saying in an interview as you get to a number like $5 billion, it starts to become a meaningful number on the bottom line.

"If you were at $5 billion software business with 30 percent margins, that would be roughly $1.5 billion in net income," John added.

Swainson, who joined Dell in February, said software is a higher margin business than most of the company's other units, but is not big enough to make a difference right now, the report added.

Dell's software business now earns about $1.2bn of its $60.2bn annual revenue and according to the the plan the company targets that its software segment to account for at least 25% of its revenue.

While the company did not announce a time frame for achieving the $5n goal, the $2.4bn acquisition of Quest software was one of the steps to result in additional software sales and reach the targets.

Its plan is to focus on four key areas namely security, systems management, business intelligence and applications in the next couple of years.

Dell, the third biggest PC maker, has been striking deals to reduce its reliance on PC and server hardware and diversify its business offerings.

Dell has snapped up various software firms recently including Make Technologies, Wyse Technology and Clarify Solutions.

Personal computers growth has been declining due to the popularity of smartphones and tablets.

Swainson said Dell would target small and medium businesses as well as emerging markets for growth although acquisitions of Quest's size are unlikely in the near-term.

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