Question

Dell Inc (B) - Transforming the Company

Discussion Questions:

1. Why is the demand for cloud computing services growing so rapidly? What are the benefits and costs of moving an enterprises computing needs onto the cloud?
2. What does the rise of cloud computing mean for Dell?
3. How does the EMC acquisition fit into Dell’s strategy?

Answer 1

Cloud computing allows a firm the to migrate their data onto a third party secure cloud server. This reduces the burden of developing and maintaining an IT infrastructure by the firm. It allows employees access to this data from anywhere. Therefore, one does not need any physical infrastructure except a access device like laptop or a phone. The storage space can be rented as per storage requirements. This reduces the cost of maintaining IT infrastructure and personnel. Cloud computing offers flexibility and scalability in terms that IT requirements can be changed as per a firm's requirements. It can be easily scaled if the company grows in size and scale. It also offers better security features and data security.

The rise of cloud computing means another avenue for growth for Dell. Dell is a computer hardware company. The PC market is not commoditized and the margins are not as much as before. Competition is also intense. Cloud computing opens up a new line of business and a new revenue stream for dell. Since it is in the nascent stage, the opportunity to be an established player is there. This is a huge opportunity as the projected usage of cloud computing is going to increase manifold. This business fits strategically in sells current offerings and they can look at a different revenue stream and reduce dependency from PC business.

EMC provides cloud computing hosting platform and storage sharing, IT infrastructure solutions, Security offerings, Analytics and other products. Since dell wants to foray into the cloud computing business and its products are used in cloud computing(servers, hardware etc), it makes sense for Dell to acquire EMC. There are enough synergies to recognise that there is value in this business proposition.Dells can sell bundled products such as Cloud computing plus hardware to businesses where IT is handled by a single company.