Dell entry shows cloud computing is becoming a commodity

Cloud computing goes from leading-edge to 'must-have' on IT shopping list.

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Not everyone believes Dell can pull off a strong push for the data center.

Dell's strong suit has always been interoperability and promise of no vendor lock-in, which is angelic singing to CIO ears, but doesn't provide the kind of margins and upsell opportunities slightly less open systems do.

Still, it's made a good business selling commodity servers, and made a lot of progress on HPC and streaming-media sales through its Data Center Solutions and streaming game service OnLive.

Three-quarters of Dell's revenue comes from businesses, rather than consumers. That, along with revenues depressed along with the economy, prompted it to focus on business IT rather than "shiny objects" as Dell's VP of strategy refers to smartphones and tablet PCs.

Can a box company do not only services, but cloud?

It doesn't seem to have much choice. Cloud computing is becoming the new normal, so any IT vendor who can't play up there will be locked into a much smaller, much poorer on-premise-only niche that will probably always make up the bulk of IT assets, but will give up increasing percentages of the CPU cycles or MOPS- or FLOPS-equivalents to the cloud.

With the cost of components rising, pressure to cut prices increasing and nowhere else to go, Dell plans to increase the chunk services contribute to its total revenue from 10 percent now to 25 percent in three years.

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