Dell’s Fresh Focus on Services, Not PCs, Is Paying Off

Dell is making $8 billion in services every year, according to its founder and CEO.  In an interview this week Michael Dell credited company’s one percent share of the global enterprise services market, as well as $1.5 billion in annual software sales, to a series of successful acquisitions in recent years.

Dell mentions Force10, Compellent and EqualLogic alongside Quest and AppAsure, two of the company’s most tecent software buys. He goes on to share some figures that offer a glimpse into the breadth of the vendor’s operations in the services space, as well as hints of what it plans next.

The executive says that Dell handles 32 billion security events per day between SecureWorks and SonicWall, and manages 114 million mission-critical devices on top of that. The InSite One cloud service for the healthcare industry hosts more than 5 billion medical images, according to Dell, who adds that spare parts for ProSupport are stored in 656 locations worldwide.

“Despite efforts to grow beyond a PC company with multiple acquisitions over the past few years, we estimate 65%-70% of its business is still tied to PCs,” Sterne Agee analyst Shaw Wu wrote in a report last week. “We still believe [Dell] needs to take bolder, more aggressive steps to reinvent itself.”

The high-margin services space is a big bet for the company, especially in light of intense competition from other vendors.

EMC, which recently held its earnings call for the third quarter, is seeing a lot of demand from enterprises that are replacing their legacy infrastructure for virtualized storage and Vblock cloud modules, while HP, which also competes with Dell in the consumer space, expects services revenue to fall by over 10 percent this year.