Five facts on Dell (Denali)

Denali is the holding company through which Michael Dell hopes to reinvent Dell. A US securities and exchange filing at the end of March shows the company will actively move away from the PC and high volume servers.

  1. Denali hired John Swainson, former CEO at CA to run the software business. The company will look at expanding its business into areas like BI and storage software, presents a huge opportunities, software as a service will eat away revenue.
  2. While Denali has benefited from the trend to migrate workloads from expensive Unix systems to commodity x86 servers, Gartner notes that this potentially short term. According to Gartner, the move to virtualisation and server consolidation will enable businesses to defer server purchases
  3. A section of the SEC filing prepared by J P Morgan reflects this challenge. The investment bank highlighted Denali’s management plans around reducing margins from end user computing devices, servers and storage to reflect increasingly aggressive competition and buyers spending less.
  4. The acquisition of Force 10 in 2011 will help drive networking sales. IDC expects the networking business to grow 7.3%. Gartner expects sits software revenue to grow 7.7%, due to the acquisition of Quest. Storage is expected to suffer as a result of the decline in its long-standing relationship with EMC.
  5. On the services side, J P Morgan notes that Denali should see modest growth in its PC maintenance business, but competitive pricing will put pressure on traditional outsourcing.

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