Focusing on future-proofing their supply chain has made Dell more resilient
Dell is strengthening its supply chain and investing in long-term growth in sectors such as edge and multicloud to counteract the slowing down of sales of computers. It's been a testing time for the tech sector at large, with job cuts and operating cost reductions being wide-spread right across the sector and Dell has also had to make layoffs with 5%, 6,500 of its global workforce leaving the company, allowing the company to better invest in its long-term future.
Dell has ridden through the dotcom bubble of the 90s and also more recently had to endure the current turbulence of the post-pandemic era but the company is now in a strong position going forward, which means the business is now well positioned for what will happen in the future by tapping into growth areas such as multicloud, IoT and opportunities related to its infrastructure.
Times are tough at the moment for business in general. Central banks trying to push inflation down and that has lead to suppressed growth, as interest rates go higher. Companies are becoming more cautious and there is an air of uncertainty.
The tech sector in general will always have to keep an eye on underlying technology trends in terms of the amount of data that is being created globally and the decision making at the edge of the network. The infrastructure roll-out of 5G is a prime example of what companies are doing around the world to keep up with this trend and the importance of technology to deal with it. Dell has been very focused on its strategic investments such as edge, multicloud and telecom.
Dell has focused on its supply chain management which is one of its core business strengths. The pandemic was quite challenging for Dell as one major supply chain was China but it was able to navigate through the restrictions allowing Dell's supply chain to keep going globally. There has also been the restrictions in semiconductor availability which has also had an impact on the supply chain, as semiconductor shortages has made a big bent in global production.
Dell is a $100bn company and 40% of its revenue comes from its infrastructure solutions group. 65% of business comes from PC revenue and 35% from infrastructure space, with the latter being the growth sector going forward. Edge, multicloud, data capabilities and telecoms are all growth areas for Dell moving forward and sectors the company wants to focus on.
As the sales of PCs slows, as businesses make less investment in cap ex on PCs and focus more on managing their data as customers want more choice in terms of how they want to consume technology, with the rapid growth in as-a-service requirements. Customers want to continue to acquire technology but without the need for significant upfront investments, by scaling down their investments. Dell wants their customers to be able to scale up or down depending on their solutions requirements.
Dell invests about 4% on its R&D revenue, with the business focusing on a number of initiatives including multicloud, with the emphasis on allowing customers to manage their workloads and data on platforms on a cloud environment, whether it's on public cloud, on-premise, private hosting or private cloud environments. One key area of investment for Dell is to develop capabilities to help their customers achieve operability across various platforms.
With the roll out of 5G, telecoms companies have focused on modernising their infrastructure networks and this has lead to the need for less proprietary hardware and software stacks to an open environment. The telecom network is the ultimate edge opportunity for Dell.