Dell to invest $1bn in datacentres and cloud facilities

Dell plans to invest $1bn in 10 new datacentres and other infrastructure over the next year, to provide a backbone for its cloud services.

The hardware company, best known for its servers and PCs, plans to use the $1bn (£612m) to fuel a major expansion in cloud product areas, targeting enterprises with high-margin products. This effort will focus on infrastructure-as-a-service, platform-as-a-service, virtual desktop-as-a-service and IT outsourcing, Dell announced on Thursday.

Technology advances, delivery methods and the move to disruptive IT models like cloud are changing the way businesses operate.

– Steve Schuckenbrock, Dell Services

"Technology advances, delivery methods and the move to disruptive IT models like cloud are changing the fundamental way businesses operate," Steve Schuckenbrock, president of Dell Services, said in a statement. "Dell is mobilising to help customers capture these benefits and, with today's announcement, is making the power of the cloud accessible to more organisations and users."

Over the past three years, Dell has sought to diversify its products away from hardware and into remotely delivered services, mirroring a shift that has been occuring in the enterprise as more services migrate to the cloud. In its annual report in March, it said a key strategy for the business is to target the enterprise market by expanding into new, higher-margin service areas, such as cloud products.

Investment spending

Dell will spend some of its investment on 10 new modular datacentres. The plan is to build these across the world, with an undisclosed number in Europe, in the next 24 months. They will offer public and private cloud services, along with managed IT services. Dell expects to use the facilities to offer compute, storage, platform and virtual desktop services.

The datacentres will stand alongside Dell's extensive existing datacentres, many gained in a number of high-profile acquisitions. These include the 2009 purchase of IT services company Perot Systems and the December takeover of InSite One, which specialises in storing medical images in the cloud.

Additionally, Dell plans to set up 22 Solution Centres over the next 18 months to provide customers with learning materials about Dell's products and to help them build bespoke packages of services. They will also let businesses to test out those products and services within a simulation of their IT environments.

These consultancy and service centres bear a resemblance to IBM's range of cloud centres, which offer training and the ability to co-develop specific products with IBM, and to HP's Cloud Discovery Workshops, which are for educating C-level executives about HP products and general cloud strategy.

The investment follows a stronger showing in services for Dell. In the 2010 financial year, which ended 28 January, the Round Rock, Texas-based company's service revenue increased from $5.6bn to $7.7bn. This was due in part to the Perot acquisition, which contributed 12 percent of the $61bn total revenue for that year, up from nine percent in 2009.