Dell Trading Up from Manufacturing Hardware to Manufacturing Cloud Computing

There  is a lot of coverage on Dell selling its manufacturing operations.

GigaOm has one speculating Dell is getting out of the hardware mfg business in preparation for building cloud computing.

Just a day after Dell launched it’s own line of mini Inspirons, and after CEO Michael Dell said carriers would likely subsidize such netbooks, creating smaller price tags, the Wall Street Journal speculates that Dell will sell its manufacturing plants, shrinking its operations. This would be good for Dell because it would give it a chance to ditch an aspect of its business with diminishing returns and go after a growth area, like cloud computing.


The hardware and operations that comprise a computing cloud will be a low-margin business for those offering it. If Dell can take the lessons of squeezing the costs from a low-margin business like building computers and translate that into helping build, deliver and operate clouds most efficiently, it could win. By tying its range of consumer and corporate devices back into such clouds, it could become a powerful business generator for cloud providers.

When it comes to the utility industry (which is what many cloud providers like to compare their business to), GE sells billions in equipment and services to providers. Dell has made some acquisitions that get it started down that road offering both services and equipment to clouds, but it also has a company culture of exactitude and discipline that can’t be bought. I think if Dell can dump its manufacturing plants, it will head for the clouds.

If there is a Dell built cloud, can Dell build better devices for its cloud?