Dell to cut $2B in costs in pursuit of enterprise
Computer maker Dell (Nasdaq: DELL) is in the midst of a belt-tightening, restructuring effort designed to help the company rise above a consumer PC market under siege from the mobile computing movement, and become better equipped to chase the potentially more rewarding market for enterprise IT solutions.
To that end, the company announced, at an analyst event this week, it plans to cut about $2 billion in costs over the next three years, to help it invest in its business and enterprise pursuits.
Almost half of that savings is expected to come from consolidating sales and marketing functions, while some costs also will be reduced by consolidating manufacturing operations, streamlining Dell's own internal IT platform, among other efforts. It is not clear yet if job cuts will be involved.
The writing--or rather, the numbers--are on the wall for Dell to change its game. The company said that revenue and profits slid in the first quarter, but that it's seeing growth in its fledgling enterprise efforts. Dell, last year, began pursuing a cloud strategy, and also has been busy acquiring companies, including Force 10 Networks, SonisWall and others, to help it grow its enteprise IT capabilities.
Dell's new target market is not without its challenges. Many networking equipment vendors and service providers already are pursuing that sector after taking hints that their own core markets were becoming lower-margin businesses.
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