Dell Bets $1 Billion on 'Internet of Things'
October 10 2017 - 11:29AM
Dow Jones News
By Rachael King
Dell Technologies Inc. is joining the crowded field of companies
wagering big money on the so-called Internet of Things, as the
computing giant looks for new avenues of growth amid a shift in
corporate spending to the cloud.
The Round Rock, Texas, company said Tuesday it will commit $1
billion over three years in research and development to create
hardware and software that helps manage billions of everyday
devices connected to the web.
Once the largest personal-computer maker, Dell is now known as
much for its corporate products like storage servers and security
software following last year's deal to buy EMC Corp.
Dell is looking for areas where it might grow as customers
increasingly buy computing and storage over the Web from the likes
of Amazon.com Inc.'s Amazon Web Services and Microsoft Corp. while
spending less on their own data-center hardware.
Corporate spending on data center hardware and software from
Dell, Hewlett Packard Enterprise Co. and others is forecast to grow
less than 3% to $178 billion in 2020 from this year, according to
research firm Gartner Inc. In contrast, companies are projected to
increase spending on cloud infrastructure services by about double
to $70 billion by 2020.
As the cost of sensors in everything from thermostats to
connected cars continues to plummet, Dell is betting there will be
an associated boom in computing hardware and software that sits
close to these devices, known as edge computing.
"We think edge computing could be 100 times bigger than the
internet as we know it today," said Chief Executive Michael Dell in
an interview. "That may sound crazy right now but give it a few
years and I think that will be more understood."
There is some method to Mr. Dell's madness. It is cheaper and
more efficient to process information coming from sensors closer to
where it originates rather than sending that data back to the
cloud, said Patrick Moorhead, president of Moor Insights &
Strategy. An autonomous car or a robot surgeon needs to process
information in real-time and they wouldn't tolerate delays that
occur when processing information in a remote cloud.
Part of Mr. Dell's bet is that corporations will want to keep
control of valuable data. An auto maker, for example, will want all
that data from autonomous vehicles to be stored on their own
equipment and not on someone else's server. That data serves as a
company's crown jewels and needs to be secured, protected and
managed, Mr. Dell said.
As mobile carriers begin to implement fifth-generation wireless
networks, it will make it easier for edge-computing devices to
communicate with one each other, Mr. Dell said. For that piece,
Dell is counting on subsidiary VMware's network virtualization and
security software called NSX.
Dell will also rely on another subsidiary, Pivotal, as it
targets corporate customers working in the Internet of Things.
General Electric Co., for example, came to Pivotal to use its
software to create its Predix platform which collects and analyzes
data from industrial machines.
In addition, Dell Technologies Capital, the company's venture
investing arm, has stepped up investments over the past six months
in related companies including Otonomo, a connected-car data
exchange marketplace, and Zingbox which makes Internet of Things
device security, Dell said.
Dell is somewhat late to the trend, at least in earmarking
significant investment toward products. A number of tech giants
including Amazon, Microsoft, Cisco Systems Inc., Hewlett Packard
Enterprise and Samsung Electronics Co. have all in the past year
planted their flag with new platforms or committed R&D
investments.
Write to Rachael King at rachael.king@wsj.com
(END) Dow Jones Newswires
October 10, 2017 11:14 ET (15:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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