Dell expansion on mainland spells greater investments

The US computer giant is planninga big push into IT services and software business in its second-largest market

PUBLISHED : Thursday, 03 January, 2013, 12:00am
UPDATED : Thursday, 03 January, 2013, 4:36am

Dell will steadily increase its investments on the mainland, as the computer maker this year expands into the information-technology services and software business in its second-largest market after the United States.

Texas-based Dell, the world's third-largest supplier of personal computers, is spending more than US$25 billion a year on the mainland in terms of manufacturing and sourcing of information-technology components and related products.

"We're making significant investments in China and it's growing," said Dell president Steve Felice, without elaborating on how high the spending would rise.

Felice, who also serves as Dell's chief commercial officer, said the company was broadening its capabilities on the mainland to help more firms improve their efficiency, respond more quickly to business demands, mitigate security risks and simplify their information-technology infrastructure.

Market analyst firm Forrester Research forecast total spending by mainland businesses and the government on information-technology hardware, software and services would grow 11 per cent this year to 733 billion yuan (HK$911.3 billion), up from an estimated 662 billion yuan last year, which should augur well for Dell's expansion initiative.

Dell, the mainland's No 1 supplier of server computers and No 2 personal computer brand, is expected to continue selling more hardware in the market, according to Amit Midha, the company's president for Asia-Pacific and Japan operations.

Forrester projected mainland enterprise spending on computers and peripheral equipment to rise to 323 billion yuan this year from 287 billion yuan last year.

"Ultimately, the growth of our software and services business will be driven by the customer base that we have developed in the server space," Midha said. "This is a big priority for us and we see lots of opportunities."

Dell is a leading supplier of servers and storage systems used in the vast data centres of major Chinese internet firms, including top gaming and messaging services provider Tencent, internet search leader Baidu and e-commerce giant Alibaba Group.

"We've built up a lot of good assets that will help us expand our business in China," said Midha, adding that its local workforce had grown to more than 9,000 from 6,000 in 2010.

Dell has made more than US$10 billion of strategic global acquisitions over the past five years, including technology services firm Perot Systems, cloud-computing provider Boomi, managed security services specialist SecureWorks, internet security firm SonicWall and systems management supplier Quest Software.

It has also developed its mainland infrastructure to include a global design and engineering operation in Shanghai, manufacturing plants in Xiamen and Chengdu, and an international service centre in Dalian.

Midha said Dell wanted to get a mainland licence to operate a data centre so it could offer cloud-computing services that allow companies to rent software, such as systems management and security, over the internet.