Dell Technologies is making a $1 billion bet on the Internet of Things, with a new initiative and a three-year plan to create new products.
The Round Rock-based tech giant said Tuesday that it will commit the money for research and development of hardware and software that helps manage billions of devices connected to the internet.
The initiative includes a new Internet of Things division and a partner program.
The Internet of Things “is fundamentally changing how we live, how organizations operate and how the world works,” Michael Dell, CEO of Dell Technologies, said in a written statement. “
Dell said the company “is leading the way for our customers with a new distributed computing architecture that brings IoT and artificial intelligence together in one interdependent ecosystem.”
Internet of Things is a tech industry term for internet-connected non-computing devices.
Dell has not been considered a major player in Internet of Things technology, as the company has long been focused on its personal computer business. But the company has been focusing more on the fast-growing area of offering IT products and services to large corporate and government customers.
Buying data storage company EMC Corp. for $58 billion in 2016 was a key part of that strategy. Dell Technologies is now a $74 billion business, with nearly 150,000 employees, including about 13,000 in the Austin metro area.
The new Dell IoT Division will be headed by VMware chief technology officer Ray O’Farrell. The division will be charged with development of Internet of Things products services across the entire company. (VMWare is a subsidiary of Dell.)
The division will combine internally developed technologies with offerings from Dell’s partners to deliver complete offerings.
“Our new IoT division will leverage the strength across all of Dell Technologies family of businesses to ensure we deliver the right solution - in combination with our vast partner ecosystem - to meet customer needs and help them deploy integrated IoT systems with greater ease,” O’Farrell said in a written statement.
A recent IDC report projects that worldwide Internet of Things spending will grow 17 percent this year to about $800 billion, and will reach $1.4 trillion by 2021.
By contrast, corporate spending on data center hardware and software from companies including Dell is forecast to grow less than 3 percent to $178 billion in 2020 from this year, according to research firm Gartner.
“With 75 billion new devices supposed to be connected by 2025, this will require a different way of transforming, storing and moving the data,” said Patrick Moorhead, technology analyst at Austin-based Moor Insights and Strategy. “There will be hundreds of billions of dollars in investment to make IoT happen at scale. Dell Technologies wants to be one of the companies to provide this technology.”
Dell is entering the Internet of Things market behind a number of tech giants. Companies including Amazon, Cisco Systems, Hewlett Packard Enterprise and Microsoft have in the past year announced new platforms or new investments.
Roger Kay, industry analyst with Massachusetts-based Endpoint Technologies Associates, said the move into Internet of Things - and the $1 billion investment - makes sense for Dell.
“They are well positioned to win here because they have so many other resources they can bring to bear,” Kay said. “Dell can say they’ve got experience in this and a product line and consulting services to explain how it should be laid out. It’s a pretty comprehensive offer. That doesn’t mean it won’t be competitive.”
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