All IT enthusiasts brace yourselves because word’s up that Michael Dell plans a $5 billion software business.
It might well be Dell isn’t the company that once used to “move the needle” in the business. But, founder and CEO, Michael Dell believes it’s time to take business to the next step. It’s an interesting race Dell is taking on against big time developers such as Apple or HP.
In a statement for Forbes, John Swainson, president of the software division at Dell, believes it’s a bold move that could boost up Dell’s sales in approximately five years once the business rolls out.
“As you get to a number like $5 billion, it starts to become a meaningful number on the bottom line,” he told Reuters in an interview. “If you were at $5 billion software business with 30 percent margins that would be roughly $1.5 billion in net income” said John Swainson.
The master plan is to the purchase Quest Software for $2.4 billion and add technology. Quest has around 4,000 employees and generated $857 million in sales last year alone. Once the deal ends, the new division will have over 6,000 people and around 2.000 engineers. Swainson said in an interview that “we’re going to turn Quest into the foundation for Dell’s software business.”
Obviously this $5 billion software business isn’t something that happens over night. It’s a bold challenge Dell is taking on and as John Swainson said they have big plans. “We have to build a software business at scale. Building a dinky little software business isn’t going to help” he explained.
And from the looks of it everybody at Dell is excited about the new project and the whooping $5 billion sales estimated. “I see us remixing Dell’s business over time,” Swainson said. “IBM took 20 years to remix a business that was hardware centered to one that is software and services center. It won’t take us 20 years to do that, but it won’t take us one year either” Dell software division president said.
Perhaps Swainson and other people at Dell are a bit too excited about the potential revenue. Dell has been doing just fine in services, servers and even storage, but software is a whole new challenge.