Dell plans to spend $1.15 billion in cash on data storage company 3PAR. Why? Dell must diversify its business.
As you can see in the chart below, Dell still gets 72% of its revenue from desktop PCs, laptops, and printers and monitors. Revenue from those divisions has been flat for the last five years, as HP and Acer have grown in popularity, taking Dell’s sales.
To hedge against the softening PC market, Dell is diversifying by getting into data and services. Each of those parts of its business have seen modest growth in the last five years.
Despite the growth, Dell’s services and storage business was $4.2 billion last quarter, less than 30% of its total revenue.
For comparison, HP generated $13.3 billion in sales from services and storage, or approximately 42% of its revenue, in its most recent quarter. Dell’s services business accounts for 13% of its sales, versus 27% for HP.
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