updated 08:41 pm EDT, Thu July 19, 2012
Company eyeing higher margins in software sales
Dell has reportedly set a lofty goal for its software segment, which it hopes to expand into a $5 billion business as the company continues to diversify its product offerings. The company's software head, John Swainson, has told Reuters the company is pushing for its software business to eventually make a "meaningful contribution" to overall revenues.
"As you get to a number like $5 billion, it starts to become a meaningful number on the bottom line," Swainson said. "If you were at $5 billion software business with 30 percent margins, that would be roughly $1.5 billion in net income."
Dell last month announced plans to slash its current expenses by more than $2 billion over the next three years, though CEO Michael Dell stressed that the cuts would be utilized to help the company ramp up its investments in other segments such as software.
Consumer products, particularly hardware such as PCs and printers, have been dragging the companies profits down as the company struggles to adapt to a market that has experienced thinning margins and increased competition. The difficulty has been shared with competitors; HP recently announced similar cuts and 35,000 layoffs.
Dell has yet to announce a time-frame for achieving its $5 billion goal.