Dell to save over $2 bn, seeks growth beyond PCs

Dell Inc is planning to cut costs by more than $2 billion during the next three years as the world's third-largest personal computer maker tries to move into more lucrative fields like data-centre gear and computing software and services.

Dell, based in Round Rock, Texas, said in a meeting with analysts that it would cut costs by streamlining its supply chain and consolidating sales support staff, and increase its sales from higher-margin data centre solutions comprising of servers, networking, storage and related software and services. 

The company intends to wring savings of around $800 million in expenses from its sales division, around $600 million from its plants and other parts of its supply chain, around $400 million from service delivery, and around $200 million from its general and administrative spending.

Dell, which employs about 109,000 workers, did not say whether the cost cutting measures would also include job cuts, but it told analysts that it would consolidate its sales support division, which usually leads to layoffs.

Last month, Dell's rival Hewlett-Packard Co said that it would save around $3 billion to $3.5 billion in annual costs by October 2014 by reducing its workforce by 27,000 or about 8 per cent (see: Hewlett Packard to eliminate 27,000 jobs).

Over the past 12 months Dell has acquired eight companies that gave it strategic intellectual property for its growth as a solutions provider. The company has also doubled the number of its engineers developing enterprise solutions and more than tripled the number of its specialists selling solutions over the past five years.