Dell set to invest up to $1bn in datacentres and cloud offerings

Gartner suggests this points to a strategic move away from its usual product offerings

Dell has revealed that it plans to invest up to $1bn (£613m) in its current fiscal year in new datacentres and cloud technologies.

It suggests that the decision comes as clients look to innovate and drive business results in a "virtual era".

The new datacentres will reportedly deliver increased efficiency, and will allow customers to use infrastructure-as-a-service and virtual desktops as a service offering.

"Technology advances, delivery methods and the move to disruptive IT models such as cloud are changing the fundamental way businesses operate," said Steve Schuckenbrock, president of Dell Services.

"With this shift, businesses are gaining benefits in terms of speed to market and organisational and compute flexibility," he added.

Gartner analyst Rakesh Kumar suggested this change in strategy reflects a global shift towards the cloud, and that datacentres need to be built to deal with this adjustment.

"We are seeing a huge investment in the datacentre and cloud market, as there is currently not enough space for how much data is being demanded," said Kumar.

"Datacentres that were being built five years ago are not sufficient any more. They are either not in the right location, do not have enough power, or the cooling mechanisms are inadequate. They are out of date with what is required today."

Dell's general business relies on high volumes at low margins. But these margins are falling, Kumar explained.

"The announcement points to a strategic expansion that is similar to the likes of IBM and HP. They are all vying for this space, where the cloud is seeing high growth and high margin," he added.