DELL Dell Inc. (MM)

The Small & Medium Business (SMB) segment has emerged as a key focus area for all eminent Information Technology (IT) companies, and Dell Inc. (DELL) is no different.

The company has recently launched a marketing automation software from Pardot as a service to help businesses carry out cost effective demand generation programs that are easy to track and measure. The new offering is expected to help Dell expand its portfolio of Software-as-a-Service (SaaS) solutions, which are specially targeted toward small and medium-sized organizations and help them to manage and grow their businesses.

The marketing automation solution from Dell is customized to help marketing organizations cater to customer needs effectively, and includes services for setting up email campaigns, developing web site forms, and integrating Google AdWords and CRM systems. As with all Dell Cloud Business Applications, this new solution includes pre-packaged implementation services that are designed to accelerate adoption and time to value.

So, we believe that IT security is another area that Dell may explore going forward. Given the improvement in demand for security products among smaller companies, Dell is looking to cater to this demand to stimulate growth. The same strategy has been adopted by Intel (INTC), when it acquired McAfee to cater to its own customers.

As per a recent research published by International Data Corp (IDC), the small and midsize businesses are expected to spend $5.6 billion on security technology by 2015.

Moreover, SMBs have also realized the fact that employees are using the same technology to control and get malware protection compared to other traditional IT products. As per IDC research, security has become a top priority for about 19.0% of the smallest companies, (less than 100 employees). Moreover, for companies with head count of up to 999 employees, the number stood at 36.0%.

Dell’s SMB segment has performed particularly well in the first quarter of 2013. Dell’s server, software, storage and any other offerings capable of facilitating transition to the cloud will be snapped up by the SMB customers. This is because SMBs take quick decisions and there is less process involved in the approval.

Macroeconomic factors, currency and competitive challenges remain headwinds for Dell. Moreover, the company faces certain sales execution issues, which may affect the timing and the revenue recognition process. This apart, some modest accounting issues may also affect the company’s business.

Currently, Dell has a Zacks #4 Rank, which implies a short-term Sell rating.

 
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