Dell plans data centers in Asia as customers look to cloud

Dell's expansion of data centers in the region aims to meet growing demand from customers for a mix of private and public clouds

Dell could set up over 20 data centers in Asia to meet growing demand from customers for a mix of private and public clouds, the head of the company's Asia Pacific and Japan region said.

The company's first data center in the region is likely to come up in India for customers in the country, said Amit Midha, Dell's president for APJ, on Wednesday. The pace of investment in these data centers will depend on the growth in demand, and the need for clearances in some countries including China, he said.

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It has become important to locate data centers in key countries in the region because of local regulations relating to movement of data outside a country, Midha said.

Customers want both a private and public cloud, and Dell wants to be able to provide them offerings on both sides, Midha said. "This is a transition which will run for several years to come," he added.

The company is also seeing demand for its equipment and design services for the large number of data centers that are coming up in the region particularly in China. The country is building up a large number of data centers for use by government, and companies including startups, Midha said.

Dell also started rolling out its services delivery capability in the region from the middle of last year: Until recently it was largely focused on the U.S. and EMEA (Europe, the Middle East and Africa) regions.

Most of last year was an investment phase for services which is likely to continue this year, Midha said. "This is an area that would be bearing fruits for us probably in the second half of next year," he said.

As it expands in services in Asia, the company also plans to tap into its 23,000 staff in India, of which a significant number work in services such as application outsourcing and projects, but have so far been working on outsourcing for customers in the U.S. and EMEA, Midha said.

China is also likely to be a hub for delivery of services in the region, particularly for Korea, Japan, and the local market.

Services accounted for 10 to 12 percent of the company's revenue of $12.7 billion from the region in the last fiscal year, but its share will not see a big shift this year, as all of Dell's businesses are growing fast in the region, Midha said. A more dramatic shift in the share of services can be expected in say about three years, he added.

As more and more people are joining the middle class in Asia, and companies in the region plan to go global, there is a great opportunity for Dell, according to Midha. A boom in mobile phones is for example creating large demand for server capacity.

Dell's Asia Pacific and Japan revenue grew 10 percent in its fourth fiscal quarter ended Feb. 3, 2012, including 15 percent growth from China. For the fiscal year, revenue in the region grew 13 percent, while revenue from China grew 20 percent.

The company added some 1,000 new staff in the region in sales and marketing alone in the last fiscal year. About 600 of these are specialists who are focused on understanding and meeting customers requirements. "We are not leading with pricing or a product specification," Midha said.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's email address is john_ribeiro@idg.com.

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