Dell’s golden opportunity isn’t in servers

Dell-bashing is a fairly common pastime these days as servers become a near no-margin business and as its consumer business flounders (along with HP’s) at the hands of Apple (s aapl), but dire predictions about Dell’s (s dell) prospects might be overkill. A more fair assessment might be to say that Dell is stuck “between an Apple and a hard place,” and that it has to do some fancy maneuvering to free itself. I actually think Dell has a golden opportunity to reposition itself as an IT visionary if it fully embraces the path it’s already going down. Forget hardware as a differentiator and treat it as what it really is — a delivery mechanism for software and services.

Michael Coté, a former Redmonk analyst, actually presented a good case for this in a May blog post. He surmised that although Dell doesn’t realize it, it’s actually building a software division, and “[s]oftware is what will allow Dell to grow in the enterprise, giving their customers a reason to buy Dell systems (or ‘solutions,’ if you like) rather than just boxes.” I think Coté was spot on in his analysis, and since he recently moved over to the strategy team at Dell, I’ll assume he’s pushing for such a strategy within Dell as we speak.

But, as Coté notes, just investing heavily in software doesn’t mean Dell will suddenly compete with Oracle,(S ORCL) IBM (S IBM) and HP (S HPQ) in selling traditional enterprise software-plus-hardware solutions. Fortunately for Dell, it doesn’t have to compete with them. Because it doesn’t have a legacy business to defend, it can blaze a completely new trail that has its trailhead where Oracle (s orcl), IBM (s ibm) and HP (s hpq) leave off.

Enter cloud computing and big data.

Look at the various software-based partnerships and acquisitions Dell has made over the past few years: Boomi, Scalent, SecureWorks, DynamicOps, Cloudera, Joyent, Aster Data Systems, the list goes on. Dell is even pushing its own Opscode-based Crowbar tool for deploying distributed software onto hardware, and is offering services around a reference architecture for the OpenStack cloud computing platform. None of these moves are about hardware, really, and none of them are about legacy enterprise software.

Cloudera, Joyent and OpenStack are telling of what Dell can do on the solutions front. All of these products — as well as most others calling themselves cloud or Hadoop — are all about the software. Just give us the cheapest servers that will run. One might think there’s no place for a server vendor to make money, but Dell has a plan.

It provides preconfigured architectures custom-designed for these systems, and consulting and services are part of the deal. That means far higher margins that just selling gear alone. And cloud computing and big data are high-growth markets in which Dell is ahead of the curve among hardware vendors. These areas also complement Dell’s huge Data Center Solutions division that sells large quantities of stripped-down servers to Internet companies and other hyperscale companies. Want to become the next Amazon Web Services (s amzn) or Facebook? Dell could have sold you the hardware all along, but now it has the software to make those servers and storage systems really hum.

Boomi is particularly interesting because it’s not necessarily even about software. It’s about integrating data from a variety of sources — including Software-as-a-Service applications — under a single umbrella. As I noted when Dell bought Boomi last year, “Dell customers will be able to host their own applications in their own clouds, and then easily integrate data between those applications and SaaS applications – and Dell makes it all possible.” Now, you can add Dell’s own public Infrastructure-as-a-Service clouds as another locale where those applications and data might reside.

Plus, Dell will still move enterprise PCs if it can stake out a solid position in the virtual-desktop market that seems ready to take off, which might actually drive down Dell’s OEM costs on components and licenses.

I don’t know how Dell improves its consumer business save for finding a tablet business model comparable to what it had in the heyday of Microsoft (s msft) Windows on Dell PCs (maybe Android (s goog) is the answer), but maybe it doesn’t have to. If Dell embraces the next-generation software and services business it’s currently building, it can build an enterprise business that more than pays the bills. Oracle and IBM have done just fine without selling laptops to you and me.