Computer hardware giants at risk due to Cloud computing.

Image by Ivan Walsh via Flickr

With the SaaS and Cloud getting prominence, hardware IT giants scrambling for survival strategies.

With Cloud computing gaining popularity(adoption is still a question) and companies planning to get rid of hardware and software infrastructure, maintenance and labor costs, there is a huge risk of pure-hardware vendors such as Dell, Xerox, Gateway losing their fortunes.

With move to Cloud computing, the present customers of these hardware vendors won't have a need to maintain infrastructure, hardware and labor costs, as it will all be taken care of by the Cloud or Data Center management company chosen by the customer. This could give a huge savings and easy of maintenance, scalability and reliability of their hardware infrastructure.

What this means for hardware vendors is that, their revenue from selling hardware to companies becomes a smaller portion of their revenue. The only source of revenue would then be the consumer notebooks and desktops. Selling hardware directly to data centers would be a hard sell with lesser margins due to volumes.

The good news is the consolidation has already started happening. Dell buying the Perot Systems(outsourcing software services vendor), Xerox buying ACS(again an outsourcing software services vendor) are early signs of the trend. You can expect to see more in the near future, as the hardware vendors don't have much choice!

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