Dell cuts the ribbon on its new Northern California outpost (Photo: Cade Metz/Wired.com)

Dell is doing its best to turn itself into a hip Silicon Valley cloud startup.

On Wednesday morning, beneath a nearly cloudless sky in Santa Clara, California, the Texas-based IT behemoth pulled out the giant scissors and cut the ribbon on what it calls the Dell Silicon Valley Research and Development Center. The 240,000 square-foot facility will eventually house about 700 employees, as the company expands its Valley workforce to 1,500 bodies over the next year.

In short, this is where the company will move many of the Northern California outfits it acquired over the last several months — including storage vendor Ocarina, data center management maven Scalent, and desktop management player Everdream — vowing to expand the engineering dollars pumped into these operations and two others, Kace and Force10, located elsewhere in the Valley.

“Dell wants to be an R&D company,” says Paulette Altmaier, vice president of “cloud applications” at Dell, who has set up shop in the new two-building facility on Silicon Valley’s Great American Parkway. “That’s my background, and people like me are interested in helping Dell transform and acquire key technologies and grow them.”

Michael Dell himself put his hands on the giant scissors, as did California Governor Jerry Brown, both painting the new facility as the sort of investment that will help revive a sluggish economy. “What we need is risk taking. And I think the whole Dell company embodies that,” Brown said, before painting this quality as a classically Californian attitude. “California is a state of pioneers, of people who left one place to look for something better.”

Dell isn’t leaving Texas, but it has made a conscious decision to expand into a part of the country famous for its engineering talent. According to Altmaier, two hundred of the company’s new Valley hires will be engineers. “We really want to tap into Silicon Valley innovation. In addition to providing a mothership for the acquisitions we’re bringing in, we’re organically tapping into the local talent,” she says. “We want to accelerate the research and development done by these acquisitions, not just continue at the same pace.”

Dell networking vice president Dario Zamarian will also work out of the Santa Clara office, overseeing — among other things — the company’s new Force10 acquisition. Though the data center networking kit maker will remain in a separate Silicon Valley facility, Zamarian says the acquisition is central to the company’s efforts to innovate rather than just resell. “We want to complement our servers with enough networking to really become a first-stop player,” he says. “With Force10, we created an intellectual property baseline so we can actually create networking solutions for the data center. It’s as simple as that.”

The same sort of transformation has reached a more advanced stage over in Dell’s storage group. This week, the company announced that it will no longer resell gear from storage giant EMC, preferring to sell hardware made by Ocarina and other acquisitions, including EqualLogic and Compellent.

As the world’s data centers move to virtual servers — cutting into the profit margins of server makers — HP has moved in much the same direction as Dell. Last year, the two rivals waged a bidding war over storage outfit 3Par (with HP winning). But unlike HP, says Paulette Altmaier, Dell is concerned with serving more than just the world’s largest companies. “We have strong, direct relationships with customers, and we have a heavy focus on the mid-market,” she says. “That’s how we’re different from IBM and HP.”

Altmaier’s “cloud applications” group handles Dell’s partnership with Salesforce.com — the two companies now offer web-based CRM services to small- and medium-sized businesses — and she oversees Boomi, a Philadelphia-based acquisition that lets businesses bridge the gaps between cloud services like Salesforce and old school back-end software. “We partner with Salesforce, but at the same time, we’re investing in technologies, like Boomi, to provide our own value around partner applications,” she says. “We’re not just a resell company.”

The Boomi engineering team with remain in Philadelphia, but some sales staff will work out of the new Silicon Valley Research and Development Center. Yes, having an R&D center moonlight as home to a sales team seems a bit of a contradiction, but Dell is certainly transforming itself. From a separate group based in Texas, it’s even offering “infrastructure cloud” services along the lines of Amazon EC2, building on VMware’s vCloud platform and the open source OpenStack project.

Altmaier tells us that her group will soon launch an online data analytics service. The technology will come from an as-yet unnamed third-party. But it will be hosted in Dell data centers, and as you listen to the company’s message, you must remember that this is a hardware company talking. When Dell moves into “the cloud” — as it continues to do in big ways — that’s innovation.