5 Companies That Should Be on Dell's Shopping List

22 Comments

delle.jpegSince Dell (s dell) keeps telling folks it wants to buy some companies, we’ve written out a list that Michael Dell should consult as he expands his eponymous empire. Second-hand sources quoted in the Wall Street Journal today said that the company was seeking deals in data storage and tech services. The article also noted that Dell hired a former IBM deal maker last month who has since been sued by his former employer to keep him from getting involved in strategy discussions at the computer giant. So since Dell’s new M&A guru can’t offer up ideas, we thought we’d take a stab at it. Readers, feel free to offer up your own suggestions in the comments below.

CommVault (s cvlt): Dell already supplies CommVault software (including de-duplication software) in some of its storage boxes, and accounted for about 22 percent of CommVault’s sales in the last nine months of calendar 2008. With the fight over Data Domain (s ddup), de-duplication is hot. And storage is clearly an area where Dell wants to buy something.

oDesk: Dell equals low-cost hardware and just-in-time manufacturing, and as a services play, oDesk mimics that philosophy. Need a developer for next week? Through oDesk, Dell could provide a cheap contractor on a just-in-time basis. This isn’t the IBM services model, but it’s quintessential Dell.

ParaScale: This startup makes software that allows companies to build their own storage clouds. This is another way Dell can create a low-touch services offering to customers, rather than get into an intensive, consulting-based relationship with companies that require cloud storage from an outside vendor.

Vyatta: With Cisco (s csco) launching its own servers, and HP emphasizing computing and switching in its gear, why shouldn’t Dell be bold and acquire its own switching assets? Vyatta is like the open-source Cisco, and combining it with Dell’s servers gives folks low-cost, functional products — something people come to Dell for in the first place.

Palm (s palm): I know, I made fun of this last month, and have an idea that Dell would likely grind down the Palm folks with its exacting and less-than-innovative culture, but it’s also a move that could make sense. Perhaps Dell could model this deal on its Alienware acqusition that left the high-end gaming maker a separate subsidiary that didn’t have to deal with Round Rock.

22 Comments

Ike

I recently went through an acquisition with Dell and left. The culture there is so dysfunctional that I can’t see them being successful with any transaction. The “winning culture” is a lie. You walk in and you hear, “this is an entreprenurial company”…couldn’t be further from the truth. It’s a company run by career managers who spend all day pinging powerpoints back and forth and never speaking to a customer and politicking. That goes for the hardware and services divisions both. There’s an internal identity crisis between career ship em a box managers and services managers that is driving some internal dysfunction as of late. The Box Shippers undermine the services acquisitions and good services people play a “sit on their hands” game and try to figure out how to get re-org’d. It’s brutal. Then need to fire all the managers in Round Rock and go back to having everyone in the company in a customer facing, revenue generating role. Otherwise you’ll end up in the same place of having disgusting, sickening non-customer focused business that is internally scared to do anything the right way. Fire a sh!t of career managers there, that’s the only way to help fix things.

NYCamps

All of these companies do NOTHING to keep Dell relevant in the Enterprise Space. The only company Dell should be looking to purchase is RED HAT. All developers these days come from two camps; .Net or Linux. Dell has plenty of service offerings around MS, but could seriously use help on the Linux/unix side of things. Red Hat has developed a nice portfolio of close-to-the-box wares that would help Dell branch deeper and broader into “cloud” computing, S.O.A, and presently relevant customer initiatives.
Couple all of this with Oracle’s recent acquisition of Sun, and the amount of business Dell could realize is infinite!

tom herold

They will buy and jack shit company and any joeshmoe company. what is it that we are gaining?
why are we discussing this here.
I thought this blog talked about technology , innovations and products, this news seems to be a deviation.

now go ahead guys and gals-> twit about this and create a buzz.

Countingon Myfingers

> …it’s also a move that could make sense…

If Palm were free or cost maybe a few hundred million dollars it would “make sense”.

At billions of dollars current valuation (remember – 200-ish million shares after Preferred are accounted for, $13-ish current stock price, $400 million in debt)…and billions MORE if ANY premium is paid…it totally does not “make sense”.

I’m surprised you and (many) other Media folks continue to ignore the outrageous cost Palm would be to any acquiring company when you write articles that say acquiring Palm would “make sense”.

Paul

If you want big, how about they buy Skype and bolt on RingCentral? But buying Palm would be a waste for the reasons raised in the post.

Paul Lopez

Dell needs something BIG. They run in to problems when they try to introduce a competing OEM product, Dell branded like an MP3 player or PDA. They need to decide if they go after consumer, prosumer or business/enterprise, can’t do all three.
http://lopezunwired.com

Scott

Just some thoughts on the switching front; switching is hyper-competitive and even the most bleeding-edge network equipment vendors acknowledge switching is a commodity due to the lack of intellectual property. Product differentiation is on the software side, so this would be tough for a great manufacturer like Dell. Furthermore, Cisco has a market share of about 33% of worldwide port shipments and 70% of worldwide revenues as of calendar 1Q09, which must be daunting for a new entrant.

On the flipside, Stacy brought up an interesting idea; Vyatta. It makes me wonder if Dell could actually compete with Cisco if they acquired someone like Vyatta, funded internal development of the OS alongside licensing it under the GPL (like Intel with Moblin), and just solely focused on building the most affordable, powerful networking hardware on the planet. It would blindside a very stubborn industry, attracting new customers like Google to start buying rather than building their own equipment. Google even might contribute to the open-source OS like they do Linux just to twist the knife a little as they are known for doing.

Back to reality; never mind all that. It was a nice dream.

pwb

I think Dell should concentrate on hardware. It has no competence in software or services.

Haresh Vaishnav

If they want to stay relevant in the enterprise space and compete with big guns like HP, IBM, Cisco they will need big acquisition. Buying small startup and growing them organically is not going to do it.

I agree with iBav on storage. NetApp is the most appropriate choice. Dell has been selling storage from EMC; but this immediately brings them lot of credibility in this space with enterprise customers.

oDesk is too small for them to help win in the enterprise space. They have to go with the established company such as ACS similar to what HP did last year with the buyout of EDS.

iBav

what about NetApp and/or Force10? Win-Win for all parties and helps combat Cisco, HP, EMC, and IBM. Om – good point on Citrx, they do need a s/w services play offset declining h/w margins…

Rajon

They need to get something that allows them to play in the serious side of the data center against the HP, IBM, and soon to be Cisco. Something like expanding the deal with Egenera or flat out snapping them up.

Tim Masters

I think Dell buying CommVault makes sense – but it has nothing to do with deduplication. To use CommVault for deduplication, you have to use CommVault as your backup software – and most companies are not going to change their backup software just to get dedupe – there are many dedupe appliances that you can use that do not require you to change your backup software. The people that are speculating that Dell would buy CommVault for deduplication really don’t understand the technology and are simply operating off of buzz words.

Brandon Schenz

How about a Held Desk company for it’s customers. I just had the worse experience with them, and refuse to do business with them again unless they change their support process.

I had a laptop for a week and the Hard Drive died. Hardware fails this is fine, but they really dropped the ball in handling it. Promised to ship new laptop as this one was only a week old (to the day). A week later never got any emails from them on the replacement. Called and was transferred no less than 7 times until I finally got sick of it and told them to cancel it all, send me a return label, and give me a full refund.

Found an HP model that had better hardware for a lower cost. The customer service experience cannot possible be any worse should anything go wrong with the hardware…

Tathagata Chakraborty

I second that! Why don’t companies acquire something that makes life easy for their customers? Every time any company gets acquired the customer service invariably gets worse.

Ron

Didn’t Citrix just do a deal with Vyatta? Would that preclude a Dell purchase? If not Citrix might get screwed depending on how Dell played things with Vyatta.

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