Dell Eyes Acquisitions Services, Data Center and StorageBy Lawrence Walsh | Posted 2009-03-26 Email Print
CEO Michael Dell says the computer company will expand its capabilities and capacities in enterprise services, storage, data center infrastructure, servers and software to stay competitive with IBM, HP and Cisco.
Dell won’t sit on the sidelines as Cisco Systems gears up its blade server strategy and IBM pursues Sun Microsystems for its data center assets.
At a press conference in Beijing, CEO Michael Dell says the company that bears his name is actively eying acquisitions to give it greater enterprise capabilities in servers, storage, software, data center infrastructure and IT services.
"If you look in the last few years at the acquisitions we have made, it really has been focused in those areas," Dell said at the press conference.
Dell didn’t elaborate on specific acquisition targets or timing.
Dell’s comments come amid intense speculation about the mergers and acquisitions among IT industry giants. IBM, the leader in the server market and IT services, is said to be deep in discussions to buy struggling Sun Microsystems for as much as $8 billion.
Intel CEO Paul Otellini this week said that Sun has been looking for a buyer for all or parts of its business for several months, and Hewlett-Packard, Cisco Systems and Dell were all perspective buyers.
"I can tell you that Sun was shopped around the valley and around the world in the last few months," Otellini said in Securities and Exchange Commission filings. "A lot of companies got calls or visits on buying some or all the assets of the company. It looks like IBM is in the hunt now. And at a hundred-and-some-odd-percent-premium, I suspect they'll get it."
Following reports that Dell received lackluster reviews for its smartphone design, financial analysts began openly talking about the virtues of a Dell acquisition of struggling handheld manufacturer Palm. Palm is set to release its Pre smartphone later this year, a device that many analysts say rivals the Apple iPhone in functionality and capability.
And in the wake of Cisco’s unveiling of its unified computing data center architecture and blade server strategy last week, several analysts and observers started speculating whether the networking giant would restart talks to acquire or merge with storage heavyweights EMC or NetApp.
Dell has been under pressure by declining markets and increased activities among traditional rivals, namely HP in the personal computer market. After years in the top spot for PC sales, Dell was dethroned in late 2007 and has been losing ground in the server market, where it ranks a distant third behind IBM and HP.
Dell has been active in trying to reverse its fortunes. Over the past 18 months, it’s made significant acquisitions in the managed services and storage space. Its 2007 acquisition of Equal Logic for $1.4 billion gave it a sizable footprint in the storage market. NetApp global channel chief Julie Parrish said in an interview with Channel Insider last fall that Dell was one of the companies that concerned her from a competitive perspective.
In the same period, Dell abandoned its "direct only" sales model and began building an indirect sales model. It’s recruited nearly 15,000 resellers and solution providers in North America and is now generating more than $9 billion in channel sales annually.
In the continuing evolution of its channel strategy, Dell this week announced deals to sell preconfigured versions of its Vostro desktops and notebooks through distributors Ingram Micro and Tech Data. To jump-start those sales, both distributors say they’ll give the products heavy call center support to generate customer demand for their solution provider customers.
"Certainly it’s an opportunity to have the collective sales forces at Ingram Micro and Tech Data represent Dell to VARs, rather than sell against us," Dell’s global channel chief Greg Davis told Channel Insider. "…Where we believe we may have lost business in the past, we’ll now we have Dell products available."
Dell’s acceptance of distribution as a route to market will make it easier for solution providers to acquire multiple products for holistic solution selling through a single source. It also makes the acquisition of financing easier.
"Dell’s move to sell select small business products through distribution will make it easier for my inside sales representatives to place orders and shorten product delivery time to my customers," says Doug Ford, president of I.T. Pros, a Dell reseller.