Dell has adapted its business approach substantially over the past few years. They have consistently been a top 10 buyer of tech firms; however, we’re currently witnessing a shift in its acquisition strategy which says a great deal about how Dell sees its future. About one month ago, Dell announced its latest acquisition of Wyse Technology, a provider of cloud computing and secure desktop virtualization technologies – just one of a string of moves by Dell to move beyond its core hardware business into software and services – a familiar theme from the big hardware vendors, which we have been observing since IBM began its shift almost 10 years ago. Like many of its competitors, Dell has been watching its traditional PC sales drop, whereas it is seeing an increase over 20% for its enterprise businesses.
Dell began its migration to software and services back in 2009 when it hired David Johnson from IBM and appointed him VP of Corporate Development to lead its aggressive new acquisitions strategy. Shortly after Johnson joined, it acquired Perot Systems for $3.9B.
Dell has been especially focused on building assets to develop its businesses in the cloud, Infrastructure as a Service, and in security. Dell has made 13 acquisitions in the past 24 months, 12 of them into straight software companies. It’s also interesting to see that Dell does not typically buy too far from home; all of its deals are US companies, except for one Canadian firm.
In addition to the story these acquisitions tell about Dell’s strategic path, in February of this year it established a new software group and hired ex-Computer Associates CEO John Swainson to lead that business unit. The newly-formed business unit will build on Dell's software capabilities and "provide greater innovation and organizational support to create a more competitive position in delivering end-to-end IT solutions to customers."
Like many of the top tech firms, Dell is sitting on a pile of cash at $14B, even after all of these recent deals. I’m quite certain we’re going to see a few more in the coming year in the software space, further building out its strategy in this direction.
Posted by MarkJohnson, Director on 14 June 2012