I am reminded of a comment I heard attributed to Bill Joy which was "Nothing says 'circling the drain' like one former tech leader buying another former tech leader."
I see that there are several reports of this rumor floating around, I suspect that its true and the 'leaker' is someone who is trying to get a better deal by letting the world know you can buy Dell for $14/share. I expect it is a positive for Dell to go private again, but I don't know if its in Microsoft's interest to be part of the game. I expect a successful Dell strategy might be to partner with Redhat and move their product line to something more standard with solid Linux support. Which is to say something closer to Supermicro's strategy but with Redhat on board.
According to the article, Microsoft is not buying Dell. They are financing the deal - and at $2 billion, essentially out of petty cash.
While there are many possible upsides, the one that stands out is that as a private entity, they can participate with Microsoft on research without worrying about Wall Street's demands for quarterly growth. For Microsoft, inside knowledge of the hardware roadmap will help them maintain leadership in the Enterprise segment.
As for Red Hat, they didn't earn $2 billion in net revenue last year. And Linux is certainly not a path to success with consumers or on the enterprise desktop.
I had the same thought. Specifically, the thought that immediately struck me was the HP acquisition of Compaq/DEC, which Scott McNealy famously called "two garbage trucks colliding." Dell is in a hot world of hurt, with Supermicro on one side and tablets on the other -- and I don't see how they compete with either of them, let alone both...
Unless that "teaming with Red Hat" meant going full enterprise/server and dropping consumer lines, I just don't see that going well (though I'm not sure I would say that enterprise equipment is really lacking in the Linux support area right now anyway...).
I expect it is a positive for Dell to go private again, but I don't know if its in Microsoft's interest to be part of the game.
Even according to your prediction, at worst they get their money back and then some. My guess is that MS wants the next Dell to still be a MS ally. Microsoft isn't going away anytime soon and Dell needs to keep that in mind if they want to be worth more than what it is today.
We went with Acer desktops, Apple portables, and HP or SuperMicro servers. Dell decided to classify us as government when we are an educational institution. It was a very, very sore point[1], and the government pricing was 2x the educational price.
1) only time I have ever lost my cool with a vendor
Based on the earlier rumors of Dell moving into thin clients / hosted PC service, and now Microsoft's stamp of approval assisting in this deal, it seems like there won't be much of a mainstream PC enterprise market in a few years. Just lots of thin clients on desks and lots of big servers somewhere.
Dell is not being purchased by Microsoft. Silver Lake Partners, a PE firm that does investments and leveraged buyouts (LBOs), is conducting an LBO of Dell. Microsoft is merely providing some of the capital for the buyout, which would likely take the form of a loan to Silver Lake Partners.
Again, Microsoft is not buying Dell, Silver Lake Partners is.
It makes a lot of sense for MS 1. from a strategic standpoint, 2. Microsoft having tens of billions of cash reserves which need a return, and 3. MS + Silver lake have a prior relationship: MS purchased Skype from them.
Dell desktops and laptops are incredibly popular in India because they are officially Linux supported (N series) and because of their CompleteCover warranty, which is awesome.
Macbooks are very expensive out here, plus Apple warranty is really, really bad.
Surprisingly, the other company which has a decent after sales support is Samsung (Lenovo sells through resellers, which screws up the experience).
Dell is a surprising addition, but only logical if you consider that every business partner of Microsoft, ever, was either bought out or killed by Microsoft. I am still surprised people want to be business partners with that company. Watch what will happen to Nokia.
I don't see what advantages Dell hopes to gain by going private. Dell has always been a one-trick pony: reduce the cost of PCs and servers by eliminating retail operations and manufacturing to-order or overseas. Everyone caught up to Dell a decade ago. Their problem today is that they provide nothing distinctive and occupy a stagnant market niche. Are they planning some sort of outrageously-expensive pivot to Apple-style consumer electronics or a Nokia-style desperation move to pin all their hopes on Microsoft's mobile platforms?
Dell, Nokia, Borders, Blockbuster. The world changes and people shift platforms. It doesn't matter how good the company is when they don't have products anyone wants. The enterprise market is still there but not so much with Dell and it is never going to have the same margins again. Microsoft is just going to draw this out.
I could see a certain benefit to a Microsoft-owned Dell.
It might sound strange to the HN crowd, but I've actually seen more loyalty toward Dell than MS in "the enterprise" recently.
I could see a strategy around retaining and expanding certain parts of the the enterprise business being enabled by owning and integrating the entire stack.
i don't get what MS is trying to achieve. the market isn't there anymore. so why prop up a business with outside money?
dell for consumers is done. low margin commodities can be done without that kind of overhead. a race to the bottom is profitable for while, but then you reach it and boom.
Dell makes a nice bit of coin (2+bil in profit last quarter according to google), mostly from the enterprise stuff, hence the kerfuffle over 3Par 2 years ago.
What I don't get is why they're submitting to a leveraged buyout.
I haven't bought a Dell PC since 2000. It was a piece of junk. Their support was also junk. I'm curious if this has changed in the past decade. Anyone bought a Dell recently that wants to weigh in?
It's hardly scientific, but both my parents have Dell laptops, and they seem happy enough with them. I'm not a big fan of the plastic construction, having been spoiled by my metal Macbook, but they seem solid enough, and apparently there's always some special offer of one kind or another to take advantage of, so the prices can be very reasonable.
And my old employer bought dell desktops. I guess they had some bulk deal or something. They always seemed basically fine, and felt pretty solidly put together - I wouldn't have wanted mine to fall on my foot. Some of the staff had dell laptops, and nobody seemed to have much to say about them one way or the other. Which is probably exactly what you want, really...
I can't speak for older Dell stuff, nor for anybody else's experience, but I've seen no evidence that their computers are worth avoiding.
Dell customer service was awesome, then turned awful in 2000 or so when Dell left the company. I dont know how it is now but I imagine better again? Dells entire value was solid computers + great service, thats how they got big. These days I suppose everybody makes pretty good quality hardware. Having said that my last PC purchase was in 2005. All Mac since then.
The newer products are actually pretty good: XPS 12, XPS 27, they announced the XPS 13 with a 1080p screen, and so on...
However, I think they had some problems before that and this might be one of the reasons why they're in a pretty bad shape right now (the other big reason being the iPad, tablets in general, Android, etc. of course).
[+] [-] ChuckMcM|13 years ago|reply
I see that there are several reports of this rumor floating around, I suspect that its true and the 'leaker' is someone who is trying to get a better deal by letting the world know you can buy Dell for $14/share. I expect it is a positive for Dell to go private again, but I don't know if its in Microsoft's interest to be part of the game. I expect a successful Dell strategy might be to partner with Redhat and move their product line to something more standard with solid Linux support. Which is to say something closer to Supermicro's strategy but with Redhat on board.
[+] [-] brudgers|13 years ago|reply
While there are many possible upsides, the one that stands out is that as a private entity, they can participate with Microsoft on research without worrying about Wall Street's demands for quarterly growth. For Microsoft, inside knowledge of the hardware roadmap will help them maintain leadership in the Enterprise segment.
As for Red Hat, they didn't earn $2 billion in net revenue last year. And Linux is certainly not a path to success with consumers or on the enterprise desktop.
[+] [-] bcantrill|13 years ago|reply
[+] [-] jussij|13 years ago|reply
Your suggesting they should turn their back on the majority of their current user base.
Doesn't sound like such a smart business move to me.
[+] [-] turar|13 years ago|reply
[+] [-] jlgreco|13 years ago|reply
[+] [-] OGinparadise|13 years ago|reply
Even according to your prediction, at worst they get their money back and then some. My guess is that MS wants the next Dell to still be a MS ally. Microsoft isn't going away anytime soon and Dell needs to keep that in mind if they want to be worth more than what it is today.
[+] [-] blhack|13 years ago|reply
Offices are still buying desktop PCs by the pallet-load. What are they buying?
edit: I'll answer my own question: http://en.wikipedia.org/wiki/Market_share_of_leading_PC_vend...
[+] [-] protomyth|13 years ago|reply
1) only time I have ever lost my cool with a vendor
[+] [-] nonamegiven|13 years ago|reply
EDIT: And in some places, virtual machines. Good for MS and those places, not so good for Dell.
[+] [-] smackfu|13 years ago|reply
[+] [-] bigdubs|13 years ago|reply
The PC market is fairly cutthroat, a result of, all things, Microsofts general business philosophy of commodifying its complements.
[+] [-] jsz0|13 years ago|reply
[+] [-] iomike|13 years ago|reply
[+] [-] sabalaba|13 years ago|reply
Again, Microsoft is not buying Dell, Silver Lake Partners is.
It makes a lot of sense for MS 1. from a strategic standpoint, 2. Microsoft having tens of billions of cash reserves which need a return, and 3. MS + Silver lake have a prior relationship: MS purchased Skype from them.
[+] [-] confluence|13 years ago|reply
> "I’d shut it down and give the money back to the shareholders"
Dell on Dell today:
See above.
Sound like he heeds his own advice
Have to respect that :)
[+] [-] thetrb|13 years ago|reply
[+] [-] sandGorgon|13 years ago|reply
Macbooks are very expensive out here, plus Apple warranty is really, really bad.
Surprisingly, the other company which has a decent after sales support is Samsung (Lenovo sells through resellers, which screws up the experience).
[+] [-] nikster|13 years ago|reply
[+] [-] gamble|13 years ago|reply
[+] [-] pm90|13 years ago|reply
[+] [-] shirro|13 years ago|reply
[+] [-] incision|13 years ago|reply
It might sound strange to the HN crowd, but I've actually seen more loyalty toward Dell than MS in "the enterprise" recently.
I could see a strategy around retaining and expanding certain parts of the the enterprise business being enabled by owning and integrating the entire stack.
[+] [-] pinaceae|13 years ago|reply
dell for consumers is done. low margin commodities can be done without that kind of overhead. a race to the bottom is profitable for while, but then you reach it and boom.
[+] [-] brudgers|13 years ago|reply
And going private is the best way for Dell to pivot out of that segment without shareholder lawsuits. Or to pivot within it.
[+] [-] zapman449|13 years ago|reply
What I don't get is why they're submitting to a leveraged buyout.
[+] [-] Apocryphon|13 years ago|reply
[+] [-] jbail|13 years ago|reply
EDIT: Guess not (which isn't too surprising)
[+] [-] to3m|13 years ago|reply
And my old employer bought dell desktops. I guess they had some bulk deal or something. They always seemed basically fine, and felt pretty solidly put together - I wouldn't have wanted mine to fall on my foot. Some of the staff had dell laptops, and nobody seemed to have much to say about them one way or the other. Which is probably exactly what you want, really...
I can't speak for older Dell stuff, nor for anybody else's experience, but I've seen no evidence that their computers are worth avoiding.
[+] [-] nikster|13 years ago|reply
[+] [-] thetrb|13 years ago|reply
However, I think they had some problems before that and this might be one of the reasons why they're in a pretty bad shape right now (the other big reason being the iPad, tablets in general, Android, etc. of course).
[+] [-] antidaily|13 years ago|reply
[+] [-] Nux|13 years ago|reply
[+] [-] redwood|13 years ago|reply
Interesting
[+] [-] bluedanieru|13 years ago|reply