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CIOs might hold back on Dell purchases

Jack Loo | Feb. 7, 2013
Analyst firm Ovum says there is uncertainty to which Dell products and services might be strengthened or eliminated.

One significant risk likely to face computer maker Dell after being privatised is that enterprise customers could temporarily hold back on purchases, according to Carter Lusher, chief IT analyst at Ovum.

Earlier this week, founder Michael Dell teamed up with investment firm Silver Lake to buy Dell, the company he founded as in 1984, in a deal valued at about US$24.4 billion.

The implication of going private is that the company is planning radical changes to its strategy and product roadmap, said Lusher.

"While the company might come out of this transition stronger with a product lineup that better meets the needs of businesses and public sector organisations, there will be uncertainty as to what products and services stay, get strengthened, or get eliminated," he said.

Industry observers said Dell is looking to become a supplier of IT infrastructure for enterprises, but the organisation has the challenge of shedding its longstanding identity as a PC maker.

Another issue for Dell is how the Dell Services arm, built on the Perot acquisition, shares its financials for the due diligence phase on large, multi-year IT services deals, said Lusher.

"Ovum sees effective communication to prospects and customers about Dell's strategy and product roadmap as a, if not the, critical success factor to get through the transition. While this might sound simple it is not," said Lusher.

"Ovum recommends that CIOs need to assess the risk to their infrastructure and put into place plans should Dell's radical hardware, software, and services shifts require changes to procurement plans," added Lusher.

 

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