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Systems management, cloud services likely in Dell's software acquisition plans

Chris Kanaracus | Feb. 6, 2012
Dell's formation of a new software group, which was announced Thursday, could be the forerunner to a string of acquisitions by the vendor, with some observers predicting a focus on systems management and cloud services provisioning.

Dell will also look to have relevant software offerings for mobility, despite having had little success in the tablet and smartphone markets. It's conceivable that Dell could partner with or buy out a portion of Research In Motion in order to gain mobile device management technologies, according to Persaud.

Don't expect Dell to attempt to topple the likes of HP and IBM in systems management at the enterprise level, however.

"[Dell's] focus is on the midmarket," said analyst Rob Enderle of Enderle Group.

A purchase of systems management vendor BMC, which has made some midmarket-centric acquisitions of late, would provide a serious jump start to those plans.

But such a megadeal is not likely, according to Enderle. "[Dell CEO Michael Dell] doesn't like to do big acquisitions." Instead, Dell will pick up "young companies" that fit its vision, he said.

Dell wants to create a systems management portfolio "where the whole is greater than the sum of the parts," Enderle said. "Having to go to a third party [for needed functionality] puts them down a tier from the HPs. In the midmarket, they want to lead. The stuff they pick up may be agnostic but the goal is to create solutions around Dell technology so they can compete with the other players."

Overall, it's obvious why Dell decided to form the software group, according to Frank Scavo, managing partner of the IT strategy firm Strativa.

"No one wants to be in the commodity hardware business these days, and Dell is no exception," he said via email. "IBM sold off its PC business to Lenovo, HP apparently toyed with the idea of selling off its PC business last year, and Oracle is refocusing its Sun business away from low-end servers."

Dell, Hewlett-Packard and Oracle are "all following similar strategies of combining hardware with software and services; they each have different starting points," Scavo added.

To this end, the Dell announcement should also be a warning sign for software vendors, according to Enderle.

"If you're a software company and have been relying on companies like Dell, this is a wake-up call that all of the hardware players are doing their own software," he said.


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