Dell buys for the future

At the end of the summer, when Dell finally cleaned up its accounts enough to file a full set of financial results, analysts interpreted a respectable up-tick in revenues as a slight return to form

In November 2007, when Dell posted an overall revenue growth of 9% but a 1% decline in laptop sales, it became apparent that the company still has a way to go. In the same month, the company made two important acquisitions – only the fourth and fifth in the company’s history – that reveal a commitment to a strategy that will certainly take some time to bear fruit.

First, the company announced it was upping its commitment to storage systems with the acquisition of privately owned, storage area network array builder EqualLogic for $1.4 billion. Not only does the purchase buy Dell a hot storage technology line based on low-cost iSCSI disks, but it lays the foundations for a storage equipment sales channel.

Dell believes the EqualLogic buy will help it sell its own equipment through the smaller company’s channel. But that is a gamble: EqualLogic’s channel partners may see Dell, which still sells the majority of its equipment directly, as a competitor and stop reselling EqualLogic hardware.

Dell will also have to see how well the acquisition sits with its close partnership with EMC. Currently, Dell resells mid-range EMC storage devices – in some cases jointly designed with the storage market leader. The range spans both fibre channel disk systems and iSCSI-based arrays. Dell says that some of the EqualLogic technology will also find its way into the company’s homegrown PowerVault low-end storage systems.

EqualLogic launched its first product in 2003, and is now on its third generation of iSCSI systems. It boasts some 2,000 customers.

Elsewhere, Dell signalled a hunger to expand its services arm with the acquisition of on-demand desktop management service provider Everdream, for an undisclosed amount.

Everdream’s software-as-a-service platform delivers desktop management over the Internet. That should provide a potentially lucrative add-on to many desktop contracts. The Everdream product set includes hardware and software asset discovery and management, software distributions, patch management, online back-up and remote support – all delivered via a software-as-a-service model. Everdream manages more than 140,000 desktops worldwide, with a client list that includes ADP, Brocade Communications, Korean Airlines and

Further reading

Return of the king Michael Dell plans to revive his company's fortunes by mimicking his rivals.

Don't call it a comeback Dell is showing the first signs of recover, but as Hewlett-Packard's stellar performance demonstrates, it has got a long way to go yet.

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Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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