Analysts See the Deal as the Next Logical Step for Dell
"I see this as just the next step, going beyond PCs, for Dell," Mark Margevicius, vice president and research director of client computing at Gartner, told eWEEK. "This is a strong fulfillment on the portfolio. This allows them to backfill on pieces that are really important to their clients."
The second aspect of the deal, Margevicius said, is that it "crystallizes their vision and messaging about 'from the client to the cloud.'"
The thin-client market is still experiencing growth, despite all the recent noise about "bring your own devices" policies that many (especially newer) companies are now claiming. IDC has advised that the TC market will be worth $3 billion by 2015, powered by a healthy 15 percent compound annual growth rate. Government, health care and financial services are the leading verticals here, and those are big-ticket buyers that also purchase Dell servers, storage and laptops.
Wyse was No. 1 in market share of thin-client unit shipments in the fourth quarter of 2011, with trailing 12-month revenues at $375 million and 2011 revenues running at a remarkable 45 percent year-over-year growth rate.
Deal Hardly All About Thin Clients
However, this deal is hardly all about thin clients. Wyse has come up with some fancy cloud-management software over the last few years that plays largely into this transaction.
"We believe part of the rationale for this deal is defensive as thin clients cannibalize PCs; however, Dell believes that the overall impact of Wyse will add more to their software and services sales than hardware sales," Jefferies & Co analysts Peter Misek, Jason North and Billy Kim wrote in a research note. "We see the acquisition as a logical step in Dell's piecing together of a complete cloud computing stack."
Indeed. Wyse is a respected survivor in the shark-laden IT business and has gained a wealth of respect and loyalty from customers around the world in its generation-long existence.
"PCs are not a growth business; they have to kick free of that 'PC-maker' moniker. This is a key piece of that componentry that delivers a cloud vision," Margevicius said. "What they're [Dell] getting is a pretty extensive portfolio of IT. They [Wyse] have pocket cloud, thin OS, a streaming manager, and a variety of other tools and technologies that are really important."
PocketCloud Remote Desktop is Wyse's way to remotely connect a Mac or Windows desktop with an iOS or Android mobile device. Streaming Manager runs an OS locally on thin clients over a network without the usual multimedia/performance problems thin clients often encounter. Wyse's ThinOS runs Webcams using Citrix's XenDesktop.
Acquire or Partner? That is the Question
A big question on investors' minds, according to Sterne Agee's Wu, is whether Dell could have chosen to partner with Citrix and VMware on thin-client and virtualized desktop software, instead of making the acquisition.
The realistic answer is that Dell can do all of the above; since it is has become an all-purpose data center products and services company, it can provide partnering solutions in TC and virtual desktop implementations just as easily as it can bring in its own products.
Dell is big on handling a virtual circus of IT in a data center and matching and melding new-gen software with legacy hardware and software. In a Big Tent, who would expect otherwise?
Chris Preimesberger is eWEEK's Editor for Features and Analysis. Twitter: @editingwhiz