Strategic Acquisitions

By Chris Preimesberger  |  Posted 2011-09-19 Print this article Print


Since returning and moving his company away from its image as a maker of low-cost PCs, Dell has sought out strategic acquisitions that the company can spin into new profit centers.

"The kinds of companies we like to acquire are proven, but sort of unknown," Dell said. "We'll acquire about eight companies a year, and Dave Johnson [Dell senior vice president and chief of acquisitions] will have to look at about 250.

"The best companies are those we are already partnering with because we understand them and they understand us. We de-risk a lot of the acquisitions because we already know what we're doing."

EqualLogic, a new-generation storage company whose arrays and software fit right into the cloud-computing model, is a good example of what Dell does with its acquisitions: namely, magnifying their value into its 180-country sales network, and providing capital and personnel where required.

"When we bought EqualLogic [in 2007], they had about 3,000 customers; now they're well over 30,000 customers," Dell said. "We've had KACE for seven quarters; their business is now seven times larger than what it was before the deal.

"I don't know if we can keep doing that-eight quarters/eight times bigger, nine quarters/nine times bigger-but we'll certainly find out if we can."

Dell's Take on HP

During the interview, Dell was in an ebullient mood, which was understandable. A week earlier, his company's biggest competitor in the personal systems business, HP, had announced its plans to leave the business entirely to focus more of its energies on software and services. (According to industry analysts Gartner and IHS iSuppli, HP is the No. 1 PC maker in the world, with about 17 percent of the market; Dell has 12 percent.)

Dell, a user of Twitter, chided HP that day with this tweet: "If HP spins off their PC business ... maybe they will call it Compaq?" He was referring to HP's controversial 2002 acquisition of that PC company.

"What an opportunity for us, no question about it," Dell said. "While we are moving into software and services, we are going to continue to grow our PC businesses, as we know we can.

"Remember, this [global IT] is a $3 trillion business, and we think there are fabulous opportunities all through it. People are going to continue to use PCs [in various forms] for a long time to come, even though there are a lot of other good new devices out there.

"I know a lot of good people at HP, and you don't ever want to wish anybody ill. HP has been a very successful company for a long time. But they do seem to be having a tough go right now. Businesswise, of course, it's very good for Dell and our shareholders. So you have to look at it first from that standpoint."

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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