Dell Gets More Than Thin Clients in Wyse Acquisition

NEWS ANALYSIS: The deal for venerable thin-client and VDI provider enables Dell to add a new portfolio of cloud-system software and to backfill on other necessary pieces of IT.

Dell is now officially a Big Tent: a benevolent sponsor of new IT acts that sells a lot of tickets in its traveling circus.

The latest headliner for the center ring in Round Rock, Texas, is 31-year-old IT industry survivor Wyse Technology, which was born in 1981 during the Reagan Administration, when new companies still used "Technology" as part of their names.

/images/stories/wyse-logo1.jpgDell announced the deal April 2 but declined to say how much it will pay for the San Jose, Calif.-based purveyor of thin-client, virtual desktop and cloud management software. However, if one does the math on Wyse's $375 million in annual revenue, then it's a safe bet that the deal will set Dell back for a cash amount in the $400 million to $600 million range. That price represents 1.0 to 1.5 times Wyse's expected annual revenue, according to Sterne Agee industry analyst Shaw Wu.

Wyse Has Wised Up to IT Trend

For years, Wyse made "dumb terminal"-type hardware/software systems for large enterprises: desktop computers that were tethered only to internal corporate systems. It no longer makes and sells hardware. But in the last half-dozen years, Wyse has become wise to a significant trend in enterprise IT: hardware companies shifting focus to software and cloud management tools.

It's probably not a coincidence that Dell has gone the same route in almost the exact same time window. At the user level, it's true that Dell still makes plenty of personal computers, but it is rapidly putting more emphasis on what it really wants to provide in the 21st century: cloud management software, other types of data center software and corresponding services for all of the above.

Dell, founded by CEO Michael Dell in 1984, is only three years younger than Wyse, so they both came out of the same IT thought generation. There's something to be said about common cultures fitting well together here, too.

A key qualifier for the Big Tent label: Dell appears in a hurry to out-buy fellow Big Tents Hewlett-Packard, IBM, EMC, Oracle and Cisco Systems. At last count, Dell has bought 14 companies in the last two years and three in the last two months. The employee on-boarding process in Round Rock must be as fast-moving as an in-memory database, because if it isn't, those HR folks must be tearing their hair out.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor of Features & Analysis at eWEEK, responsible in large part for the publication's coverage areas. In his 12 years and more than 3,900 stories at eWEEK, he...