Dell's Perot Buyout Presents New Enterprise Challenge to HP

News Analysis: Dell's plan to acquire Perot Systems for $3.9 billion sets it on the path toward becoming a full-scale enterprise IT hardware and services company that can compete more effectively with Hewlett-Packard. Adding an IT services arm to the Dell organization is increasingly important as profit margins for desktops, laptops and servers continue to shrink.

Dell's decision to acquire Perot Systems for $3.9 billion in an effort to expand its operation beyond the personal computing business is an extremely smart move.

Although Perot Systems operates in a different space than Dell, its services should go a long way in helping Dell find new avenues for revenue and corporate growth while improving and expanding its relationships with major enterprises.

Perot offers several technology-related services designed specifically for the enterprise, including consulting, data center management and software. These services should help Dell acquire more market share in the enterprise computing space where Hewlett-Packard has done a fine job of battling it out with Dell.
The new Dell
As long as both boards approve the deal and regulatory proceedings allow it, the new Dell will look quite different from how it does today. The PC maker won't just be a PC maker. Soon, it will be a multifaceted services company able to appeal to enterprise customers who want more than a simple PC contract.
In today's PC manufacturing business, margins are low. It's extremely difficult to make the kind of profits Dell enjoyed even 10 years ago. Worst of all, competition is fierce as notebooks are becoming increasingly commoditized.

In today's marketplace, it's practically impossible to tell the difference between an HP notebook and a Dell notebook. The logo might be different. One notebook's design might be sleeker than another. But when organizations are searching for capable machines with good specs, chances are that the two companies will be offering about the same product at about the same price. Both Dell and HP machines have Intel processors, Windows, the same display sizes and the same capabilities. There's really not much difference.
But Dell has changed that for the future. With the help of Perot, Dell can go to companies and explain that although it might be offering the same computer as the competition, it's not offering that as its only service. Sure, it will support PCs as before, but now it can provide data center and consulting solutions that make it a far more valuable partner. It's a powerful combination.
It's about the relationships
One of the most important elements of Dell's deal with Perot is that the company can now build stronger relationships with enterprise partners.

Don Reisinger

Don Reisinger

Don Reisinger is a longtime freelance contributor to several technology and business publications. Over his career, Don has written about everything from geek-friendly gadgetry to issues of privacy...