What Will Dell Buy Next?

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Dell bought three companies in the past week and five since the beginning of the year. Three of them deal with data and applications – specifically in cloud computing. Where is Dell going next? If building a portfolio of end-to-end solutions is the end game, there are many options for spending Dell’s $18 billion war chest.

The bottom of Dell’s wallet seems limitless, as does its willingness to spend on new assets. In the past week, Dell bought three companies – Wyse Technologies (thin clients), Make Technologies and Clerity Solutions (cloud applications).

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Since the beginning of the year, Dell has snapped up five companies, including SonicWall (security) and AppAssure (backup). And in the last 15 months, Dell has bought a total of 13 companies, including Force10 Networks.

In total, Dell has spent more than $5 billion on these assets, and there’s no indication the wallet is about to snap shut.

While the latest spending spree is being tied back by analysts to the formation of a new software group under CA CEO John Swainson, there’s actually a more deliberate M&A machine at work behind the scenes. Dell sometimes spends years watching and studying companies before it buys. Speculation is it’s developed a long-ball strategic plan dating back to its 2006 management shakeup.

>> CHECK OUT: A Word about M&A in the Channel

Dell has made numerous acquisitions over the past several years, including the following:

  • EqualLogic (Storage)
  • Perot Systems (Business Process Outsourcing, Professional Services)
  • Compellent (Storage)
  • InSite One (medical records storage)
  • SecureWorks (security managed services)
  • SilverBack Technologies (managed services, RMM)
  • Everdream (endpoint management)
  • Ocarina (storage deduplication)
  • KACE Networks (appliance management systems)
  • Boomi (cloud integration)
  • MessageOne (software management)
  • Force10 Networks (networking, switches)

What’s interesting about this list is that it points toward infrastructure products and management. While no company can provide all the infrastructure required by businesses ranging from large enterprises to small business, Dell has a broad and comprehensive portfolio that can now stand toe-to-toe with the likes of Hewlett-Packard, Cisco and IBM.

The recent acquisitions – Clarify and Make, in particular – point to a shift toward applications and making use of data sitting on the infrastructure. Dell has made no secret of its desires to become a significant player in the cloud. The new assets show recognition that providing pipes to the cloud isn’t enough. True success will come from providing applications that manage and manipulate data in the cloud and end devices.

What’s missing from this equation? A lot.

  • Middleware products like IBM (WebSphere) and Oracle (Fusion)
  • Database and analytical applications provided by companies like SAP, SAS, Oracle and IBM (Cognos)
  • Application acceleration and WAN optimization (Riverbed, Blue Coat, F5)
  • Internet service and quality control (Akamai)
  • Cloud and application management capabilities provided by companies like IBM, CA Technologies, and BMC Software
  • Voice and Telephony such as ShoreTel and Avaya
  • Video conferencing such as LifeSize, Vu Technologies, Avaya, Polycom, Cisco
  • Mobile device management, such as Zenprise, MobileIron and BoxTone
  • Security, on the broad scale, such as Kaspersky, Trend Micro, Symantec and McAfee
  • And, of course, the hosted infrastructure of Amazon, Rackspace, Hostopia, Verizon (Teremark) and scores others

There’s still a lot missing from Dell’s arsenal. Speculation is that Dell will continue to spend its way to transformation rather than develop organically. The company has overcome its missteps of the middle-decade to become a more robust vendor insulated from market fluctuations. And, of course, it’s developed a robust channel along the way to fuel and support its transformation and growth.

Where will Dell point its money cannon next? It’s hard to say with so many targets. What do you think Dell should buy next?

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