Microsoft Dell deal would restore PC makers' confidence The PC business could experience not one but two seismic events on Monday. First, the world’s third biggest PC maker is expected to announce a $20bn leveraged buyout, taking it off the stock market and putting it back into private hands. Twenty-five years after Dell floated, the PC maker’s management would no longer be …
........at least implicitly underlined? MS will have a 10% stake - that gives them a say but not any form of unilateral power over Dell. The other investors are highly unlikely to roll over just because Demon* Lord Ballmer tells them to.
*Yes, I am satirising the attitude of some round here.
Satirise all you want, but someone who has a 10% stake in a very fat pie will occasionally put in a personal appearance, and they may only have 10% of "Dell", but they have 100% of the software Dell needs to flog hardware to sheep which offers IMHO quite some additional leverage.
I may do Ballmer an injustice here, but from what I have heard so far he's not terrible good at the whole cooperation/collaboration thing, so board meetings could get, umm, "lively"..
Of course. I entirely agree with you. My only point was an attempt to pre-empt the howls of "Dell's been borged" etc. I was simply pointing out that although Redmond will of course have a say "at the table" both because of their stake and because they are the provider of the main os that Dell use, that there are limits on how far they can throw their weight around. In this "transfer of ownership" there are several powerful players involved, some of whom may not be exactly willing to swallow Redmond's agenda in any automatic sense. I was simply hoping to contribute to a slightly more grown-up debate than that we very often get here the moment that the "Great Satan" is mentioned.
I wonder if this will make it easier to get Linux on Dell equipment. If Microsoft buys a piece of Dell they'll have to tread very carefully with efforts to suppress Linux on PCs being shipped from manufactures, especially a manufacture that they are part owner of. Remeber this isn't the samething as Apple owning to whole chain.
You don't know Microsoft, do you ? Dropping Linux is highest on the list of conditions imposed. Dell will obey because even I would do it for few billions of dollars. It's not Microsoft who will do it, Dell will suddenly discover that nobody wants Linux.
Here's hoping for reverse-borgification... Mr. Dell would make a pretty good successor to Ballmer as head of MS... the sooner the better.
I do worry that Dell will be hurt by closer Microsoft ties... there are very few companies who have come out well from any kind of partnership with MS. Rather like King Henry VIII's wives there are advantages and disadvantages to such domestic arrangements.
Redhat, Suse, VMware, Citrix, appasure and all the other middlewear stuff comes to mind.
Never mind the SAN/Networking stuff
How much income do Dell make on desktops compared to server, storage and services revenue?
I'd wager a lot...
I get the feeling that the Microsoft investment will be the undoing of Dell. Microsoft's software decisions of later have been stupid. They are desperately trying to copy others while at the same time ignoring what made them successful. Examples: Google -> Live search/Bing; iPad -> Windows 8. You do not ignore what your customers are saying and expect to be successful: Dell lost the #1 PC crown to HP because Dell refused to sell AMD chips back when AMD really was better. If Dell is forced to listen to Microsoft who is not listening to their customers, then Dell may be in big big trouble. I foresee trouble up ahead for Dell.
It could actually be an interesting exercise to follow the track of all the companies MS has invested in or bought up and see what happened. Didn't Nokia stock brick quicker than a Samsung laptop with Linux when they signed a deal with Microsoft?
If modernity is characterized by a loss of the sense of the real, this fact is connected to what has happened to money in the twentieth century. Everything threatens to become unreal once money ceases to be real. I said that a strong sense of counterfeit reality prevails in "Disorder and Early Sorrow." That fact is ultimately to be traced to the biggest counterfeiter of them all - the government and its printing presses. Hyperinflation occurs when a government starts printing all the money it wants, that is to say, when the government becomes a counterfeiter. Inflation is that moment when as a result of government action the distinction between real money and fake money begins to dissolve. That is why inflation has such a corrosive effect on society. Money is one of the primary measures of value in any society, perhaps the primary one, the principal repository of value. As such, money is a central source of stability, continuity, and coherence in any community. Hence to tamper with the basic money supply is to tamper with a community's sense of value. By making money worthless, inflation threatens to undermine and dissolve all sense of value in a society. ...
Those who know how to exploit an inflationary situation can gain as much as others lose. As a result, inflation creates a topsy-turvy world. The fact that people are losing and making fortunes overnight is responsible for all the social confusions in "Disorder and Early Sorrow," such a s Cornelius's inability to tell his son from his servant. In a world in which all distinct categories begin to dissolve, a pervasive sense of relativism develops. Cornelius's convictions begin to weaken and he feels unable to take a stand against the opinions of the younger generation. In a frightening anticipation of today's tyranny of political correctness, the history professor retreats into a n academic skepticism when faced with the fanaticism of youth, trying to make his lack of conviction masquerade as a form of broadmindedness ...
Must be too long since I read my economics textbooks or these sentences are incorrect:
"Microsoft, along with VC Silver Lake Partners, is reported to have lined up $15bn from UK and US banks to finance a deal, making them minority investors in a private Dell. Reports value an estimated $3bn Microsoft contribution as a 10 per cent stake."
Huh?
- MS+Silver Lake together have gotten $15bn from banks to invest in Dell
- MS invests $3bn
=> Silver Lake then invests $15bn-$3bn=$12bn?
Or are the banks not loaning money to MS and/or Silver Lake but investing directly in Dell?
MS 3B is 10% so total 15B gives MS + Silver Lake 50%, or 49% if it is a minority stake. Presumably Michael Dell + associates get the other 51.
MS and Silver Lake can get $ from wherever: internal resources, investment partners, banks etc. as long as they plonk down 15B to help to buy out existing shareholders nobody really cares how they finance the deal.
What's wrong with that?
MS wants to make sure Dell is pushing windows (and it's tools) in the server market rather than Llinux and I'm sure Dell will get preferential discounts from MS to achieve this. The business market is where MS makes it's real cash.
This strategy may well piss off other channel partners though and could cause problems for MS long term, happy hand grenade juggling MS.
I concur. There are a lot of server farms with a lot of servers in the world. A lot of those servers are already running on Linux, with both local and geographical redundancy for critical functions, which Linux does (or at least can be made to do) well. If Microsoft are worried, it's because they probably should be.
Except.
Apple are competitors at the OS level.
This would turn one of their biggest customers into a finger of MS.
There other big customers will notice if MS is anything less than perfectly even handed in their dealings with "New Dell"
But history demonstrates that MS deals a little more "fairly" with its own than with others.
So MS is going to just throw more money at the problem. Seems it would be cheaper to just fix the GUI so they get rid of that Unity desktop joke so business and your average PC user would actually want Windows 8.
Get your heads out of your a$$e$ and go talk to real people that make less than $500 a week and find out what is really going on since tossing $15 billion at a problem for the wrong solution is foolish. The reason you have this problem is you're only listening to people that can buy what ever they want without even thinking about it so they don't care about price and if they do make a mistake of buying Windows 8 they can just buy another computer with 7 but most of us have to save up just for Windows and I'm not spending good money on a touch screen OS for a new PC.
IMO the biggest mistake which Microsoft is making is to deprecate older software bundles, even if they're still being maintained. Now, this isn't something new; people have been saying this for over the years now. When Vista came out people wanted to buy into XP until that ran out; Windows 7 had a somewhat different approach but you also see this happening on other platforms.
Visual Studio 2012 for example. Now, so far it pretty much works for me (evaluating the Professional version) but only after I made some serious changes to the layout. I've seen (in forums) plenty of people who would be very happy if they could still buy VS2010 somewhere.
I think that's the kind of strategy Microsoft should be considering here. Don't call it "giving in", nah, they should think of this as a soft of exit strategy. If sales of Server 2012 aren't going as well as planned, maybe you can fill in the gaps by selling Server 2010 as well. If Windows 8 doesn't sell; keep Windows 7 around as well.
Something tells me that if you sell Server 2010 with a little discount (because its no longer maintained, only supported) you're likely to attract new customers. Don't underestimate the amount of people who buy this stuff second hand due to price concerns and lack of availability.
MS has a long history of back-handed and "under the table deals" with OEMs.
But... Now they're buying a seat at the table at Dell, a minor seat at that. If they try to exert influence like they've done in the past, the first answer from Dell might (should) be, "Put it before the board at the next meeting."
By buying the minor share, MS might just find it's switched from major background influence, like at Nokia, to "kid at the table".
(I can really see MS ditching its share of Dell within 2-5 years from now, when it finds out it can't get its way.)
There are lots of benefits of going private for Dell while they try to reinvent themselves. Michael Dell might even enjoy going to work again.
However, there are a couple of issues they'll have to overcome:
1. Servers. Linux is to servers as Windows is to the desktop. Dell can't change that all by themselves, even with Microsoft in their corner. Do we think that Microsoft hasn't already tried to use huge incentives to get the server vendors onto Windows? I assume that Dell will continue to focus on Linux in the server space, but I'm sure there will be tension.
2. Android. This one is tougher. The Android-based mobility market is a big chunk of the overall mobility segment, and I don't think Dell can continue to not participate. Not just for the revenue, but for the ecosystem opportunities. I don't imagine Microsoft would agree with me on this point.
I can't speak about your #2 but for argument #1, you're missing one point here. Servers are overwhelmingly purchased without OS, as opposed to PCs. Buyers already have licensing agreements with MS so server vendors can't force them to buy another copy. In fact, most of the time server vendors do not know what OS will be installed. Microsoft could have convinced them to drop support for Linux but this would have made hardware makers unhappy and with the fierce competition among OEMs, there was nothing MS could do, again because servers are being purchased naked.
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Many experts in the field of analysis for technology companies controlling their hardware and software stack, like Apple or Oracle (for their server line), caution that independant OEM companies like Lenovo and HP will "probably" be at a distinct disadvantage in dealing with a Dell focuses Microsoft, and therfore move more quickly to a more secue position of flexibility by supporting Google ChromeOS and possibly Ubuntu Linux on desktops, smartphones and servers as a hedge.
Good luck to all of Microsoft's OEM hardware partners looking to Redmond to be ethical, fair and honest in their arrangements and dealings with the behemoth, since trustworthiness and integrity has never been a hallmark of Mictosoft's practices for far too long, according to seasoned and wise technology observers
Beware the old and true saying: "Those who lie down with snakes are almost guaranteed to be poisoned"
I can't see that this is a good idea for either Dell or MS. MS will get a seat on the board, which is enough to have real influence. History has shown that companies where MS gets serious influence make bad decisions on the promise, and get shafted in the future when the decisions turn out badly. MS have a very bad reputation for keeping faith.
MS can't offer anything to Dell that makes this attractive. Early access to technology for MS isn't exactly going to be of earth shattering importance, MS have done very little new or innovative for a very long time. But such access has the threat of stifling innovation and business agility at Dell. The downside for MS is that they are again getting into the position of starting to compete with their customers. A cosy relationship with Dell will almost certainly add to the perception of all the other PC manufactures that, whilst they can't do much about the need to purchase Windows for PCs, they probably want to actively consider every possible option for any other product they make. And right now that means Android. Maybe MS thinks that they simply can't fight Android in the mass market and will be content with a only couple of big manufacturers (Dell and Nokia). This puts MS on a trajectory to buy these two and to compete with Apple head to head in this space. This could end as badly as iPod versus Zune, and if I were a betting man, that is where I would put my money.
Dell servers running Windows whatever server hosting "Dynamics" or whatever their clusterf**kapplication will be called.
Kind of like an IBM iSeries or what was an HP 3000 series.
But from Microsoft.
I can barely control my excitement.
Customers will be beating down the doors to get their hands on this bundle.
4 years ago, after a decade of building, upgrading and over clocking my own machines, I decided to buy a PC that 'just worked' and one that I couldn't XXXX up by messing with the BIOS etc. The XPS 420 I bought fit the bill perfectly but was improved with the upgrade from Vista to W7. Dell and Microsoft, a great combination.
Now, the old Dell is getting long in throwaway tooth and I needed a replacement. After trying W8 I decided I would rather use a flame thrower to clean my teeth. I could have bought another Dell ss I've been really happy with the old one but buying one would have meant either getting W8 preinetsalled or downgrading (at extra cost) to W7.
In the end I decided I wanted something again that 'just worked' so sitting on my office desk is a new 27in iMac. It has cost me over £2k bit it more than just works, its a beautiful, fast and well made machine that is a pleasure to use.
So Dell and Microsoft have lost my custom this time around and to be honest, if I ever need a laptop then my experience of using the iMac and OS X would point me towards a Macbook or Air. I would think there are other PC users that feel the same way as buying the next version of Windows is not the same no brainer decision it used to be.
Good to see that Dell is taking his own advice and giving the money back to the stockholders. MS is getting into integration with hardware. Sounds like the way another computer company does things. And we saw what happened to the clones.
"Silver Lake’s portfolio includes Avaya, Go Daddy, GroupOn, Skype and Zynga"
Sounds like a death knell. Maybe they should call themselves Mercury Lake.
When Dell servers were Intel only, even in the days when the Opterons were far superior, many analysts were scratching their heads, but the recent SEC fraud case shows that Michael Dell was taking Intel to the cleaners over this agreement - Intel contributed up to 76% of the operating profit in just one Quarter - a not untidy sum of $720 MILLION. Not bad considering the only work involved was having to say "thanks, but no thanks" to phone calls from AMD. By all accounts he had Intel over a barrel, in a way that was more like a scene from the sopranos than a business agreement. Factor in that they didn't have to design, manufacture and market seperate AMD based product lines, and it was a pretty shrewd move. He was pulling in potentially hundreds of times more cash than what he could have gained by shifting Opteron boxes.
http://www.theregister.co.uk/2010/07/26/after_the_dell_settlement.
He may be choosing to dance with the Devil, but he can do a mean foxtrot. I'm sue he'll be stepping on Balmers toes, not the other way around.
And the Microsoft vs Linux on servers argument is really a moot point - The majority of large enteprises (who spend the BIG bucks) don't run either on the hardware - VMWare or Xen or AN other hypervisor are on the bare metal. The OS is effectively an application these days.
Client systems might be a very different proposition thought - I'm sure a couple of billions from Balmer in a brown envelope under the table would be enough to lock Dell UEFI secure boot to Microsoft OS's only.
They must be thrilled - not. Microsoft's definition of "hardball" involves offering them unfair disadvantage not just on tablets but on servers, storage and networking now as well. Microsoft may as well declare war on Cisco, HP, Fujitsu, IBM and Oracle all at once.
As if that weren't bad enough Microsoft and Dell are each going after the high-margin professional services that keep the lights on at their VAR partners as well. This is what Steve Ballmer meant when he said they are becoming a "devices and services company."
It's the Armageddon of tech. It can only end one way.
Could this all just be as simple as buying low and selling high. Whist Dells stock is "low" buy it back, also making you able to make long term strategic decisions with out needing to inform the world and his wife and then when the economy picks back up, float the company again, making billions?
This article ponders "Who's going to lose" in the Microsoft-Dell deal.
While Dell will certainly have an advantage for Windows 8 Slates and smartphones if it goes in that direction, it is not certain that sales of the Slate will grow to any discernible degree to compete satisfactorily - at least for Microsoft - with Apple iPAD or the sales of Android based tablets that come in a myriad of sizes, form factors, and has been recently (and officially) reported to be Chinese government preference.
It is also questionable whether the "obligatory" Microsoft Windows 8 based Dell tablets, notebooks (and smartphones?) will be a bonanza for Dell in the Asian Market, where it's pricing structures, similar to that of the iPads as a necessity, are significantly higher and much less competitive with Android tablets and even Android phones if Windows 8 Phones are offered. Don't forget the exploding ChromeBook sales as a factor.
Like China, several other Asian nations - think several billion people, er sales - are stanardizing on Android, that now leaves Dell completely out in the cold.
Other Potential losers from the deal are Nokia, if Dell makes Windos 8 phones, and Dell itself for servers, since there is much greater demand and uptake in Fortune 500,and Web/Internet Windows entities for Linux/UNIX based systems, where dell once thrived. They will be completely cut off from the many lucrative Dell-Oracle Linux large scale contracts.
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