Dell computers – pending regulatory and stockholder approval – has been sold to Microsoft, Silver Lake, Michael Dell (the original founder of Dell) for $24,4 billion.
The company which was listed on stocket market has now been brought back into private control, with Michael Dell the largest shareholder with 16%, and will continue to run company. Microsoft’s part of the deal is thought to be worth just $2 billion, leading many to speculate just how much control Microsoft will actually have on future decisions.
The computer giant has been losing stock value since 2005, and this in part due to competition from tablets and the continued decline of the PC market. Over the last 5 years Dell has looked to turn around its fortunes with a shift of focus to enterprise hardware and services – but despite some success this new focus doesn’t looked to have solved Dell’s underlying problems.
Private Once Again, But Why?
By going private again, Michael Dell is probably hoping that being out of the limelight, and not being dictated do by shareholders, will see the computer giant able to concentrate on new innovative products – instead of having to pander to share holders who are only ever concerned with quarterly results and dividends.
Well, it all depends on what Dell decided to do with its new-found freedom. If Dell continues in the hardware market, which is most likely, then its hard to rule out a move toward more mobile products (tablets, phones and laptops).
There’s no suggestion the Apple and Google would be worried about another company trying to muscle into the lucrative tablet market, but with their XPS brand they can make high-end desirable products that sell. And if a newly privatised Dell could break into the tablet market, alongside Microsoft, that would be quite the success story.
Dell could also try its hand at smartphones, but even less likely as it decided not to pursue its mobile aspirations in December 2012, after less than stellar sales. But it’s clear there’s money to be made with its premium XPS/Alienware products.
What’s In It For Microsoft?
Then there’s the Microsoft connection. At the time of writing we still don’t know the true reason for Microsoft’s investment in Dell. It could that they don’t want to see another PC manufacturer go to the wall, because if PCs die then Windows dies, and in turn Microsoft would be in hot water.
They have, however, released a vague statement: “Microsoft is committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future.”
But what will their 2 billion gesture get them? Well, it’s clear the Microsoft is eyeing up hardware as a way to boost growth, and despite the lacklustre sale of its Surface tablets, an investment in the Dell could see the company finally come up with something that will blow consumers minds. There’s no doubt that Dell’s expertise in industrial design and manufacturing is worth its weight in gold to Microsoft, but is 2 billion enough for Dell to take Microsoft’s hardware aspirations seriously enough? Only time will tell.
It could even be down to Dell’s patents – which they own a couple of thousand – whatever does happen it’s safe to say that Microsoft and Dell’s future are now inextricably linked for better or worse. The likelihood is their decision to invest is probably a combination of all the above. OEMs are the backbone of Microsoft, and if they don’t sell hardware, Microsoft doesn’t sell Windows – just how long this relationship will last is anyone’s game, though.
Dell sold to Microsoft, Silver Lake and Michael Dell for $24 billion is a post from: UK Gadget and Tech News, Reviews and Shopping Site - Gaj-It.com
