In the wake of speculation that Dell is marshaling its resources to buy back stock and become a private company once again, there are new rumors that Microsoft might be involved. There are reports that Microsoft is considering investing up to $3 billion for a stake in the private Dell.
Although Michael Dell asserts that Dell is not a PC company, and Dell has expanded its horizons to different areas of technology, the brand is synonymous with “PC” in the minds of most people, and Dell’s fortunes have waned some as the PC industry suffers from somewhat anemic sales.
By going private, Dell would be free to take risks it couldn’t get away with as a publicly traded company. Shareholders are a skittish bunch, and doing anything too bold or dramatic is generally frowned upon on Wall Street.
Would Dell also benefit from a marriage with Microsoft? They’re already closely tied as partners in a symbiotic relationship that would be considered common law marriage in most states. Dell could use the extra cash to facilitate the buyout, and there are potential strategic advantages to a closer Microsoft partnership.
Onuora Amobi, editor of Windows8Update.com, says, “The Microsoft Dell marriage would be a match made in heaven. It would be perfect synergy as it would give Microsoft the reach and the instant credibility as a “device company”.”
Rob Enderle, principal analyst at Enderle Group, believes that an investment in Dell by Microsoft is a brilliant move, but not without inherent risk. “Microsoft has a large pool of cash that they often have difficulty figuring out how to invest strategically, Dell private is potentially a far more powerful company then Dell Public, and Dell Private tied to Microsoft would be a vastly more powerful combination than Google and Motorola. “
Amobi points out that the history between the two, and the close relationship they already have would be an advantage. The transition necessary for any sort of acquisition, merger, or strategic partnership would likely be relatively smooth.
Microsoft—perhaps disappointed in a lack of quality and innovation lately from OEM vendors—has taken a page from Apple’s playbook, and pushed into the hardware side of things with the Surface tablets. A Dell partnership could enable Microsoft to hand off Surface and leverage the Dell brand and supply chain.
Enderle cautions, “Dell would still need to be firewalled from Microsoft to assure their relationships with other vendors, and convincing them this can and will be done won’t be easy, however there is little doubt that what would result would be vastly more powerful than the Microsoft/Dell team that exists today.”
Things could get interesting if any or all of the Dell rumors pan out.
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Tony is principal analyst with the Bradley Strategy Group, providing analysis and insight on tech trends. He is a prolific writer on a range of technology topics, has authored a number of books, and is a frequent speaker at industry events.