Is Dell’s M&A Addressing Real Needs?
Dell (NASDAQ:DELL) has been an unstoppable spending machine of late. In the past 15 months, the Texas-based computer giant has acquired a total of 13 companies, including Sonic Wall (SNWL), AppAssure and Force10 Networks (FTEN). And in the past week alone, Dell has snapped up Wyse Technologies, Make Technologies and Clarify Solutions. All in all, Dell has poured more than $5 billion into this shopping spree and there is no end in sight.
Although analysts have connected the most recent purchases to the formation of a new software group under CA Inc.’s chief executive John Swainson, the report contends that all this spending is actually part of a long-range strategic plan that dates back as far as the company’s 2006 management housecleaning.
Dell, which has been known to observer companies for years before an acquisition, has a great number of companies over the past few years. The list — which includes storage companies EqualLogic and Compellent, managed services firms SecureWorks and SilverBack Technologies, endpoint managment company Everdream and software management firm MessageOne, among others — is heavy in the areas of infrastructure and managment. This gives Dell a portfolio that could compete with the likes of Hewlett-Packard (NYSE:HPQ), Cisco (NASDAQ:CSCO) and IBM (NYSE:IBM).
Dell’s acquisition of Clarify and Make, in particular, indicate that the company has a marked interest in toward becoming a major player in the cloud, along with understanding that real success in this arena will come from providing applications that manage data in the cloud and the end devices. However, Dell still has a long way to go to achieve this goal and it looks like it has every intention of spending its way to success, rather than seeking organic growth. The only question now is, which company will Dell set its sights on next?