from the dude-you’re-gettin-dell dept.
We heard that Dell is in buyout talks with private equity firms. Now, the word is that Microsoft may invest one to three billion dollars in that buyout. For that amount of money, Microsoft isn’t going for majority ownership, but it would be a significant stake. Dell is worth around $22-25 billion. Speculation is that investors would put up $5-7 billion in equity, borrowing the rest. As a point of reference, Michael Dell’s stock is worth $3.6 billion.
Hmmm, well I’ve been in the industry for a long, long time…and many things have not so much surprised me as simply amazed me. Like the slow-motion cluster fuck that IBM made of the original PC-PS/2 & DOS-WIN-OS/2 Intel battlefield. The astonishing demise of DEC (Digital) and HP, innovative engineering-led companies absorbed by the former beige-box cowboys at Compaq, with the final blow dealt by the lovely Carla. Don’t even get me started on Xerox, who actually marketed a full GUI system before Apple. Worked well too, but was a tad pricy, like the Lisa.
Given the above, I am not surprised that MSFT would invest in Dell. Microsoft does not need Dell. People who buy their products are not driven by hardware choice – in the PC world there is still plenty of that. Despite the various boosters, more than all the other platforms combined… If Dell went South tomorrow, plenty of hardware manufacturers would pick up the market share overnight, and others would be cutting their own throats to do the same for the enterprise support.
MSFT only bailed out Apple to pre-empt antitrust attacks, (a move that was partially successful, unless you use MS-Office on a Mac)
If they fail, or more likely, if they start to fail and shrink as so many computer companies before them have done that is going to leave a void in the industry. As pointed out other companies will fill that void. Point out any number of lesser companies would fill that void. From Microsoft’s standpoint those companies are far less likely to have their interests in line with their own.
The last thing Microsoft wants is a number of computer companies growing up and being willing to get serious about not using their products. Legacy companies can’t risk their relationship with Microsoft, but up and coming companies have more flexibility in how they do things, especially when they are based out of China.
Certainly remember “Wintel” and everything that meant, and you’ll understand my point when I get a bit frustrated having to explain to people new to the industry what that means. Microsoft is just about out of “Wintel’s” and just doesn’t have that many companies that they can count on anymore.
On a practical side, many of these companies will be more difficult to secure payment from than Dell. Think of it as being a bit like Wal-Mart, they may not pay well, but they/always/ pay on time. There is a lot of value in that for someone that wants to count on a dependable revenue stream.
