Turning Threat Into Opportunity: Dell Acquires Wyse

This morning, I participated in an analyst conference call to discuss Dell’s intent to acquire Wyse with Dell President Jeff Clarke, Dell Senior Vice President Dave Johnson, and Wyse President and CEO Tarkan Maner.

According to Dell, the acquisition will help Dell extend its virtualization solutions and create more integrated enterprise solutions from traditional IT hosting to the cloud.

This can potentially be a smart deal for Dell:

  1. Channel partners have experienced healthy growth in this space. Based on conversations with prominent resellers in Q4 2011, many are experiencing explosive growth in client virtualization inquiries and thin client sales. One systems integrator we spoke to has experienced a 40% annual increase in the number of VDI inquiries, while another reseller experienced a 55% YoY increase in thin client sales. 
  2. Dell is now better positioned to address the full range of enterprise mobility projects that are expected to come. Virtualization and consumerization is very much a reality. In terms of hardware and software, Forrester data suggests that over half of companies surveyed are looking to support tablets and smartphones in the enterprise in the near future. Client virtualization software allows these devices (and thin clients) to connect to their enterprise data and applications. 
  3. The combination of Dell+Wyse enterprise offerings firmly positions them for growth on the services side also, in anticipation of the future. In terms of services, Forrester data suggests robust demand in the future for cloud-based services.  Traditional PC manufacturers like Dell agree and see the writing on the wall: The future of enterprise IT is within cloud enablement and services. It's no secret that Dell has made some interesting acquisitions in this area over the past year or two — acquisitions that help migrate clients to the cloud. The acquisition should supplement Dell's capabilities on cloud-based services.
  4. Dell can redefine the desktop. Hardware has largely been viewed as a commodity with thin single-digit margins. It doesn’t have to be that way. If Dell can figure out how to successfully package the hardware, software, and services, this acquisition can not only help improve margins through effective bundling techniques, in the future, they can reverse the perception and also help transform the desktop. This can be an opportunity for Dell, especially if one takes the long view that the rate of innovation at Apple is waning.