Quest Purchase Continues Dell’s Transformation
Round Rock-based computer giant Dell completed its $2.4 billion acquisition of Quest Software on Friday. Dell is on a corporate shopping spree, as its traditional business of building computers has become less profitable and more competitive.
Dell is busy buying companies in an effort to expand what it can offer customers. That includes things other than PCs and tablets, devices that are becoming shockingly cheap if you’re not worried about what brand you buy.
Investment banker Jay Goldberg found an example of this in a tiny stall inside a Chinese electronics market. In a room full of vendors hawking computers and parts, Goldberg found an Android tablet computer for only $45.
“I would consider it a device that anyone in the U.S. would be comfortable using,” Goldberg said. “It was a 7-inch device. It ran the latest version of Android. It was Wi-Fi only, it had a nice screen and a very snappy processor, so it responded to your commands, quickly.”
Industry analyst Jayson Noland says discoveries like that are becoming more and more common for many products.
“Almost as good at a lower price, or just as good at a lower price, and it puts pressure on the entire industry, not just Dell,” Noland said.
Dell’s response is to do more, and maybe make less. Dell spokesman Jess Blackburn says the nature of Dell’s business has changed.
“Our strategy which we have been particularly focused on is taking Dell from more of a hardware company to a full-service, comprehensive solutions provider,” Blackburn said.
That means cloud storage, networking, servers and security hardware, all tied together by software. The potential payoffs in this “corporate enterprise” market are higher growth rates and bigger profit margins. But analysts say the transformation will be difficult and, assuming it works, may take a long time.
And while the company has a lot at stake in this transformation, so does Central Texas. The Dell family, and executives made wealthy by the company, support numerous charitable groups and causes. Round Rock City Manager Steve Norwood says Dell’s presence there is priceless.
“They’re really good corporate citizens,” Norwood said. “They’re involved, they care deeply about the community, and we’re very fortunate and realize that Dell is vital to our local economy and also to the Central Texas economy.”
Dell’s latest acquisition as part of its makeover, Quest Software, expands the company’s ability to offer security services and business management services, along with bringing Quest’s customers under the Dell umbrella.
A Dell executive said the company plans to continue buying a company a month as it expands its marketplace portfolio.