COMMENT ON A TWEET #15: MICROSOFT PARTICIPATION IN THE DELL LBO

COMMENT ON A TWEET #15: MICROSOFT PARTICIPATION IN THE DELL LBO

Matt HealeyTuesday,5 February 2013

The Snap:

Tweet: ” @VanessaAlvarez1 @BloombergNews: BREAKING: Dell to be valued at $24.4 billion, $13.65 per share”

The Download:

I have written about this before. I think this is a good development for Dell, which is not in a position to be a public company right now given its growth prospects. What I wanted to focus on for this comment was the Microsoft participation in the deal. That I think is a very bad idea for MSFT, which already has a market share problem in the fast growing tablet and smart phone markets. Further, Microsoft is facing challenges with integrated systems on the server side. Now it has bought a portion of a hardware vendor and has introduced channel conflict. The problem is that MSFT is dependent on more than just Dell as a channel and it has more than simply client software. Microsoft also relies on HP, Lenovo, and a few others, and sells a lot of copies of Windows server. By acquiring a portion of Dell, Microsoft is now competing in the hardware space against some of its channel partners that also sell servers. I suspect that the effort that companies like HP or Lenovo put into selling servers running Linux in a VMWare environment will now increase. They will not say so publicly, but I suspect that it will happen. So, this could threaten Microsoft’s growth in the server side.

Hat Tips:

Vanessa, Bloomberg, Image Credit: Flickr

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