Tuesday, January 29, 2013

Dell's Shotgun Wedding With Microsoft

According to the Wall Street Journal, a Dell leveraged buyout is at hand. Dell has been, along with HP, a quintessentially loyal partner and supporter of the Wintel monopoly over decades.  Microsoft has apparently learned from Warren Buffett and is offering a preferred security for its cash into the deal.  At the end of the day, Microsoft would like have a "captive OEM."  Since Michael Dell, like Bill Gates, is a founder of the company, it's not likely that control over Dell's future options would be given away.

Dell's manufacturing, sourcing, and supply chain management expertise are valuable assets for Microsoft's own push into devices.  As the world of suppliers continues to consolidate globally, Dell will eventually come back public and Microsoft will make money on its preferred.

I'd love to be a fly on the wall to hear what Michael Dell really thinks about Windows 8.  Hitching his company's wagon to this product, with no flexibility to hedge his bets, is not a good strategic decision.  Crafting the right deal for Dell will be a lot more than a matter of semantics.

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