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Does any of this seem familiar to anyone else?
February 5, 2013 10:28 AM   Subscribe

Michael Dell, with the help of a $2 billion dollar investment from Microsoft, is taking Dell private. Dell was once a $100 billion company, but has fallen behind HP and Lenovo in marketshare in the post-PC era. This is the largest leveraged buyout since 2007.

Barely fifteen years ago, when asked what he would do if he were in charge of then-beleaguered Apple Computers, Dell famously said, "What would I do? I'd shut it down and give the money back to the shareholders." That year, Apple secured a $150 million dollar investment from Microsoft that kept the struggling company afloat while the iCeo Steve Jobs began that gargantuan task of turning the company into the juggernaut it is today.
posted by entropicamericana (70 comments total) 7 users marked this as a favorite

 
Microsoft, always reaching out the beleaguered "little guys"...
posted by wenestvedt at 10:33 AM on February 5, 2013


Does taking Dell private mean that the investors think PCs have a strong long-term future, or is this is an attempt on Microsoft's part to help underwrite older technology that sells software licenses?
posted by Blazecock Pileon at 10:36 AM on February 5, 2013


Maybe if they are private they'll have less pressure to produce truly awful hardware? No, probably not.
posted by DU at 10:39 AM on February 5, 2013


Sounds good to me. Why waste your time with managing investor expectations and the constant drive for better numbers at all cost, even to the long term detriment of your company, if you don't need their money. As for MS, whatever, they helped out Apple as well.

Ima get in touch with their "go shop" I got $47.50 but I can leverage a few things and synergize some shit.
posted by Ad hominem at 10:39 AM on February 5, 2013 [8 favorites]


That year, Apple secured a $150 million dollar investment from Microsoft that kept the struggling company afloat while the iCeo Steve Jobs began that gargantuan task of turning the company into the juggernaut it is today.

Honestly, I had to read this a couple of times before it sunk in that there was a time when $150 million was the difference between existence and bankruptcy for Apple and not, let's say, their gross quarterly profit on the Apple TV product.
posted by gauche at 10:39 AM on February 5, 2013 [13 favorites]


Does taking Dell private mean that the investors think PCs have a strong long-term future

Pretty much just the opposite
posted by JPD at 10:40 AM on February 5, 2013 [1 favorite]


It's kind of funny how Dell had a brief "let's make Android devices!" phase, then gave up. Not realizing that the problem was not that you couldn't sell Android devices; it was that Dell doesn't have the ability to make a compelling product in any segment.

And yeah, no idea what Michael Dell is thinking. The great man shall save the day!
posted by selfnoise at 10:40 AM on February 5, 2013 [1 favorite]


One of the more interesting points I've seen is that with Dell locked up with a big pile of debt to amortize there is a big participant in M&A for mid size tech companies on the shelf.
posted by JPD at 10:41 AM on February 5, 2013


The great man shall save the day!

I'm curious how his attempt to go private and save the company will stack up to the similar thing Best Buy's founder is supposed to be working on.
posted by COBRA! at 10:42 AM on February 5, 2013 [1 favorite]


Well, hell. I've worked there for almost 15 years. Not quite ready to throw in the towel, although I am polishing up the old resume just in case. *shudder*
posted by PuppyCat at 10:44 AM on February 5, 2013


And yeah, no idea what Michael Dell is thinking. The great man shall save the day!


My guess ? He knew he can't sell his remaining stake for reasons not about money, and this LBO requires him to inject no additional capital of his own into the business. So basically he's bought himself a free option on fixing his baby outside of the eye of the public markets. If he succeeds - then he cements himself as a "genius", if he fails, well then that 14% stake was worthless anyway and he gets to cry on the few bil he'll still have in assets.

Plus watch - I bet MSD buys a nice big chunk of the debt - enough so if it is a disaster he'll still come out with a big stake in the entity post-reorg.
posted by JPD at 10:47 AM on February 5, 2013 [3 favorites]


Here's my conjecture: It's hard to please shareholders while trying to dig your company out of a hole. They get skittish at any mention of risky strategies, and they recommend staying the course --- in Dell's case, a certain recipe for slow and steady decline. This is a sign that Michael Dell isn't ready to give up on the company, and he's declaring martial law in the hopes that he can lead Dell through a phoenix-like rebirth through fire. Whether that's possible or likely I don't know.
posted by qxntpqbbbqxl at 10:47 AM on February 5, 2013 [23 favorites]


qxntpqbbbqxl, it's what we're hoping for.
posted by PuppyCat at 10:49 AM on February 5, 2013


They get skittish at any mention of risky strategies, and they recommend staying the course --- in Dell's case, a certain recipe for slow and steady decline.

No, in DELL's case this really isn't true. The entire thesis for why people own it has been predicated on them diversifying away from the declining PC business. No one wants them to stay the course.
posted by JPD at 10:49 AM on February 5, 2013


Felix Salmon: Why Dell is going private?
Why are Michael Dell and Silver Lake taking Dell private at a valuation of $24.4 billion? Christopher Mims explained his theory a few weeks ago: it’s all about a company that Dell acquired last year for roughly $500 million. Wyse makes PCs-on-a-USB-stick: everything is in the cloud. According to Mims, if you combine Wyse’s technology with Dell’s ability to talk the kind of language that corporate IT buyers love, Dell is now well position to disrupt itself:
posted by shothotbot at 10:49 AM on February 5, 2013 [4 favorites]


Remember how Michael Dell snidely suggested in 1997 that he would "fix" Apple by shutting it down and returning all the money to its shareholders?

Yeah.
posted by RonButNotStupid at 10:50 AM on February 5, 2013 [1 favorite]


It's true. Apple was able to dig themselves out only because they had hit the bottom. Everyone had written them off so any crazy scheme was on the table.
posted by Ad hominem at 10:51 AM on February 5, 2013 [1 favorite]


One this going private does is it lets Michael Dell and the investors remove the cash from the company. Much of the loans for this buyout will be immediately be paid off by issuing a big dividend to the new shareholders and driving the cash reserves way down. That's impossible to do as a public company as it also drives down the share price.

Once that's done it's hardball time- layoffs, restructuring, all sorts of painful shit that you can't do in the publicly-traded light of day.

But yes Blazecock, Michael Dell is basically shutting the company down and giving a 30% premium to the existing shareholders. It's new new high point of irony.
posted by GuyZero at 10:51 AM on February 5, 2013


For years now, I've ended up building my own over-engineered PC's from components, while buying almost-disposables for the other members of my family. I'd love to move to the middle on both fronts. I'd be happy never mounting another CPU and happy never to worry about the cheap commodity power supply in another family member's.

But Dell just never tempts me from either side. I don't see this changing that.
posted by tyllwin at 10:51 AM on February 5, 2013 [2 favorites]


Remember how Michael Dell snidely suggested in 1997 that he would "fix" Apple by shutting it down and giving all the money to its shareholders?

Sure, I remember it because it's in this FPP and every single article about the buyout.
posted by 2bucksplus at 10:53 AM on February 5, 2013 [26 favorites]


Thinking they should ditch the PC business and concentrate on servers for small-to-medium organizations. They've got a lot in server racks still, and running private clouds is still less expensive than buying cloud time at a lot of scales.
posted by bendybendy at 10:54 AM on February 5, 2013


Does taking Dell private mean that the investors think PCs have a strong long-term future, or is this is an attempt on Microsoft's part to help underwrite older technology that sells software licenses?

Door #2, i think. I'm trying to think of an investment strategy that favors plowing money into a middle-field commodity hardware maker who has never made a memorable product. The closest I can think of is the Mini 9 and that was notable mainly for being a good hackintosh platform -- in other words a coattail product, and an officially unacknowledged one at that.

Dell was a business process innovator and a good one, for a specific time in history. That time has been over for a while. In order to get back on top they have to repeat their success with something equivalently effective for a completely different set of market conditions. Lightning can and does strike twice but it's not really worth betting on.
posted by George_Spiggott at 10:54 AM on February 5, 2013


To be fair to Michael Dell shutting down a shrinking tech company and returning capital has empirically been the right thing to do 99 times out of 100.
posted by JPD at 10:54 AM on February 5, 2013 [10 favorites]


Why Microsoft 'loaned' Dell $2 billion
posted by TwoWordReview at 10:54 AM on February 5, 2013 [1 favorite]


Remember how Michael Dell snidely suggested in 1997 that he would "fix" Apple by shutting it down and returning all the money to its shareholders?

Yes, I remember reading the top of this page.


Anyway, shothotbot beat me to the punch but I thought Salmon's theory on the acquisition was interesting.
posted by Diablevert at 10:54 AM on February 5, 2013 [1 favorite]


Dude! You're getting a Dell leveraged buyout!
posted by malocchio at 10:56 AM on February 5, 2013 [5 favorites]


They should bring back the stoned college kid.
posted by klangklangston at 11:08 AM on February 5, 2013


Remember how Michael Dell snidely suggested in 1997 that he would "fix" Apple by shutting it down and returning all the money to its shareholders?

That's Michael Dell's solution for everything.
posted by mazola at 11:08 AM on February 5, 2013 [1 favorite]


The thing that worries me about this whole thing is that Dell has acquired several really good hardware manufacturers of specialized networking equipment (i.e. Sonicwall, Force 10) and has had rebranded EMC hardware in their line up for years. I seriously wonder about the long-term service contracts for the networking hardware that my company uses now. They also own Alienware, which was one of the top notch custom PC builders for quite a while, and it will be sad to see their line-up get ripped apart if they aren't making a profit for the new private enterprise.

While some people say Dell was good at the business process, I've yet to see that with the companies they have acquired. Sonicwall used to be one of the best firewall appliances you could get with integrated VPN (IPSec tunnels and Level 3 networking stuff that was pretty easy to manage). Since they were taken over by Dell, the never fully integrated into the Dell support structure, and getting service from them became horrendous. I'm seriously considering finding a new network appliance vendor now.

I also just bought a couple 10GB Dell switches, and I seriously hope I never run into any problems with them, as I'm sure all the support staff are currently touching up their resumes. It's one thing to go private and "reward" the previous investors, but if this means that management is now going to be stupid towards the companies line level employees, with layoffs or pay cuts or reduced benefits, I seriously fear and loath the thought of having to call support for anything more than in warranty repairs.
posted by daq at 11:09 AM on February 5, 2013 [1 favorite]


It's one thing to go private and "reward" the previous investors

Almost all of the major shareholders are going to take a loss on the going private transaction. Only if you've bought you shares in the last 8 months or so are you up, and even if you bought at the very bottom you probably aren't super pleased with the outcome.
posted by JPD at 11:14 AM on February 5, 2013 [2 favorites]


Apple was able to dig themselves out only because they had hit the bottom. Everyone had written them off so any crazy scheme was on the table.

Like making stuff people wanted.
posted by ChurchHatesTucker at 11:15 AM on February 5, 2013 [1 favorite]


Two words: iDell.
posted by sammyo at 11:17 AM on February 5, 2013


Like making stuff people wanted.

It seems fait accompli in retrospect, but the original iPhone was a huge risk. Massive. But that was the only way to open the door to huge rewards.
posted by GuyZero at 11:25 AM on February 5, 2013 [1 favorite]


Like making stuff people wanted.

In retrospect it seems obvious but who thought mp3 players could save the company. Nobody wanted an mp3 player before apple added the wheel.

Remember "less space than the Nomad, lame". Slashdot look like morons now but the iPod was just one in a field of mp3 players.
posted by Ad hominem at 11:27 AM on February 5, 2013 [1 favorite]


If anything, Apple (or Google or Facebook) should see this as a cautionary tale and not a chance to gloat. It doesn't matter how big or successful your company is, if the market changes out from under you and you don't figure out how to adapt, you're not going to stay at the top.
posted by octothorpe at 11:34 AM on February 5, 2013 [4 favorites]


Oh, hey, I didn't know about them buying Wyse. Yeah, that "pack of gum-sized PCs" idea reminds me of Roku's recent product, a thumb drive-sized video-streaming device that serves the same role as their current hockey puck-size dingus.

I work in IT, and I would *love* to see full PCs taken off a lot of our users' desks in favor of a tiny thing plugged into a monitor. Currently we have Wyse "Win terminals" or whatever they are called in some locations, like the library, and I think they are fine for running a limited suite of software.

And if you can live with a device that requires web access to run (e.g., Chromebook), then why not ditch the computer all together and just keep using your existing monitor, keyboard, and mouse?

Or, also: Raspberry Pi, which gives you a PC in a form factor the size of a pack of smokes. Drop your computer into your pocket and go to a place with a display & keyboard already waiting for you.

I have to go clear my head....
posted by wenestvedt at 11:40 AM on February 5, 2013


Is this positioning for Microsoft to buy them up? Aren't they getting into the computer biz with the Surface?
posted by Mental Wimp at 11:54 AM on February 5, 2013


While some people say Dell was good at the business process, I've yet to see that with the companies they have acquired.

I've heard a story, though I have no real proof of its veracity, that they bought out a small company a few years ago for their technology, and after acquiring them, laid off all the developers pretty much immediately, then realized they didn't have the password to the main dev server that had the coveted code on it. When they called the laid-off engineer in possession of the password, he declined to give it to them.
posted by Devils Rancher at 11:57 AM on February 5, 2013 [1 favorite]


Hey! They should do something cool like painting all the boxes they ship computers in black-and-white so they look like cows.

I think that worked for someone...

posted by mmrtnt at 12:02 PM on February 5, 2013 [1 favorite]


Raspberry Pi, which gives you a PC in a form factor the size of a pack of smokes.

I know that's the shirt-pocket standard but, if it's tech, the goal ought to be an Altoids tin.
posted by ChurchHatesTucker at 12:05 PM on February 5, 2013 [7 favorites]


Ooh I would love a spicy refreshing pocket computer!
posted by Mister_A at 12:09 PM on February 5, 2013


then realized they didn't have the password to the main dev server that had the coveted code on it

Same thing happened to me. During an acquisition I spent weeks walking mid-level execs through "platforms" and "workflows" and after they pulled the trigger I asked them what they wanted me to do with our source and they pretty much said "idk, whatevs". That is when I realized they just wanted us out the of the picture, but the deal would never have gone through if they had not feigned interest in keeping us viable.
posted by Ad hominem at 12:10 PM on February 5, 2013 [1 favorite]


I think we're a little early calling for the demise of Dell, given that they're one of basically three major companies servicing all of business and enterprise IT. And of the other two, one already spun off their PC line, and the other can't even seem to decide whether or not to bother continuing to make PCs.

Granted, Dell are pretty much out of the game in consumer tech. But even back in 2010, that wasn't where they were making their money:
The large enterprise segment includes national and global corporations and accounted for $819M in operating income. The public segment includes educational institutions, government, healthcare, and law enforcement agencies. It accounted for $1,361M in operating income. The small and medium sized business (SMB) segment accounted for $1,040M in operating income. Together these three segments accounted for 96.78% of Dell’s operating income.
Meanwhile, the overwhelming majority of work continues to be done on traditional workstations or laptops, in boring old offices, connecting to servers that are not at all in a cloud. Even if every executive, salesperson and web designer in the country migrated to cloudy/tablety iPlatforms tomorrow, Dell would still sell roughly a bajillion systems a year.

I think they're going to be just fine.
posted by The Prawn Reproach at 12:18 PM on February 5, 2013 [2 favorites]


When they called the laid-off engineer in possession of the password, he declined to give it to them.

Pretty tiny victory since they can for example reboot using a live CD or just pull the hard drive and read it with something else.
posted by George_Spiggott at 12:19 PM on February 5, 2013 [3 favorites]


I just realized that this puts the future of Alienware in some jeopardy, which is a shame because lately they've been making nice hardware at reasonable margins.
posted by 2bucksplus at 12:22 PM on February 5, 2013


The issue for pocket computers will be stuffing an x86 in to that Altoids tin. With ARM processors, it's as easy as pie, there are dozens of the things out, all running android. Intel has been making some moves in the mobile space, but they've always lagged in the area. Partly because of power concerns, partly because low range, high performing, lower power chips don't have great margins, and would threaten their other higher margin products.

Even if every executive, salesperson and web designer in the country migrated to cloudy/tablety iPlatforms tomorrow, Dell would still sell roughly a bajillion systems a year.

Little to no growth, or even shrinking, low margin industry. Even more reason to take it private.
posted by zabuni at 12:24 PM on February 5, 2013


I had to read this a couple of times before it sunk in that there was a time when $150 million was the difference between existence and bankruptcy for Apple

This was never actually the case. In 1997, when Dell made that comment and Microsoft invested in Apple, Apple had $1.2 billion in cash assets and no long-term debt. The Microsoft investment was not a significant factor in Apple's finances at the time, its value was as a vote of confidence in Apple. I don't know why Apple accepted the investment, but I assume it was intended to allay the fears of shareholders.
posted by RichardP at 12:29 PM on February 5, 2013


My last laptop (April 2008) was a Dell. It was one of two 15", 1920x1200 laptops I could find at the time (the other was HP). At least it's still going strong 4 years and 8 months later! Too bad that as far as I can tell there's no better display in a new 15"-or-smaller notebook (excluding Macbooks with retina displays from consideration).

Please, Google, pay someone to make a 14" or 15" Chromebook with a 2560x(lots) display. Have 'em put a 64-bit ARM CPU in it while you're at it. Then we can talk new hardware purchases.
posted by jepler at 12:31 PM on February 5, 2013 [3 favorites]


I think they're going to be just fine.

They're really not. Because Dell is 100% commodity. And the margins on commodity hardware keep slipping, slipping, slipping into oblivion.

Unless you're adding value to the process you don't get to claim margin on a purchase of 100,000 government PCs anymore. If you try to make $300 a unit they walk on over to Lenovo who will do it with $10 a unit margin. Because they're required to by law.

It's not the 1980s anymore. The CEO of HP doesn't get to schmooze the right people to become a sole and standard source of procurement and then proceed to print money any longer. These numbers don't show a healthy business. It shows that 97% of their market isn't going to make them a fucking dime in profit in less than five years.
posted by Talez at 12:40 PM on February 5, 2013 [2 favorites]


If the new ownership will give them time, and not force them to have better numbers each and every quarter, without regard to product offerings, maybe this will be a good thing.

I bought a LOT of Dell's in the 90s and early aughts. They were a good enough company, with good support, and good prices. Today, the prices are okay, I guess, but quality is shit, support is PAINFUL and the direction has been wrong for a long time. I hope the new ownership will let them take some time to build something good again. (And they have the people to still do it.)
posted by DigDoug at 1:01 PM on February 5, 2013


RonButNotStupid: "Remember how Michael Dell snidely suggested in 1997 that he would "fix" Apple by shutting it down and returning all the money to its shareholders?"

We'd all be better off if it had played out that way. We were free of the walled gardens for a time, but Apple came along and put a candy coating on it and now we're right back where we started. And thanks to their financial success, everybody thinks that walled gardens and excessive markups are just the bees' knees.

GuyZero: "It seems fait accompli in retrospect, but the original iPhone was a huge risk. Massive. But that was the only way to open the door to huge rewards."

It was such a huge risk that the original vision of the iPhone (app-less, no 3G in 2007, just a dumbphone with a big screen and a good web browser) was such an utter failure that nobody remembers what a bad idea it was even though it has hardly been more than half a decade at this point.

Whatevs. As others said, this is a much bigger deal for businesses, many of whom rely on Dell for continued support of their ancient (or new) servers. I suspect HP or Lenovo or IBM will be whipping out the checkbook for parts of the business soon. Sad, because they're actually one of the best server OEMs in the business.
posted by wierdo at 1:02 PM on February 5, 2013 [1 favorite]


Is this positioning for Microsoft to buy them up? Aren't they getting into the computer biz with the Surface?

This was my thought, too. Acer basically told Ballmer off, so having a friendly PC maker seems like a good bit of insurance, at least, and is not unusual strategy for Microsoft (cf. the Nokia relationship).
posted by Blazecock Pileon at 1:03 PM on February 5, 2013


I was somehow under the impression that Microsoft's investment in Apple was a hedge against the Justice Dept.'s anti-trust case -- i.e. "let's prop up this competitor, or they're going to really stick it to us if Apple goes under."
posted by Devils Rancher at 1:32 PM on February 5, 2013


The Microsoft investment was not a significant factor in Apple's finances at the time, its value was as a vote of confidence in Apple. I don't know why Apple accepted the investment, but I assume it was intended to allay the fears of shareholders.

The other part was the simultaneous announcement that Microsoft Office would be supported and developed on Macs for at least another 5 years. Which was sort of a way of saying that it was OK for enterprises to buy Macs.

(Slight derail, I realise. But it is relevant in a way, maybe? It's hard to know what statement could be made about Dell that would instil the same sort of confidence.)
posted by running order squabble fest at 1:54 PM on February 5, 2013


Devil's Rancher: Affirmative; MS understood that Apple going under would be ammo that could be used against them.
posted by Redgrendel2001 at 1:58 PM on February 5, 2013


Matt Yglesias in Slate maintains that it's a tax dodge.
posted by Mental Wimp at 2:39 PM on February 5, 2013 [2 favorites]


Business Week: Why Michael Dell Really Had to Take Dell Private -- "Taking Dell Inc. private lets Michael Dell shields himself from analysts, investors, and the media. Best of all, he gets to keep his company."
posted by ericb at 3:14 PM on February 5, 2013


If Dell's plan is to build USB thumb drive computers from Wyse, that would be the most hilariously bad idea I've ever heard and is doomed to such failure.

Sooner or later, Google or Apple is going to release a phone OS that you can plug your monitor+keyboard+mouse for a full computing environment (what, you think the iPhone Lightning cable was so that you can charge without needing to flip the cable if you plug it in the wrong way? Haha no, you don't dump that many pins on there for anything but driving a monitor.). Letting you run Windows 8 on that environment from some bullshit USB plug that you put on your keychain is beyond shortsighted, when everyone knows that the next form factor/device is a small phone, that can plug into a docking station/dumb-terminal-laptop/dumb-terminal-tablet for a full environment.
posted by amuseDetachment at 4:15 PM on February 5, 2013 [2 favorites]


Newsflash: the cost of computer hardware is trending towards zero.
posted by crayz at 4:39 PM on February 5, 2013


Newsflash: the cost of computer hardware is trending towards zero.

Well, not quite if you're the head of IT for a major organization. It's most decidedly non-zero.

A lot of analysis I've read and heard today is that Dell need to shift from hardware to services, which many other companies have gone through. Dell's just figured out a way to do it without having to have Wall St yell at him quarterly while he does it.
posted by GuyZero at 5:04 PM on February 5, 2013


The LBO is clever. A Hail Mary pass was unavoidable even if DELL had kept its public shareholders, and now they can throw that pass and get double or triple the returns if it connects to a touchdown. Downside is magnified too, but in a bull market who worries about that?
posted by MattD at 5:20 PM on February 5, 2013


>That year, Apple secured a $150 million dollar investment from Microsoft that kept the struggling company afloat while the iCeo Steve Jobs began that gargantuan task of turning the company into the juggernaut it is today.

Honestly, I had to read this a couple of times before it sunk in that there was a time when $150 million was the difference between existence and bankruptcy for Apple and not, let's say, their gross quarterly profit on the Apple TV product.


Actually, that's not true.

Microsoft made a $150M buy of options on nonvoting stock, IIRC they expired in 3 years. This was made public at MacWorld Expo, with a renewed commitment from MS to continue producing MS Office and Internet Explorer for Mac. Apple actually shipped Macs with IE as the default browser, as part of this agreement.

This is all widely known, and the "MS's $150M Saved Apple" is another of those myths that surround Apple. I recall reading the full story in the book Apple Confidential by Owen Lynzmayer. I'm trying to find my copy of the book so I can provide an accurate cite. So..

What is not generally known is that MS hedged their investment of $150M with an even larger share of short options, betting that AAPL stock would go down. I can't recall the exact figure but I think it was like 2 or 3x, up to around $500M which was pocket change for Bill Gates.

But AAPL stock went UP, much to Microsoft's surprise. They lost far more on their hedge than they gained when the $150M of stock went up in value.
posted by charlie don't surf at 5:27 PM on February 5, 2013 [2 favorites]


I worked at Dell for 11 years. I started at an amazing time of hyper growth in the 90s but left when the quality and support started to go down. Dell was very good at being a fast follower but when it had to lead the pack it was a one trick pony: price. Dell sucked the margins out of the PC market, commodified the PC market and capitalized on the missteps of others. Like when Compaq and HP merged. Or when Gateway overextended itself with its brick and mortar storefronts.

When it did try and innovate it generally kept the r&d costs low and with most products it meant buying something from an Asian ODM and slapping its logo on it. And we joked long range planning meant something next quarter. When they did launch new stuff it was expected to be making money from the first quarter. By going private it might not have some of the pressure. But there has always been the culture of doing things on the cheap and that won't go away when DELL is no longer on Nasdaq. Margins are super tight so paying the debt service won't leave a lot of money for coming up with innovative products that will help them de-commodify their products.
posted by birdherder at 5:56 PM on February 5, 2013 [1 favorite]


Newsflash: the cost of computer hardware is trending towards zero.

More like an asymptotic limit where OEMs get their cut. People will always pay for quality.
posted by Blazecock Pileon at 9:16 PM on February 5, 2013


People will always pay for quality CPUs, memory, hard drives and LCD panels.
posted by GuyZero at 9:22 PM on February 5, 2013


Newsflash: the cost of computer hardware is trending towards zero.

As compared to what? Sure, my workstation with 8 TB of storage, a video card over $400, buckets of RAM, a couple of SSDs, etc. and so on is cheaper now then it would have been in the mid 80s by several thousand dollars but it still cost over $1000. If the hardware is trending toward zero then companies should have no problem making a profit on a $600 computer, just like they do on say, a $600 tablet. which, i'm pretty sure, also uses computer hardware.

That said, I wouldn't be surprised if margins are low but then Dell was always a commodity high volume type company.

Microsoft's role in this will be interesting but in other news they seem to have failed to notice the death of the PC and generated record revenue not on all the tablets they and other companies didn't release.

My father, who has an iPad just bought himself a desktop running Windows 8. He didn't get the memo either I suppose.

Dell has, I understand, some love in the Linux community and it will be interesting to see how that is affected as well. Fortunately, there are a ton of hardware vendors out there for our desktops, workstations, and servers.
posted by juiceCake at 9:25 PM on February 5, 2013


They should bring back the stoned college kid.

That isn't an option.

Regarding SonicWall and the other networking companies they have been buying it is tough to see where they are going. Maybe an enterprise only company or more likely a 'throw everything at the wall and see what sticks' approach which is likely to not end well. Getting away from the low margin business of making PCs (like HP and others have done) seems like it would be a good but difficult direction, and embracing Linux or Chrome is probably the way to do that. The MS involvement means that either of those are not in the cards.

I have lots of clients with SonicWalls and I got nervous when they were bought out, and customer service has gone downhill. I've stuck it out so far but I have auditioned Watchguard, and a firm I work with has moved from SonicWall to Kerio for their clients. Now I'm getting nervous again and I have to wonder how long SonicWall will exist.
posted by ridogi at 10:35 PM on February 5, 2013


Dell Acquired By Gateway 2000 In Merger Of 2 Biggest Names In Computer Technology
posted by TwoWordReview at 7:43 AM on February 6, 2013 [2 favorites]


Remember when Michael Dell asked Vladmir Putin how Dell Computers could help expand IT in Russia and Putin's response was, "We don't need help. We are not invalids. We don't have limited mental capacity."

Yeah, now we're just piling on Dell, but I can imagine Putin laughing at hearing this news.
posted by FJT at 9:54 AM on February 6, 2013 [1 favorite]


So now Dell's biggest shareholder not named Dell has come out publicly to oppose the deal.
posted by JPD at 2:46 PM on February 8, 2013


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