Dell wants to be more than a hardware vendor

With the acquisition of Everdream, has Dell tipped its hand to a new direction?

The news last week that Dell signed an agreement to acquire Everdream, a SaaS (Software as a Service) vendor for remote management of desktops, was further evidence of a once phenomenally successful high-tech company trying to change its product offerings to satisfy the new and more complex requirements of its enterprise customers and to return to its former glory.

There is no doubt that Dell recognized at least a year or two ago that just selling hardware products wasn't going to be good enough.

"They need to have a more comprehensive solution to answer a client's service needs," said Ian Brown, a senior analyst in the IT Services Practice at Ovum.

Brown says the acquisition of Everdream and SilverBack Technologies, a remote server management company, will give Dell a new opportunity to "grow their share of the wallet."

But it goes deeper than that.

Ever since Hewlett Packard surpassed Dell as the largest seller of computing hardware, it seems Dell got the message that the only way to expand was to recognize the existence of a far more complex computing environment and that its customers need more than just commodity hardware from its vendors.

Fact is, today's users have much greater access than in the past to a wide range of applications due mainly to the fact that many more business processes have been turned into applications that employees need to access, said Brown.

"Organizations are now opening up to a much wider world. With online access to a Web layer, the complexity of what IT has to provide from the data center to the desktop has changed," says Brown.

HP has always been an enterprise company that dealt with services and manageability of all aspects of systems. Dell, on the other hand, was aware of that but kept its focus on products, never going much beyond selling an extended warranty.

The truth is, says Brown, that Dell realizes it has to be more than a "box shifter." Dell needs to add on software management systems to go with the servers they sell.

However, as it starts to take on more services and act more like a service provider, will Dell be able to take just half a step? Can it offer remote management, even if it encompasses desktops and servers without also offering the middleware every enterprise now requires to connect to back-end systems and deal with migration issues around legacy systems the way HP, IBM, and Sun have traditionally done?

Brown says it is unlikely that Dell will ever offer the kinds of services of those companies offer, but it will try to make customers see that the glass is half full by playing up the fact that it doesn't have to sell a customer legacy equipment and that it has no vested interest in getting a customer to spend on high-end systems.

Brown believes there is a place for Dell in the middle as accompany that says it can supply the best value infrastructure available and the software to manage that infrastructure.

Time will tell or maybe Brown is reading the cards incorrectly. Maybe the acquisition of Everdream and SilverBack is only the beginning. Dell is certainly not a cash poor company, and next year, Michael Dell may surprise a lot of doubters in the industry by making a play for a major system integrator, either here or offshore.

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