Dell Considers Services Acquisitions

Schneider, speaking at the Raymond James IT Supply Chain conference, co-hosted by CRN, said Dell has shied away from such acquisitions in the past. However, he said the company's desire to grow its services business, combined with current market conditions, has led the company to search for potential targets that could fit into Dell's strategy.

"We'd like to buy more intact service organizations that are really working more in the same kind of hardware space we are," said Schneider in a breakout session at the Raymond James conference. "Those requirements limit the number of services companies Dell is looking at."

Dell "has evaluated many small service company potential acquisitions," meeting with the top management of these companies and evaluating their financial status, Schneider added.

"What we really want to find are people that are really working more with Intel-based architecture, Microsoft software or Linux," he said.

id
unit-1659132512259
type
Sponsored post

Dell is not interested in acquiring a break-fix services provider, Schneider said. Among the companies Dell has considered are those that do professional services in the government sector, he said.

Schneider said one obstacle to potential acquisitions are that a number of these companies are experiencing problems in the wake of the IT spending slump. "A lot of these companies have actually had lots of problems," he said. "What pricing they would like to get as their revenue streams have fallen isn't all that realistic."

Dell has been in active negotiations with a number of services companies that have ultimately failed. "A lot of these guys sell hardware, and it may be hardware we don't want to sell and they want valuation for that," Schneider said.

Dell acquired small solution provider Plural this year. "If we could buy a handful of companies like Plural, of that size or bigger, we'd be happy to do it if we could find the right people," he said.

Dell's services business is about 10 percent of the company's annual revenue and is growing, Schneider said, noting that Dell's professional services organization now has hundreds of employees. While that number may appear small, Schneider said it is more than double that of a year ago.

As for Dell's new small-business services offerings, which were unveiled earlier this week, Schneider said it is difficult to predict how fast that business will grow. Dell's small-business services are in part aimed at driving hardware sales, he said.

Schneider conceded that with standardized small-business services, Dell realizes that there are small businesses in which it cannot act as the IT outsourcer or back office. "We know that there are a lot VARs, resellers and other service providers that provide good service for a lot of people that want to buy Dell hardware," he said.

"To me it is just trying to pick up more hardware sales, and [it's a bonus if we can make some money selling services or get people things they want in a more simplified manner," he said.

Schneider said there has been growth in small-business IT spending during the last several quarters. "We have always been a big player in small business, particularly in the U.S., so we really want to broaden out our products and services to this category," he said.