Do VARs Have 2 Billion Reasons To Fear Microsoft-Dell Loan?


Microsoft's $2 billion loan to Dell as part of Dell's $24.4 billion leveraged buyout has raised some eyebrows across the IT industry, with many solution providers, analysts and even other vendors wondering how Microsoft will remain vendor neutral when it all of a sudden has a more vested interest in the success of one of its PC partners.

"This has the potential to raise unfair trade practice issues," according to one VAR who asked not to be identified.

Meanwhile, PC maker Lenovo said Microsoft will continue to be an important partner but noted the "tough competition" in the market in a statement regarding Microsoft's involvement in the leveraged buyout of Dell.

[Related: Who's Who: The Key Stakeholders In Dell's $24.4B Deal To Go Private]

"We are well prepared to continue to win in the PC+ era by focusing on our own efforts, core strengths and great execution," Lenovo said in a statement. "We remain as always confident in our strategy, our ability to deliver compelling and innovative products and our overall position and performance. We believe that the financial actions of some of our traditional competitors will not substantially change our outlook."

Even before the deal was finalized, Michael Goldstein, CEO of LAN Infotech, a Fort Lauderdale, Fla.-based VAR, had expressed wariness of a closer link between Dell and Microsoft.

"I don't think they're going to merge tomorrow, but it's a possibility down the road. Dell is Microsoft's biggest reseller partner. They're hugely important. Seeing the two of them combined makes me a little nervous because we're a smaller solution provider and we don't want to get lost in the mix if it does happen," Goldstein told CRN.

Microsoft released a statement, without attribution to a specific executive, which noted that the company is committed "to the long-term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future. We're in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform."

Meanwhile, Cindy Shaw, managing director and research analyst at Discern, said in a report that the degree to which Dell includes or excludes Microsoft in innovations could be a game-changer.

"One of the most important uncertainties regarding what Dell will do differently as a private company -- and how that could impact the industry and other industry participants -- is Microsoft's influence over Dell," Shaw wrote.

Shaw notes that Dell traditionally has exhibited a high degree of loyalty to Microsoft products.

"The WinDell scenario pressures traditional competitors with similar products and services rather than lower-cost disruptive offerings," Shaw wrote, adding that other areas of collaboration between Microsoft and Dell could happen around software-defined data centers.

"Microsoft may help Dell stitch together and leverage its acquired assets," she said.

Meanwhile, HP, Lenovo, EMC, NetApp, Oracle, Cisco Systems, Intel, VMware and, to a lesser extent, IBM, will face additional pressures because of Microsoft's tighter forge with Dell, she said.

"HP, as an important Microsoft partner, is likely most threatened and we view IBM as less threatened due to its large business helping customers solve business problems - not just IT problems -- and its ability to evolve," she wrote.

Meanwhile, HP stayed clear of Microsoft when it issued its own statement but couldn't resist taking its own swipe at its big rival.

PUBLISHED FEB. 5, 2013