Quest Acquisition Opens Door For Dell To Focus On Complete Solutions, Not Parts

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Dell's planned acquisition of Quest Software not only gives the company a full portfolio of storage, security and management software platforms but also provides it the opportunity to prove that it is indeed on the way to becoming a provider of complete solutions and not just the parts, according to Dell executives.

Executives from Round Rock, Texas-based Dell and Aliso Viejo, Calif.-based Quest on Monday said the Quest software will be at the center of Dell's new push into the software business and will give Dell a chance to integrate it with its existing hardware and software businesses to provide integrated solutions for SMB and enterprise customers.

At the same time, solution providers of both companies will be watching to see whether the integration of Quest goes as well as recent Dell acquisitions of companies like Compellent and EqualLogic in terms of opportunities for channel partners to profit from those integrated solutions.

[Related: Michael Dell: We're 'Not A PC Company']

Dell on Monday said it will acquire Quest for $2.4 billion, ending weeks of speculation that Dell was in negotiations to make the deal.

The acquisition gives Dell a very profitable new software business.

Quest, which has an annual revenue of $857 million, enjoys 86-percent gross margins and 11-percent operating margins, said David Johnson, senior vice president of corporate strategy for Dell.

Furthermore, Dell gets a business where 55 percent of revenue is recurring revenue thanks to Quest's direct sales force, a group of over 4,000 solution provider partners and a customer base of over 100,000 companies, Johnson said.

Quest's software will be at the center of Dell's strategy to provide customers complete, open solutions for physical, virtual and cloud environments, Johnson said. "Dell now has the tools to assist customers to migrate to open, scalable infrastructures whether [those infrastructures] are on-premise or off-premise," he said.

John Swainson, president of Dell's new Software Group and former CA CEO, said the Quest software matches the three key trends -- exponential data growth, the accelerating push to the cloud and the move by users to bring their own mobile devices to work -- which are driving the industry-wide push to develop dynamic business solutions.

For Dell, Quest provides a way to leverage a growing software business to enhance the company's stand-alone and embedded software strategy without cannibalizing existing hardware and software sales, Swainson said.

NEXT: VARs Say Quest Acquisition Positive For Dell And Partners

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