PC or not PC?
While most of the analysts are trying to understand if the PC business is dead or simply (temporarily) out of favor, one of the most profitable companies in the tech sector, Dell Inc. (DELL, Financial), is not just sitting and waiting for the things to evolve (either in a favorable or adverse way).
The PC business is not just fading away, but only turning into something different (just try to work for eight hours/day on your tablet or smartphone and tell me how do you feel at the end of the day).
In addition, for Dell it’s really important to understand what they can find out there that can enrich their business and, above all, ensure they're building a big moat around you.
Dell is just addressing this need, and it’s doing it through acquisitions.
At the beginning of this month, Dell announced it signed definitive agreements to acquire two software & services companies (Clerity Solutions and Make Technologies) and a leader in the cloud client computing business (Wyse Technology).
The Clerity Solutions and Make Technologies Deals
On April 3, 2012, Dell acquired Clerity Solutions, a provider of applications modernization and re-hosting solutions. Let’s try to understand, in the first place, what exactly Clerity does.
Applications modernization, in practical terms, is the process of changing old legacy software applications in order to adapt them to a new hardware or, more in general, to a new IT infrastructure.
Of course this process can be very time (and resource) consuming, and it is usually executed incrementally, in order to avoid stopping the normal business flow.
Consequently, it should be as fast as possible and possibly try to preserve the original features and software quality.
Re-hosting is a similar concept. It is the process of “porting” applications usually developed for expensive (but obsolete) hardware platforms to new cheaper and scalable platforms in order to save costs and give them access to new technologies (for example, the Internet capabilities).
In a few words, Dell acquired Clerity in order to “help customers reduce the cost of transitioning business-critical applications and data from legacy computing systems and onto more modern architectures, including the cloud.”
On April 5, 2012, the Make Technologies deal took place.
Make Technologies is essentially in the same business as Clerity — application modernization and cost-reducing services — but it is headquartered in Vancouver, Canada.
Here are some of its main capabilities:
Dell will add Clerity and Make Technologies people and resources to the pre-existent Dell Services division.
Wyse Technology
On April 2, 2012, Dell announced intent to acquire Wyse Technology, “the global leader in cloud client computing.”
Cloud computing is a simple concept. It is a way to connect people (and their computing services) through a network (the network could be Internet, but not necessarily).
With this powerful technology (enabled by the recent broad use of Internet and by faster connection speeds), you can use your application and data either on your PC (or tablet) or on your smartphone without knowing where your program and the relative data physically is (it could be on a server in Norway or in Canada, or both).
Your application is running on the cloud (as Internet is usually referred to), so you’re just requesting and using a remote service (after all, this is what you need), and someone else is taking care of the servers, the routers, the software, data safety (at least we hope!), etc.
We all are already experimenting the benefits of the cloud, and I think it will be something more than ever natural for future generations to think "cloudy."
If you want to learn something more on cloud computing, you can find lots of tech articles on the Internet. I also found this video that gives you a better idea of the concept (pictures and movies are always better than words).
Coming back to Wyse Technology, they are specialized in desktop virtualization (I know, another tech term!).
With a virtual desktop, you can bring your computing environment practically where you want, on a different and new platform, or for example work on a remote PC from your home (another cloud feature).
This will be useful for Dell in order to improve their remote assistance capabilities, and for their customers to implement cheaper platform transitions and assist their clients.
Now that you have a taste of how important the cloud is today for old hardware producers, let’s get back to the Clerity and Make Technology deals: Why are the companies so focused on modernization?
Most of this process consists into moving legacy applications and capabilities from old platforms and IT infrastructures into the… cloud!
Conclusion
Dell Inc. (DELL) is using its huge cash flow generation in order to diversify its business, mainly trying to turn itself from an hardware (and services) company to a solution provider (that is, hardware and cloud computing SW services as parts of an integrated complete solution).
I think Dell was already a value stock with good outlook for the years to come (I really loved this article, written by Matt Blecker), and now, with the recent cloud-based acquisitions (and the ones that will come following this trend), it will be even more strong and profitable.
This strategy comes from a very competent management: So, even if this is always a tech company, investors that are buying the stock right now will get their benefits for a very long time.
Disclosure: I am long DELL
While most of the analysts are trying to understand if the PC business is dead or simply (temporarily) out of favor, one of the most profitable companies in the tech sector, Dell Inc. (DELL, Financial), is not just sitting and waiting for the things to evolve (either in a favorable or adverse way).
The PC business is not just fading away, but only turning into something different (just try to work for eight hours/day on your tablet or smartphone and tell me how do you feel at the end of the day).
In addition, for Dell it’s really important to understand what they can find out there that can enrich their business and, above all, ensure they're building a big moat around you.
Dell is just addressing this need, and it’s doing it through acquisitions.
At the beginning of this month, Dell announced it signed definitive agreements to acquire two software & services companies (Clerity Solutions and Make Technologies) and a leader in the cloud client computing business (Wyse Technology).
The Clerity Solutions and Make Technologies Deals
On April 3, 2012, Dell acquired Clerity Solutions, a provider of applications modernization and re-hosting solutions. Let’s try to understand, in the first place, what exactly Clerity does.
Applications modernization, in practical terms, is the process of changing old legacy software applications in order to adapt them to a new hardware or, more in general, to a new IT infrastructure.
Of course this process can be very time (and resource) consuming, and it is usually executed incrementally, in order to avoid stopping the normal business flow.
Consequently, it should be as fast as possible and possibly try to preserve the original features and software quality.
Re-hosting is a similar concept. It is the process of “porting” applications usually developed for expensive (but obsolete) hardware platforms to new cheaper and scalable platforms in order to save costs and give them access to new technologies (for example, the Internet capabilities).
In a few words, Dell acquired Clerity in order to “help customers reduce the cost of transitioning business-critical applications and data from legacy computing systems and onto more modern architectures, including the cloud.”
On April 5, 2012, the Make Technologies deal took place.
Make Technologies is essentially in the same business as Clerity — application modernization and cost-reducing services — but it is headquartered in Vancouver, Canada.
Here are some of its main capabilities:
- End-to-end application portfolio transformation (modernization) solutions
- Automated application and code migration
- Maintaining and managing legacy applications cost reduction
- Custom code (in legacy portfolios) drastic reduction
Dell will add Clerity and Make Technologies people and resources to the pre-existent Dell Services division.
Wyse Technology
On April 2, 2012, Dell announced intent to acquire Wyse Technology, “the global leader in cloud client computing.”
Cloud computing is a simple concept. It is a way to connect people (and their computing services) through a network (the network could be Internet, but not necessarily).
With this powerful technology (enabled by the recent broad use of Internet and by faster connection speeds), you can use your application and data either on your PC (or tablet) or on your smartphone without knowing where your program and the relative data physically is (it could be on a server in Norway or in Canada, or both).
Your application is running on the cloud (as Internet is usually referred to), so you’re just requesting and using a remote service (after all, this is what you need), and someone else is taking care of the servers, the routers, the software, data safety (at least we hope!), etc.
We all are already experimenting the benefits of the cloud, and I think it will be something more than ever natural for future generations to think "cloudy."
If you want to learn something more on cloud computing, you can find lots of tech articles on the Internet. I also found this video that gives you a better idea of the concept (pictures and movies are always better than words).
Coming back to Wyse Technology, they are specialized in desktop virtualization (I know, another tech term!).
With a virtual desktop, you can bring your computing environment practically where you want, on a different and new platform, or for example work on a remote PC from your home (another cloud feature).
This will be useful for Dell in order to improve their remote assistance capabilities, and for their customers to implement cheaper platform transitions and assist their clients.
Now that you have a taste of how important the cloud is today for old hardware producers, let’s get back to the Clerity and Make Technology deals: Why are the companies so focused on modernization?
Most of this process consists into moving legacy applications and capabilities from old platforms and IT infrastructures into the… cloud!
Conclusion
Dell Inc. (DELL) is using its huge cash flow generation in order to diversify its business, mainly trying to turn itself from an hardware (and services) company to a solution provider (that is, hardware and cloud computing SW services as parts of an integrated complete solution).
I think Dell was already a value stock with good outlook for the years to come (I really loved this article, written by Matt Blecker), and now, with the recent cloud-based acquisitions (and the ones that will come following this trend), it will be even more strong and profitable.
This strategy comes from a very competent management: So, even if this is always a tech company, investors that are buying the stock right now will get their benefits for a very long time.
Disclosure: I am long DELL
