Dell and Wyse: will 1 + 1 = 2?
3 April 2012 | 0
The news that Dell is planning to buy Wyse Technology makes sense for a number of reasons. It provides Dell with a strong presence in the thin client market overnight (you really can’t get any stronger than the number one spot) and a very credible position in the desktop virtualisation/VDI space at a time when that part of the market is beginning to gain traction.
Dell has claimed the proposed acquisition will create "an industry-leader that offers customers an alternative compute model directly from Dell or through our channel partners" and help enterprises to "enhance security, streamline desktop management and boost user productivity".
So what about those channel partners? Typically, when a deal like this is announced, most of the focus is understandably on the two companies involved, but there are often hundreds, if not thousands, of other businesses affected. In this instance, according to Wyse, there are as many as 3,000 channel partners worldwide selling its products that will be wondering exactly where they will fit when the deal goes through.
US web site eChannelLine has some interesting quotes from a conference call featuring Dell’s senior vice president for corporate strategy, Dave Johnson, and Wyse president and CEO Tarkan Maner. Regarding the channel, Maner described the deal as "great news for our customers and our channel ecosystems worldwide" and a great opportunity to grow its desktop core business and expand in the cloud.
He claimed "it’s a great story for channel partners" because they have an end-to-end solution to provide to their customers. "My phone has been buzzing with calls from channel partners," Maner added. I bet it has.
Johnson, meanwhile, said the addition of Wyse’s 3,000 channel partners would broaden Dell’s channel reach. "We will retain these channel partners," he pledged, "and our intent for those with no current relationship with Dell is to get them to sell the Dell portfolio." He added that Dell would thrash out a method for Wyse partners to use its PartnerDirect programme.
On the face of it, this all sounds like great news for Wyse’s channel. Not only are they going to continue to market Wyse’s products but those that don’t have an existing agreement with Dell will be able to get access to its portfolio as well. Suddenly, their options have been dramatically expanded although they will need to ditch the "No PC" Wyse marketing message that loudly proclaims "the PC is dead!" and exhorts customers to "just say no PC".
As for Dell partners, they will have a very strong thin client range to flesh out their product offering to enterprises. The messaging is slightly easier for them as they’re not likely to have told their customers to junk the PC in the past. Instead, they are merely extending a thin client option to customers.
As with all deals like this, there are two prospective challenges, one is channel-based and the other concerns the technology. As far as the channel is concerned, the likeliest source of upheaval when an acquisition occurs is at the distribution level. In other words, when you’re combining businesses and technology, who gets to supply what?
The other concern, which is technological, revolves around what happens to a technology when it is subsumed into a larger business. Wyse is number one in thin client, probably because it’s been focused on that market for a long time. What happens when it joins forces with a much larger operation that works across a much broader product portfolio? Will that focus get lost?
This is potentially a channel issue too because you have to suspect that Wyse’s success has also been down to the strong focus of the channel on its thin client products and related software and services. The danger is that a combined Wyse/Dell channel won’t provide that focus.
One thing experience shows is that when it comes to acquisitions they rarely result in one plus one equalling two. More often than not, it makes something like one and a half, if not less. The same could apply to channel partner numbers. If you’ve got a lot of channel partners on both sides that are going to be selling the combined products, you’re probably going to see some rationalisation, some of it voluntary and some of it forced.