Eye on Oracle

Jun 26 2012   1:57PM GMT

Acquisition of Quest Software would fit Dell’s strategy

Mark Fontecchio Mark Fontecchio Profile: Mark Fontecchio

Many Oracle database administrators know Quest Software as the company that produces Toad, the popular third-party Oracle Database management tool. So how does it make sense that Dell, maker of desktops and laptops and pizza-box servers, might acquire it?

Those DBAs might feel a little better to know that if Dell were to acquire Quest, it wouldn’t be a one-off purchase. Dell is focused on boosting its enterprise software portfolio, and getting Quest would be part of that strategy. However, it’s still too early to tell whether that strategy by Dell is working, or will work in the future.

Quest Software filed papers with the federal Securities and Exchange Commission this week stating that a “strategic bidder” has proposed to buy Quest for $27.50 per share, or more than $2 billion total. Reuters, citing an unnamed source, reported that Dell was that strategic bidder. Neither Quest nor Dell would confirm the Reuters report, with a Quest spokesperson saying the company wouldn’t comment for now beyond the SEC filings, and a Dell spokesperson writing in an email that Dell would not comment on “speculation.”

Dell is most well-known for selling consumer desktops and laptops, as well as small x86 servers for the data center. But it has reached into its pockets several times in the past few years to acquire software companies known for their work with enterprise customers. The streak began with its purchase of Perot Systems for almost $4 billion back in 2009. Perot was known for applications development and systems integration. Other purchases have included systems management company KACE Networks, storage/backup companies Compellent and AppAssure, security company SonicWall, thin-client company Wyse Technologies, and Clerity Solutions, known for its mainframe migration and application rehosting.

 “Our commitment to build a broader set of end-to-end solutions and shift the mix of our business continues to be our top priority, and we’re making progress,” Dell Chief Financial Officer Brian Gladden said during the company’s most recent quarterly earnings call. “Our mix of enterprise solutions and services is now 50 percent of our margin, and 31 percent of our revenue.”

That’s a pretty significant cut of the company, and a marker that Dell really is focused on the enterprise. Dell is one of the top volume sellers of servers, so it already has its foot in the door of many enterprise data centers. The question is whether it can transform its own reputation enough so that customers will move beyond hardware and buy enterprise software from Dell.

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