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Dell Sells IT Services Unit For $3 Billion (informationweek.com)

Posted by BeauHD on from the era-of-acquisitions dept.

An anonymous reader writes: On Monday, March 28, Dell has publicly announced it is selling its IT services unit to NTT Data of Japan for more than $3 billion. The sale of Dell's IT services marks the first and largest transaction the company has taken on since it disclosed in December that it was considering divestitures to help offset its buyout of storage giant EMC, said Dell spokesperson David Frink. However, Frink cautioned that it's not fair to speculate that there will be more divestitures to come or that this will be the last, as the company moves forward with its EMC buyout deal that is valued at roughly $60 billion. The deal between Dell and NTT Data will help ease some of the financial burden of the deal between Dell and EMC. According to Frink, that mega-deal with EMC is expected to close in the August to October timeframe.

28 comments

  1. Between being sold to Japan 80s style or merging by Anonymous Coward · · Score: 0

    Not sure which I'd prefer. I'll just chalk this one up to "cyberpunk is now."

  2. Dell's history?? by n0creativity · · Score: 2

    So I just implemented a new VMware Essentials Plus installation for smallish nonprofit I work for. This news has ne a bit on edge regarding the future of VMware's lower end licensing models. Reading the article, what stands out from the standard BS is that Dell wants VMware to be a 'stronger' product from the EMC line. To me that screams 'Make more money', which, for a product of VMware's market maturity, generally means raising profits through licensing restructuring. AKA, raising prices. Having never been a Dell business customer, does anyone have familiarity with Dell's SOP after takeover? Should I expect my Essentials Plus license to go up, significantly, in cost? Or worse, remove the lower level license options all together? We are running all HP hardware, but I'd be surprised if Dell went as far as to try to induce hardware lock-in by not supporting major hardware vendors... then again, who knows. Anyone have any insight or thoughts?

    1. Re:Dell's history?? by Anonymous Coward · · Score: 2, Insightful

      Anyone have any insight or thoughts?

      Here is some free advice: Don't risk your core business on closed source software.

      If your client is a "small non-profit", then why isn't something like VirtualBox good enough?

    2. Re:Dell's history?? by Junta · · Score: 2

      VMware has already been down the path of starting to neglect/retire lower cost options, and raise prices on their core products. They already were eager to have high-margin, but now the pressure is *really* on to gouge their 'captive' customer base for more money.

      For a 'smallish nonprofit', you'd nearly certainly be better off with either CentOS/RH or Hyper-V, depending on your inclinations. Actually this is the particular problem Dell faces. They seem very enthusiastic about VMware, but I see vmware's position as the most tenuous. When you administer vmware, it's either through linux or, most certainly, through Windows. Your applications do not 'run on vmware', they run on some platform that you are managing. Nowadays those platforms have their own virtualization capabilities. So you can have your 'vmware and platform' skillsets or just 'platform'... Seems vmware is at risk..

      --
      XML is like violence. If it doesn't solve the problem, use more.
    3. Re:Dell's history?? by SQLGuru · · Score: 1

      VMWare is a different company than EMC. EMC owns a large percentage of it (controlling interest). Dell's offer (at least originally) would continue the separation of the companies. Obviously, with controlling interest, it would be easy enough to make the vote of the VMWare board go in whatever direction they wanted. But short-term, you shouldn't have to worry.......it will be at least a year after the EMC deal closes before they make many drastic changes.

    4. Re:Dell's history?? by Anonymous Coward · · Score: 0

      Christ. Do you have any experience with VirtualBox? Actually stressing it even slightly? Jeez what an idiotic comment.

    5. Re:Dell's history?? by dalan · · Score: 2

      Probably not the best altenative, but not idiotic without knowing the size of deployment. But CentOS/RH (aka linux kvm), ProxMox (same deal) or shrug, free Hyper-V are sensible alternatives.

      --
      Cheers! -- Richard
    6. Re:Dell's history?? by Anonymous Coward · · Score: 0

      VMWare is a totally different purpose and market from VirtualBox. VirtualBox is workstation virtualization at best, good for labs and testing, and some custom applications, but not much else. VMWare ESX/ESXi is for real business.

      That said, there's a lot of options in the free software space that actually serve the same purposes as VMWare. In the open source arena that's KVM/qemu or Xen + libvirt. In the commercial realm that's Hyper-V.

      Of course, the reason VMWare competes with these products despite its high price tag is because it came first and it's just plain better in most ways. For a simple, one-machine hypervisor, the others do just as well, but if you want real clustering and real HA, be prepared for a lot of work and mixed results with the alternatives, where VMWare just works.

      For people who want an ESX alternative that's relatively easy to use, Proxmox works quite well too.

    7. Re: Dell's history?? by n0creativity · · Score: 1

      I honestly can't tell if that comment was a poor attempt to troll or a real suggestion... Regardless, my response is that some of us have to live in the REAL world and implement REAL solutions for business critical infrastructure.

    8. Re:Dell's history?? by K.+S.+Kyosuke · · Score: 1

      As the other commenter says, why would a small non-profit need to stress it heavily?

      --
      Ezekiel 23:20
    9. Re:Dell's history?? by Sax+Russell+5449D29A · · Score: 1

      For any and all small to medium size systems I always prefer to go with KVM. With Red Hat's Virt-Manager it's an excellent low-cost and high-performance solution. It's all open source too, which I like very much, but external support might be more expensive to acquire. If you have great talent in-house, then there's usually no need for fallback support.

      --
      -SR
    10. Re: Dell's history?? by n0creativity · · Score: 2

      This small nonprofit has 200+ employees spread over 15 physical sites with a radius of about 60 miles. I apologize if I mistakenly categorized it as 'smallish', but i was under the impression that midsized orgs were like 500+ employees. We are running 3 HP DL 360 G9s for compute, an MSA 2040 with 12TB of useable disk space, and 2 10Gb HP 5700 switches dedicated for iSCSI traffic. We run around 50 VMs and I designed the cluster so that all of the VMs can run comfortably on 2 of the DL 360s so that I can minimize downtime for software\hardware maintenance. The switches are a bit overkill as we don't need the 40 10Gb ports or the 2 40Gb ports, but I spent 3 months working with vendors and directly with HP reps trying to find a smaller, cheaper 10Gb switch, but the 5700s is the cheapest solution with at least 8 10Gb ports. I explored Cisco and other vendors but that would require using SFP+ modules instead of DACs because HP doesn't officially support any DAC but their own. And the cost of the SFP+ modules alone made using a different vendor for the switches significantly more costly.

    11. Re: Dell's history?? by n0creativity · · Score: 1

      That was my main concern. I am very familiar with VMware but since I'm the 'everything tech' admin, i don't have the time or resources to not has full on support for the primary infrastructure of the organization. The Essentials Plus license is pretty reasonable with the discounts we got and because I leveraged an existing Essentials license and just upgraded it. But thanks for the recommendation, I'll keep that in mind as I watch for warning signs from Dell\VMware.

    12. Re: Dell's history?? by n0creativity · · Score: 1

      Apologies for the spelling mistakes... I'm not illiterate, as much as it may seem, haha. Sometimes typing on my phone is a challenge.

    13. Re: Dell's history?? by plopez · · Score: 1

      In the US the cut point is at 50 employees, for regulatory and tax purposes. And I agree, more than 50 and you can start losing the personal relationships which are characteristic of small businesses.

      There is a bias in the media and in culture to not take businesses with less than hundreds of employees seriously "Bigger is better" is the bias but it small business which drive innovation (e.g. Apple in the early days) and employment.

      --
      putting the 'B' in LGBTQ+
    14. Re: Dell's history?? by Anonymous Coward · · Score: 0

      have fun being accused of sexism when you can't do something that a feminist is insisting you can but won't because you hate women.

    15. Re:Dell's history?? by Anonymous Coward · · Score: 0

      I tried qemu and it was a piece of shit, so bad that I had to hold my nose and use VitrtualBox.

    16. Re:Dell's history?? by pnutjam · · Score: 1

      KVM doesn't support Windows, does it? I was under the impression it was either VMware or Virtual Box if you need a mixed Windows and Linux environment.

      --
      Cheap storage VM.
    17. Re:Dell's history?? by Sax+Russell+5449D29A · · Score: 1

      If you mean running Windows as a guest, then yes, it works just fine! I haven't used much Windows on KVM lately, but anything non-3D is fluent and should work out of the box without any problems. Using the virtio disk drivers in nocache mode gives also great disk performance, even on Windows (even better on 'writeback' mode, but it's inherently unsafe to use for critical systems).

      If you ever want to try KVM the super easy way, just install the virt-manager package on any Linux distro and it's pretty straight forward from there on out.

      --
      -SR
    18. Re:Dell's history?? by Anonymous Coward · · Score: 0

      Yeah, because after all, smallish non-profits shouldn't depend on solutions that have existed for years, have demonstrated ability to meet business needs, and are supported by calling a phone and getting a live human to talk to.

      That's just nuts.

  3. Perhaps not the wisest move... by Junta · · Score: 4, Interesting

    Though Dell is not the biggest of players in that space, that seems like the most 'clingy' sort of customers. If you truly have outsourced your IT, it's very challenging to change your vendor, since you by definition opted not to have the in-house skills needed to be able to do that.

    Compare that to any hardware/software solution, where the client retains enough in-house to be able to say 'You know what, we can switch vendors and here's what the cost picture looks like'. This includes EMC gear.

    Also interesting that Dell acquired this division in 2009 for 3.9B. They lost 900 million dollars on the effort.

    --
    XML is like violence. If it doesn't solve the problem, use more.
    1. Re:Perhaps not the wisest move... by alvinrod · · Score: 1

      Compared to how most big corporate acquisitions these days turn out, only losing $900 million seems like they actually came out ahead.

      Look at how Nokia turned out for Microsoft or Motorola did for Google.

    2. Re:Perhaps not the wisest move... by Anonymous Coward · · Score: 0

      They lost on the deal, but at the time they weren't expecting to 1) take the company private and 2) buy EMC and VMWare. So I don't think Michael Dell is kicking himself over Perot Systems right now.

    3. Re:Perhaps not the wisest move... by Anonymous Coward · · Score: 0

      I've seen quite a few comments on Dell losing 900 mil on the deal. Its worth pointing out that is is much more complicated than that. You would need to also include the net profit the group generated in the time they owned it. Gross Income - Operating Expenses = Net profit. If the consulting made them 200 mil in the 6 years they owned it, then the loss on the sale would only be 700 mil. On the other hand, if the group was losing money then the initial loss would be even bigger. Just to make it more convoluted, if the group was losing 100 mil a year, Dell would make its money back in 15 years just by avoiding any more loss.

  4. Ease the financial burden? by Anonymous Coward · · Score: 0

    $3 billion is 5 percent of $60 billion (and no, I didn't have to google for that). So, this is not a big help.

  5. NTT buys customer list by Anonymous Coward · · Score: 0

    I think NTT buys only the customer suppoer contracts.Dell's IT Services management was moved long time ago to India branch. Not a surprise then that the quality dropped as in free fall. Guess who is going to be axed first by NTT ? NTT is not a big fan of indian outsourcing they know the issues that go with that.

    1. Re:NTT buys customer list by golden_hands · · Score: 2

      It all has to do with costs. Many customer outsourcing contracts have a commitment to year on year cost reduction, while improving the service quality. The problem with this is that this leads to active substitution of experienced people with less experienced people/trainees regardless of the country. I don't think NTT Data or just about anybody can do anything given the business drivers in play. In addition, NTT Data already has an office & technical staff in India. They were a competitor on some contracts that we bid for in the past..