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

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.

Comments

Dell's history??

[n0creativity]

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?

Re:Dell's history??

[Anonymous Coward]

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?

Re:Dell's history??

[Junta]

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..

Re:Dell's history??

[dalan]

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.

Re: Dell's history??

[n0creativity]

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.

Perhaps not the wisest move...

[Junta]

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.

Re:NTT buys customer list

[golden_hands]

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..