Here's The Cloud Computing Company Dell Is Buying: Boomi
Dell has just announced it has agreed to acquire Software-as-a-Service integration company Boomi. Boomi offers an application integration platform that aims to reduce cost and complexity out of integrating applications …
Context & Ripple Effects
Dell arrives at this deal straight out of a bruising platform fight: in August 2010 it raised its bid for storage firm 3PAR to $24.30 per share — roughly $1.6 billion net of cash — to match HP's competing offer, a war it ultimately fought over a single asset. Boomi, by contrast, is a small capability buy: a SaaS application-integration platform that reduces the cost and complexity of connecting applications, purchased outright rather than contested.
The acquisition also lands amid a broader Dell push beyond the PC box — the Streak mobile device went on sale in the U.S. in August, the Dell Duo convertible tablet was previewed in September, and rumors had Dell evaluating Google TV set-top devices. The pickup by eWeek and GigaOM shows the story read less as a product note than as a signal of what kind of company Dell is trying to become.
First-order effects
- Boomi's integration platform and its customer base move under a hardware vendor overnight, giving Dell a cloud-services product line it did not have to build internally.
- HP, fresh off winning the 3PAR bidding war against Dell, now sees its rival buying software capability instead of competing dollar-for-dollar for infrastructure assets.
Second-order effects
- Integration-software vendors face a new competitor that can bundle SaaS connectivity into existing enterprise hardware and services contracts, pressuring standalone pricing.
- Other PC makers facing the same margin squeeze get a template: rather than bidding up scarce infrastructure targets like 3PAR, acquire small cloud-software firms outright.
Third-order effects
- If hardware vendors keep absorbing cloud-software specialists, the industry drifts toward solutions-selling — integration, devices, and infrastructure packaged together — with independent SaaS point tools increasingly bought rather than left standalone.
- The pattern also carries absorption risk for the acquired: specialist platforms folded into large hardware organizations must retain their developer and partner pull to stay worth the purchase.
The trend: PC and hardware makers are converting balance sheets into cloud-software capability through tuck-in acquisitions, a pivot accelerated by losing high-priced infrastructure auctions like 3PAR.