Dell buys Wyse, plays ‘cloud client’ game
Summary: Dell expands into thin clients and virtualization software with the acquisition of Wyse. — Dell said it will acquire Wyse Technology in a move that gives the company more virtualization heft and an entry in thin computing.
Context & Ripple Effects
Wyse is the fourth piece in a decade-long rebuild of Dell around the datacenter rather than the desktop: the $1.4B EqualLogic deal in 2007 bought storage, the 2010 purchase of integration-software maker Boomi added cloud tooling, and SonicWALL brought network security just weeks ago in March 2012 with roughly 1,000 employees. The company had already declared in February 2012 that it no longer considers itself a PC company, so Wyse reads less like a one-off and more like a stated strategy executed by chequebook.
The target also rhymes with Dell's own history: back in October 2007 it experimented with diskless, streamed PCs, and in late 2011 it quit netbooks arguing 'thin and powerful' was the future. Wyse gives that instinct a product line — thin clients plus virtualization software — at the moment Windows 8 looms, where Michael Dell has promised an enterprise tablet shipping on the day the OS reaches customers.
First-order effects
- Dell immediately gains a thin-client hardware line and Wyse's virtualization software stack, letting it sell desktops-as-a-service into accounts where it previously sold only boxes.
- Citrix, HP and other thin-client vendors face a new competitor that bundles endpoints with the storage, security and integration software Dell has been assembling since EqualLogic.
Second-order effects
- Virtualization incumbents such as Citrix and VMware gain a customer who now has an incentive to push its own client-side software, pressuring partner economics on every Dell desktop deal.
- Rival PC makers under the same margin pressure are pushed toward comparable enterprise-services acquisitions rather than competing on hardware price alone — the same logic behind Dell's rapid-fire 2012 deal cadence.
Third-order effects
- If the pattern holds, PC manufacturers reposition as end-to-end enterprise IT vendors whose devices are delivery mechanisms for virtualized workloads — a structure in which the client hardware business is defended by the software and services wrapped around it.
- A market where the endpoint is a dumb window onto a datacenter shifts bargaining power toward whoever owns the management layer, setting up exactly the kind of vendor-partnership contests over cloud management that define the following decade.
The trend: Legacy PC makers are buying their way from commodity hardware into virtualization, security and cloud-management stacks, turning the desktop into a subscription-delivery endpoint.