Meet Dell, the Software Company

Michael Vizard

After a whole lot of wrangling that ultimately led to Dell parting with $2.4 billion to acquire Quest Software, Dell announced today that Quest will form the foundation of a recently formed Dell Software business unit.

That structure essentially is the latest attempt to put a final nail in the coffin of the idea that there is such a thing as an independent hardware company in the IT industry. Obviously, people will continue to run third-party application software on hardware from Dell. But over time, that approach will increasingly become the exception rather than the rule as Dell continues to expand its software base, which already includes companies such as KACE, Clerity Solutions and Make Technologies. Quest itself is really a roll-up of over 29 companies that Quest has acquired since its founding in 1987.

According to John Swainson, president of Dell Software, Dell will make no bones about the fact that going forward, it will strongly favor its own intellectual property over any competitive third-party software offerings that it competes with as part of an effort to give customers a more complete experience.

Dell’s approach to selling software essentially mirrors the way Hewlett-Packard and IBM have built up their software portfolios over the last several years. The last several years have borne witness to an aggressive effort by all the major hardware vendors to expand their software portfolios in the name of tighter integration that promises to reduce IT costs.

For a lot of IT organizations, that’s an intriguing promise. But it also assumes that the process of acquiring new hardware and software is going to be a lot more closely joined at the hip than it has historically been, which gave rise to such maxims as, “You may marry your software supplier, but you need only date your hardware vendor.”

Obviously, hardware vendors are hoping to use software to get more permanently hitched with their customers, especially when it comes to accessing services in the cloud that are primarily driven by easy access to software running on hardware that most customers never actually see or even touch.

That scenario, however, may take a long time to evolve, which is the main reason that all the hardware vendors continue to have separate software groups. Ultimately, the hardware vendors appear to be trying to force the issue by acquiring all the independent software vendors. But as long as there is venture capital available, there will always be alternative software suppliers. What remains unknown for now is how much IT organizations will value a “one throat to choke” model of IT versus the theoretically richer panoply of a third-party software ecosystem.

In the short term, best-of-breed approaches to software will probably continue to win that argument. But as history suggests, good enough often winds up winning the day if for no other reason that it’s the path of least resistance. When all is said and done, each individual IT organization will have to decide for itself how much it values economic convenience over the flexibility that comes with managing software and hardware as distinct entities. Given that’s a philosophical debate, there’s no absolute right answer. But most IT organizations are soon going to find themselves leaning in one direction or the other.

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