Dell's Latest Buy Part of Strategy for Service
NEW YORK (Trefis) -- Dell(DELL) has acquired Make Technologies, its third acquisition last week alone. Make Technologies is a software modernization company that competes in the same space as Clerity, a previous acquisition by Dell. The terms of the deal with Make are, however, not disclosed.
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The quickest way to consolidate a fragmented market is to acquire the major players and integrate them into one single entity. This has many advantages, particularly in terms of expanding market share and pricing power. Another added advantage is that it lets the acquiring company control most of the patents in the field, essentially neutralizing patent trolling.
If we study Dell's recent set of acquisitions, it is clear that it plans to become a top end-to-end service provider in the field of modernizing legacy applications. Around 100 employees of Make Technologies will be absorbed by Dell in its services department. Services revenue contributes 20% of our near $26 price estimate for Dell.
More M&A Activity Expected
Dell may most likely continue with its acquisition spree in areas such as software modernization, thin client desktop virtualization, networking and network security and data protection. By offering clients to move away from traditional computing to a cloud-based system, it can reduce costs for its clients.