Rivals take shots at $24bn Dell deal

HP, Microsoft, and Lenovo all rushed to comment on their own position in the wake of the Dell buyback announcement, notes Chris Gonsalves

Well, that didn't take long.

Even before the ink is dry on a $24.4 billion (£15.6bn) leveraged buyback aimed at taking Dell private, rival vendors are taking shots at the deal, which includes a significant $2 billion investment from mutual partner Microsoft.

First out of the gate was HP, the troubled PC maker and largest Microsoft OEM partner thought by many to have the most to lose to a cosy relationship between Redmond and Round Rock.

"Dell has a very tough road ahead," read an unattributed HP statement released Tuesday afternoon and emailed around to members of the press. "The company faces an extended period of uncertainty and transition that will not be good for its customers.

"And with a significant debt load, Dell's ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the kerb," the HP screed continued. "We believe Dell's customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity."

The folks in Palo Alto weren't the only ones throwing cold water on the deal and salivating at the opportunity to capitalise on a little FUD churned up by the Dell manoeuvre. Chinese PC maker Lenovo jumped into the fray with their own statement as well.

"While we won't comment on the specifics [of the Dell deal], we remain as always confident in our strategy, our ability to deliver compelling and innovative products and our overall position and performance," a published Lenovo statement read.

"We believe that the financial actions of some of our traditional competitors will not substantially change our outlook. Our strategy is clear, our financial position is healthy and our business is very strong - so we are focused on our products, customers and overall execution rather than distracting financial maneuvers and major strategic shifts."

Lenovo went on to add that this focus is an advantage for it and a benefit to its customers. "Lenovo has the best products, a clear strategy and outstanding momentum. We always face tough competition, and we are well prepared to continue to win in the PC-plus era by focusing on our own efforts, core strengths and great execution," it added.

Dell executives obviously disagree.

Michael Dell, chief executive and founder, said: "I believe this transaction will open an exciting new chapter for Dell, our customers and team members ... We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise.

"Dell has made solid progress executing this strategy over the past four years, but we recognise that it will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision."

Dell said he is "committed to this journey". "I have put a substantial amount of my own capital at risk together with Silver Lake, a world-class investor with an outstanding reputation. We are committed to delivering an unmatched customer experience and excited to pursue the path ahead," he said.

Indeed, as a private company, Dell may well have more latitude to execute strategic plans and transform the company into an enterprise portfolio vendor with hardware, software, cloud computing and professional services.

But so far the buyback is doing nothing to ease frazzled nerves and strained relations among the remaining strategic vendor partners concerned.

Chris Gonsalves is vice president of editorial at Channelnomics

As part of our special editorial partnership, CRN is publishing this recent article from Channelnomics.