By Phil Hassey, Founder of CapioIT

Final details are being confirmed today (Feb 6th, 2013) for Dell Computer to be taken private. It is a news-making deal that summarises the problems of legacy PC-based technology and the unrelenting glare of quarterly numbers from Wall St.

Clearly Dell, the company, and Michael Dell, its founder, have taken a pragmatic approach to survival. In companies that have the owner’s name on the front door, not wanting to be known as a “former billionaire” is a key driver to inspire and deliver change for survival’s sake.

Implications for Dell – Clearly Dell needs to be the big winner in the deal or it will just wither and die. Avoiding the Wall Street speculation will hopefully allow it to make long-term investments that can shift capabilities away from consumer PCs towards enterprise-based solutions with long-term revenue flow. It needs substantial changes to the product mix with a reduction in consumer business and a genuine shift towards deeper solutions. The current services and software portfolio is not enough. It needs more, and in particular needs more capabilities that are relevant in emerging markets, not mature North American markets such as healthcare.

Implications for Microsoft – Microsoft has pitched in a cool $2B through Silver Lake. This is perhaps the most important sub-heading of the deal. Some might argue that 2 firms near there use by dates have come together to prop up their survival. I do not quite see it this way, as the installed base of Microsoft is so huge, although clearly neither is coming from a position of momentum.

The Microsoft investment does create a precedent. Either Microsoft is going to be willing to support all struggling PC manufacturers or Dell becomes the first amongst equals. Let’s assume that it is the latter.

Implications for legacy PC manufacturers – Of itself, Dell going private will have little material impact on Dell’s Windows competitors. It will just make Dell less transparent in terms of information that it releases for regulatory issues. The Microsoft relationship is the big story, especially for HP, as HP’s is the model that Dell is striving to beat on its way to becoming IBM lite.

The investment of Microsoft will result in the other providers having to avoid being considered as Children of a Lesser Microsoft God. Clearly HP et al will put up an enormous fight to avoid being marginalized or sidelined as a provider. It will be interesting to see if the relationship of Dell and Microsoft evolves in a similar fashion to Accenture and Microsoft in the formation of Avanade. Microsoft did not block out other services providers, but Accenture had a box seat in terms of access to technology.

It is up to HP and co to prove that they are good enough and diverse enough to be more than a PC based business. They do not have a lot of time, and despite changes made, nor does Dell, if it wishes to remain relevant.