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Dell's acquisition a Wyse one, analysts say

Dell's acquisition a Wyse one, analysts say

The move eliminates a substantial competitive disadvantage in terms of pursuing new clients

Dell's announcement on Monday that it had finalized an agreement to acquire thin client maker Wyse allows the company to fill a portfolio gap that had been exploited by competitors such as HP, according to industry experts.

DETAILS: A look at what Wyse brings to Dell

"It was always a way that HP could maintain a foothold in an account, or as a lead-in to steal business from Dell, says Forrester Research senior analyst David Johnson. "As client virtualization becomes more important for more companies, that becomes more and more of an exposure and a risk," he says, adding that the acquisition is "a great move for Dell."

In addition to removing a substantial competitive disadvantage in terms of pursuing new clients, the deal will provide existing Dell customers with more options. Given the presence of a "strong ecosystem" of Dell products, some might jump at the chance to implement thin clients without having to choose a new vendor, Johnson says.

Research vice president Mark Margevicius of Gartner Research echoes the idea of the Wyse acquisition being aimed at filling a crucial gap in Dell's lineup. The company's in-house attempts to enter the thin client market in the past have been notably unsuccessful, he says, describing those poorly received efforts as "bastardized PCs."

That said, Dell's traditional strength in other parts of the virtualization market provide a base from which the company can now move forward with its new hardware, according to Margevicius.

"It's an opportunity to grow in a way that they couldn't organically," he says.

What's more, given the positions of Wyse and HP as No. 1 and No. 2, respectively, in the thin client market, he says the move could put HP under considerable pressure.

"I think it gets real interesting in terms of [HP's] ability to compete now," he says.

Chris Silva, a mobile analyst for the Altimeter Group, says that this newfound expertise in thin clients changes Dell's position in the overall enterprise IT market in subtle but important ways. While the company is currently seen more as a supplier than an out-and-out partner for business IT, technology such as Wyse's should help it position itself as a more comprehensive solutions vendor. HP and even Cisco, he adds, could see stiffer competition from Dell as a result of the deal.

Dell's other recent acquisition, SonicWall, could play into the company's newfound strength in the market for thin clients and virtual desktops as well.

"Having that integrated security expertise that comes out of SonicWall could be really critical in beefing up what a thin client can be used for or what a virtual client can be used for," Silva says.

Margevicius also singles out security as a key concern for Dell, noting that Wyse's ThinOS has been touted as the only embedded operating system that hasn't yet been breached.

On its own, the Wyse acquisition -- provided that it can be accomplished smoothly and the company's products can be thoroughly integrated into Dell's own -- removes a long-standing competitive handicap for the Texas-based hardware maker. In combination with other recent moves, like the purchase of SonicWall and a recently announced partnership with cloud desktop provider Desktone, it could even be a sign of bigger things to come.

Email Jon Gold at and follow him on Twitter at @NWWJonGold.

Read more about data center in Network World's Data Center section.

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