Dell is acquiring an IT management software provider for $2.4 billion. Quest Software will bring its IT solutions to Dell's recently formed Software Group.
Dell indicated that Quest's family of software solutions and technologies are strongly aligned with its software strategy. The acquisition gives Dell what it considers critical components to expand software capabilities in systems management, security, data and workspace management.
"The addition of Quest will enable Dell to deliver more competitive server, , networking and end-user computing solutions and services to customers," said John Swainson, president of Dell Software Group. "Quest's suite of industry-leading software products, highly talented team members and unique intellectual property will position us well in the largest and fastest growing areas of the software industry."
How Quest Fits In
Dell also said Quest's software portfolio is complementary to Dell's scalable design approach. The Quest One Identity and Access Management solution family, for example, adds to Dell's set of security assets with SonicWALL and Secureworks.
Meanwhile, Dell said Quest's Performance Monitoring solutions for applications, networks and databases address a rapidly growing need for its customers. Quest's Windows Server Management solutions complement Dell Services' modernization practice with recently acquired Clerity Solutions and Make Technologies. Finally, Dell said Quest's Database Management capabilities complement its enterprise offering.
From a financial standpoint Quest is also attractive. Quest has a diversified software portfolio and generated $857 million in global revenue based on its fiscal year 2011 results at gross margins of 86 percent and operating margins of 11 percent. Quest supports heterogeneous and next-generation virtualized environments across leading platform vendors.
Dell's Smart Bet
Charles King, principal analyst at Pund-IT, told us that by nearly any measure, Quest's position appears highly attractive.
Beyond the sheer revenue the company brings in, Quest serves more than 100,000 customers worldwide, including 87 percent of the Fortune 500. Quest has about 3,850 employees in 23 countries, including 1,500 software experts and 1,300 software developers.
"Overall, the acquisition looks like excellent news for Dell and its business customers. Quest delivers enough immediate value in the form of its sizable solutions portfolio, its software development and sales expertise, and its substantial base to more than justify the premium Dell will pay," King said.
More important, he said, Quest's solutions are well aligned with Dell's existing product and service portfolios, meaning it highly complements the company's new software group.
"What may be the most important point of all is how Quest will help extend Dell's broader IT solutions strategy, an effort that has been steadily growing ever since the return of Michael Dell, with software often taking center stage," King said.
"That shouldn't be a surprise -- emphasizing software has been increasingly critical to the sustainable success of virtually every enterprise IT vendor. From where we stand, Quest should provide a sizable means for Dell to achieve its end-to-end IT solutions provider goals."