Ovum: Dell?s move to go private good but fraught with risks

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As news of computer maker Dell going private made technology headlines this week for $24.4 billion, an analyst firm said the pioneering move makes strategic sense but is also fraught with risks.

?Dell is in the midst of a wrenching transition from a supplier of commodity hardware, mainly traditional PCs, to being a supplier of enterprise-grade IT infrastructure. Dell?s ambition is nothing less than offering the entire IT stack with supporting services,? commented Carter Lusher, chief IT analyst at Ovum.

Lusher said a significant risk that is likely to face Dell during the transition is that enterprises and public sector organizations will cut back on their purchases ?until the dust settles.?

?The implication of going private is that Dell is planning radical changes to its strategy and product roadmap. While the company might come out of this transition stronger with a product lineup that better meets the needs of businesses and public sector organizations, there will be uncertainty as to what products and services stay, get strengthen, or get eliminated,? the analyst said.

Ovum said compounding Dell?s challenge is the deep-seated brand identity as a ?PC company.?

Another communications challenge will be how Dell Services (built on the Perot acquisition) shares its financials for the due diligence phase on large, multi-year IT services deals.

?Ovum recommends that CIOs need to asset the risk to their infrastructure and put into place plans should Dell?s radical hardware, software, and services shifts require changes to procurement plans,? Lusher said.

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