Dell is ditching its software division in favor of boosting its original gold mine, hardware.
When a company starts piece-mealing out its different branches, it can often be taken as a sign that things may not be going well financially. Selling off acquisitions or proprietary patents can be a source of revenue for cash-strapped entities. But as Dell seems to be proving, it can also be a way to stop shouldering the burden of dead weight in order to focus on the areas of the company that could be thriving.
Long known for its PC and hardware divisions, Dell later acquired some key purchases that formed its software division. The theory was the company could produce the technology, then produce the software to power it. Instead, the two separate divisions never fully blended. Added to that an enormous $67 billion acquisition of EMC to bolster its hardware side, the company is moving forward without its previous software development plans.
One of the key issues with Dell’s original plan was the impact of cloud hosting, which meant fewer large-size companies purchasing servers, one of Dell’s major hardware offerings. When Dell purchased Enstratius, it was an effort to get in the cloud-hosting game to recover some of that lost market.
Now, Enstratius, Quest, SonicWall, and a few other acquisitions have been offered up for sale, and purchased by Francisco Partners and Elliott Management. This will allow Dell to return to its focus on hardware, and hopefully make up some of the market share lost to tablets and smartphones, two areas where the company has yet to develop any serious headway.