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Dell shells out billions for system integrator Perot Systems

Paul Kunert

Dell is attempting to galvanise its service business by forking out $3.9bn (£2.4bn) on fellow Texan-based systems integrator Perot Systems.

Founded in 1988 by failed US presidential candidate Ross Perot - who is chairman emeritus - Perot Systems sells application, business process, consulting, modular and infrastructure services to verticals including healthcare, Government and finance.

PC maker Dell has hinted this year that the stockpiles of cash it was sat on had been burning a hole in the seat of its pants and boosting its services business is an obvious priority given its size relative to rivals.

Michael Dell, CEO at the eponymously named vendor, said in a statement that the acquisition was a "premium asset" which provided the potential for "immediate and long term growth", representing a quick fix for its slow-to-build services base.

"This significantly expands Dell's enterprise-solutions capabilities and makes Perot Systems' strengths available to even more customers around the world," he said.

"There will be efficiencies from combining the companies," he added.

In 2008 Perot Systems turned over $2.8bn, nearly 90% of which was generated in North America, but the firm also has operations in EMEA and Asia. It employs 23k staff worldwide. In the UK, it turned over some $110m last year.

Once the deal is complete, expected from November to January, Perot Systems will become Dell's services unit led by current CEO Peter Altabef and the PC maker will consider Chairman Ross Perot Junior for appointment on its board.

Over the last four quarters, Dell and Perot Systems had a combined $16bn in enterprise-hardware and IT revenues, $8bn of which was from enhanced services and support.

Unlike HP, Dell does not have an installed base of corporate resellers or systems integrators that are trying to drive towards high value services said Alastair Edwards, senior analyst at Canalys.

"Dell desperately needed to make some investments to take it business model forward," he said, "it is moving to compete with infrastructure vendors like HP and Cisco and needs services capabilities to support that push."

Clive Longbottom, services director at Quocirca, said Dell was playing catch up in the market as IBM, Fujitsu and more recently HP had already acquired a services arm.

"Dell left it a long time to bolster its professional services business," he said, "this is no longer a hardware game, vendors need to be able to advice customers in the high-end enterprise."

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