Tue. Feb. 12, 2008
E-mail has become one of the most ubiquitous and critical applications in business today; it can impact revenue, productivity, and a company's reputation. Due to increased regulatory and business requirements, e-mail management--including measures for compliance and disaster recovery--is now more complex than ever. Our announcement today to acquire MessageOne, an industry leader in Software-as-a-Service (SaaS) enabled e-mail continuity, compliance, archiving, and disaster recovery services is an important step towards simplifying IT and restoring integrity around a vital piece of our customer's IT infrastructure.
Dell's customers have been looking for solutions to help them simplify their IT infrastructure. Legacy services masks IT complexity. Estimates show that for every 1 dollar spent on hardware and software another 3 dollars gets spent on consultants and integrators. This is where we believe there is room to fundamentally change the industry's infrastructure services model. Through the use of technology, Dell's supply chain advantages, remote infrastructure management and SaaS, Dell is pursuing a strategy in the services space that is analogous to the approach taken to simplify the hardware business 23 short years ago. We have a legacy of driving down the cost of hardware for our customers and they believe we can do this in services as well.
MessageOne is another key piece in expanding Dell's services, especially in the rapidly growing SaaS enabled managed services market and complements our recent SaaS acquisitions of Silverback Technologies and Everdream we completed late last year. Silverback provides leadership in event-based monitoring and remote management of different Enterprise assets (servers, storage, printers, routers, etc). Everdream extends this capability to include lifecycle management of client assets (notebooks and desktops). These moves also signal Dell's efforts to address the needs of the small and medium business (SMB) market, similar to our purchase of EqualLogic late last year. EqualLogic is aimed at Dell's drive to Simplify IT and virtualization for mid-sized enterprise customers through Dell's channel partners and direct channel. EqualLogic has the third largest sales of iSCSI SANs and has patented storage virtualization technology that will give customers the power to cost-effectively install, expand and modify their data storage resources. We will build upon the portfolio of existing customers and channel partners for all of these offerings and will incorporate the respective technologies into future Dell services, including Dell's new ProSupport offering announced earlier this month.
We think ProSupport is especially exciting because it is more than another service offering, it is a choice of comprehensive support solutions that offer customers a choice based on who they are, how they use technology and where they want to allocate scarce IT resources. Dell ProSupport is breaking the "one size fits all, fragmented" support model that is industry standard, by putting choice in the hands of customers. This global offering spans all areas of hardware and will enable commercial customers, including small and medium business, to obtain world-class service from Dell or our registered solution providers without paying for more or less than they need.
Acquisitions for Dell are not a strategy unto themselves - they are a part of an overall strategy to fuel growth in five key areas: Consumer, Emerging Markets, Notebooks, Enterprise and Small Medium Business. When assessing possible acquisitions we look at several things including strategic fit - or how does it drive growth by scaling through our customer base, give us access to channels or provide new tools. We also look at how it can fit into our business model, how easily we can integrate the business, and also the track record of the management team. Via organic growth and acquisitions we will fill key capability gaps, gain access to new channels and leverage key technologies across our broad global customer base. You will continue to see Dell pursuing opportunities that strengthen our ability to meet the increasingly changing needs and challenges faced by many of our customers and simplify their IT environments.
One thing unique about this transaction is that it involved related parties. MessageOne was co-founded by Adam Dell, Michael Dell's brother, and is owned in part by two venture funds managed by Adam Dell--Impact Venture Partners and Impact Entrepreneurs Fund. Michael Dell, Susan Dell, a trust for the Dell’s minor children, and Mr. Dell’s parents are investors in both funds. Michael was not involved in the negotiation or decision-making process, and the independent members of Dell's board of directors (excluding Michael and Don Carty) analyzed in detail management's decision process to ensure that management was acting independently and in the best interests of the company and its shareholders. Additionally, Dell's board received an opinion from Morgan Stanley & Co. Incorporated concluding that, as of the date the deal was signed and based upon and subject to the matters stated in the opinion, the consideration to be paid by Dell pursuant to the acquisition was fair from a financial point of view to the company. Based on all of that, our independent directors concluded that the transaction was fair to, and in the best interests of, the company and its shareholders and approved the transaction. Michael and Susan Dell have indicated that the proceeds which they and their children’s trust receive from the acquisition will be donated to charity.