Microsoft is in talks to make a significant investment in Dell, increasing its stake in the manufacture of PC hardware.
According to a report in the Wall Street Journal, which cites sources familiar with the deal, Microsoft is in discussions to support an attempt by the private-equity company Silver Lake Partners to buy Dell from its public shareholders.
While no firm commitment has been made, Microsoft's investment would be around $2 billion of the deal's estimated value of $22 billion. The rest of the money would come from Silver Lake, Dell's cash reserves and owner Michael Dell's existing 16 per cent stake in the company.
From Microsoft's perspective, the investment would yield similar benefits to that made in Nokia and Barnes & Noble's Nook e-reader: specifically, a strong hand in influencing their hardware's ongoing use of the company's software and services.
The Wall Street Journal also claims that several Microsoft officials "expressed disappointment" in the recent PCs that use its software - a significant problem given the strength of Apple and Google, its main rivals. A big investment in Dell would give Microsoft some control over the strategic direction of the company's future hardware.
However, given that Dell is already one of Microsoft's most important hardware partners, the deal could also elicit accusations of favouritism among its other hardware partners. This is already a concern in its ecosystem due to the announcement of the Surface tablet, which prompted a public response from Acer, among other companies.