Microsoft preparing $2 billion investment in Dell - report

Deal would be part of a larger acquisition of stock from public shareholders

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.

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Latest comments (5)

Craig Page El Presidente, Awesome Enterprises5 years ago
Didn't Dell stop caring about quality 4 years ago? Or was it 5?
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Paul Jace Merchandiser 5 years ago
So this would also give them ultimate access to the Alienware line.
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robert troughton Managing Director, Coconut Lizard5 years ago
Could Microsoft be moving further into the hardware business perchance..? Apple make hardware and rose to be #1 ... Microsoft may want to be more in the PC market than the O/S provider perhaps..? Supplying the hardware and software would give them complete control.

Hard to imagine - but it could be a huge game changer from MS..?
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Fran Mulhern , Recruit3D5 years ago
@ Bob - Apple rose to be number 1, but how much of that is due to their app store (ie, software)? Part of me thinks Apple's lead is insurmountable, but then part of me knows nothing lasts forever. Right now, though, I just get the impression that MS are floundering a bit, not really sure where they're going. Still, got my fingers crossed for them.

Edited 1 times. Last edit by Fran Mulhern on 24th January 2013 1:37pm

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Yiannis Koumoutzelis Founder & Creative Director, Neriad Games5 years ago
Mobile is no PC. And apple is way and far from being #1 when it comes to Desktops.
It is in many many fronts, but as a Desktop technology provider it is not. Microsoft and its partners are exactly that. Indeed the hardware presented for windows8 launch was mostly disappointing, poor even, with only few exceptions. The most obvious one being XPS One 27 from Dell.

Unfortunately, most hardware vendors tried to mimic the strategy of apple's. Mediocre machines with fancy design for the average user. Not going to fly with PC users. The best graphics card on a true win8 machine with touch features during launch was 640M :D Or something like that. That alone deterred me from buying one. Same goes for many people i know and what i read in various communities. ( i really liked Sony Tap 20 as well)

On top of that, technology on PCs has reached a plateau. Just by adding an SSD on your 2 year old machine you can see stelar improvements. Same goes for a medium range graphics card. Unlike closed systems, like mac machines, PCs are conveniently updated in cheap. Hence the high windows 8 sales and lower new PC sales. Touch screens are slowly starting to warm up on the customer, who will soon realize that touch options for desktops is actually a very cool thing and far more efficient combined with mouse and keyboard. The next generation of windows machines is just around the corner, and with a huge amount of awesome PC games coming out this year, expect to see sales rising towards the end.
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