Dell‘s (NASDAQ:DELL) shopping spree continues with the acquisition of Clerity and Wyse this week.   Dell is clearly looking to diversify away from its PC business, and it seems cloud computing is the way to go for the Round Rock, Texas based company. The details of both the acquisitions were not revealed by Dell. These acquisitions will put Dell in direct competition with software solution providers such as IBM (NYSE:IBM), HP (NYSE:HPQ) ,Cisco (NASDAQ:CSCO) and Juniper Networks (NYSE:JNPR).
We currently have a $25.60 Trefis price estimate for Dell which is significantly above the current market price.
Wyse To Enable Desktop Virtualization Business
Wyse is known for making software and hardware for thin clients and has recently expanded into desktop virtualization software and hardware. Thin clients essentially remove the need to do computing at the client end by using servers and the internet to provide all the computing on remote servers. This makes thin client computing cheaper in the long run and easier to maintain. If we go by IDC’s estimate, the thin client market size will grow to about $3 billion by 2015 at a CAGR of 15%. 
Though the details of the acquisition were not revealed, Dell did mention that Wyse’s trailing 12 month revenue was $375 million. It also mentioned that they have about 180+ patents issued or pending. This patent portfolio would come into play as more emphasis is laid on cloud client computing in the future. Wyse has also shipped about 20 million units of its thin clients worldwide. This move could make Dell capable of providing end-to-end desktop virtualization solutions.
Clerity To Be Integrated Into Dell’s Services Division
Clerity’s technology solves a critical and growing need for most traditional computing based businesses; it helps them migrate their legacy systems to new IT systems on the cloud. It helps reduce costs by moving computing to remote servers which are easier to maintain and cheaper to run as compared to the current desktop computing models. Clerity employs about 70 people who will be fully integrated into the services division of Dell.  Clerity also reduces turnaround time in migrating the legacy systems as most of the processes are automated.
It’s Not All About Cloud Computing
Cloud computing is an area of high growth but Dell seems to have plans bigger than a mere cloud presence. These acquisitions make a lot of sense to Dell. They are definitely trying to position themselves as a service provider as they move away from the low margins of PC sales.
These two acquisitions throw some light on future plans of Dell. Clerity is in the business of moving legacy systems from individual desktops to servers in an efficient and cost effective manner, and Wyse is in the business of making thin clients that access information from these back-end processes. Essentially Clerity can set up the systems to feed into Wyse clients.
Dell with its expertise in hardware can provide the necessary servers and storage to leverage this. It also has the sales clout and the reach to scale this business. The company is also very likely to make an end-to-end computing solutions platform coupled with services to migrate away from existing systems in the hopes of owning the entire value chain of a computing enterprise suite. The value chain consists of servers in the back-end to thin clients with networking in between.
Its acquisition of SonicWALL Inc. which is a network security and data protection firm also fits into this plan. Assuming it doesn’t already have the capability in networking solutions, the next target for Dell may very well be in this space. This will make Dell compete against the likes of Big Blue, HP, Cisco and Juniper. The advantage for Dell though is that their applications are built from scratch to be pure play cloud computing services as opposed to hosting legacy applications on the cloud.Notes: