Microsoft’s Dell deal may open Surface wounds

Redmond said to be considering $2bn investment in Silver Lake buyout

Tags: Dell CorporationMergers and acquisitionsMicrosoft CorporationUSA
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Microsoft’s Dell deal may open Surface wounds Analysts believe Microsoft may aggravate OEM partners by bolstering ties with Dell. (Peteri/
By  Stephen McBride Published  January 23, 2013

Microsoft's decision to partner with Michael Dell and Silver Lake Management LLC on the acquisition of  Dell may open old wounds left with Redmond's OEM partners when it launched its Surface tablet last year, analysts told Bloomberg.

Dell is said to be close to an agreement on the buyout and Microsoft could contribute as much as $2bn according to insiders. The investment could help Microsoft gain a foothold in the enterprise segment as consumers run from traditional PCs in favour of mobile devices, but analysts believe hardware partners stung by Microsoft's surprise launch of its own tablet, could view the move with a measure of concern.

"If you're a vendor that wasn't happy with Surface, the idea of Microsoft owning part of Dell is not going to cheer you up," said Gartner analyst Michael Gartenberg.

"But if you're Microsoft and you feel you need to do more devices, and that hardware and software need to be more integrated, the ability to have major influence on a big PC vendor opens some interesting opportunities."

Microsoft has failed to charm the market with its tablet offering, leading UBS AG analyst Brent Thill to halve his Q4 sales estimate to 1m units. Forming a tighter link with an existing OEM partner may be an attempt to continue the battle against arch-rival Apple Inc in the growing mobile device market.

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