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12/19/2012
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6 Dell Storylines To Watch In 2013

With Tuesday's purchase of Credant, Dell has bought 19 companies in the last four years. But what does all the activity mean for the company's future?

4. A Security Focus.

The Credant acquisition is just the newest in a spree of security-focused purchases Dell has made over the last year. The company bought SonicWall, a maker of Unified Threat Management platforms, in March for over $1 billion and has been using the technology to offer next-gen firewalls and improved cyber-attack protection in its most recent products. This deal was preceded by Dell's February purchase of AppAssure, an acquisition that gave the portfolio end-to-end backup and data-protection services, including support for virtual servers. Prior to these purchases, Dell had relied on partnerships with Cisco, Netgear, Watchguard and others to bolster its security offerings. With the new acquisitions, Dell is in position to shed its dependence on other companies and develop into a major player on its own terms.

5. Diversity Galore: Virtualization, Mobility, Device Management, Software And The Cloud.

More apps are being deployed to mobile devices than before, data is being split between on-premises and cloud-based solutions, and IT staffers are increasingly demanding that the tools for wrangling all this complexity be simplified and automated. Dell -- largely under the stewardship of John Swainson, who began running Dell's software group in March -- has acquired technology to keep pace with emerging trends. The April purchase of Wyse, for example, has provided a firmer foothold in virtualization and thin clients. It also has helped Dell develop its MDM capabilities. Evolving device, security and systems management tools from KACE, meanwhile, are intended to fit snugly alongside the new offerings while continuing to help Dell grow from the mid-market out.

On the cloud front, Dell has purchased aggressively, culminating with the recent addition of Gale Technologies, an acquisition that promises cloud-migration capabilities and that support for heterogeneous environments will soon appear, among Active System highlights. The consideration for heterogeneity is a particularly important point, both because few companies are embracing a wholesale shift to the cloud and because the technology allows Dell to keep pace with Cisco's similarly themed Cloupia purchase.

The $2.4 billion purchase of Quest in July was one of the biggest signs of Dell's software ambitions, which entail synergizing resources throughout the portfolio. With identity and access management capabilities, Quest fit in well with the above-mentioned security purchases, but it also added performance monitoring and system management tools that could be applied to any number of Dell products and services.

How all the software pieces will complement one another will be a significant point for Dell in 2013. If the pieces come together harmoniously, the company could challenge big names like IBM. If customers perceive that certain pieces don't fit, or that there's confusing overlap among services, Dell's plans for expansion could hit a difficult roadblock.

6. No Love From Investors.

Dell's stock reached its high point for 2012 on Feb. 21, when shares traded for $18.36. Since then, investors have been mostly bearish on the company's prospects; stocks hit a 52-week low of $8.69 on Nov. 16 before somewhat rebounding to settle around $10.50.

At Dell World, Michael Dell shrugged off Wall Street's timid reception; he stated that the company's cash flow is healthy and argued that by investing in its future, Dell might naturally suffer short-term losses. IDC analyst Matt Eastwood, meanwhile, told InformationWeek that investors, preoccupied with dismal PC numbers, might be undervaluing Dell's enterprise assets.

The company, though, has continued to miss Wall Street's goals, even after tempering its outlook earlier this year. Dell's CEO made a good point when he asserted that temporary losses shouldn't distract from a forward-looking roadmap. After all, with the entire market slumping, poor PC sales aren't necessarily a reflection of the company's business strategy -- especially when that strategy aims to diversify revenue streams beyond the personal computing arena. Even so, if Dell's rough streak continues into 2013, many will doubt whether the company can contend, let alone lead, in its new conquests.

The year 2012, in short, was about collecting the right pieces. Although more acquisitions likely will follow in coming months, 2013 will need to be about successfully blending the pieces into a cohesive set of products and services.

Upgrading isn't the easy decision that Win 7 was. We take a close look at Server 2012, changes to mobility and security, and more in the new Here Comes Windows 8 issue of InformationWeek. Also in this issue: Why you should have the difficult conversations about the value of OS and PC upgrades before discussing Windows 8. (Free registration required.)

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