Dell Acquires His Brother's SaaS Company For $155 Million

The deal highlights a new trend among hardware companies to offer on-demand services for management of data, software and systems.

Mary Hayes Weier, Contributor

February 12, 2008

2 Min Read

Dell on Tuesday said it's acquiring MessageOne, a company co-founded by Michael Dell's brother, for $155 million.

The acquisition highlights what the hardware industry hopes will become a growing business opportunity: To provide customers with on-demand software services for managing and storing data, software and systems.

MessageOne -- co-founded by Adam Dell -- provides a software service for managing, storing, and recovering business e-mail. The MessageOne purchase follows Dell's acquisition in November of Everdream Technologies, an on-demand software service for remote PC management.

Last month, EMC announced MozyEnterprise, an online data backup and recovery service for large businesses that runs about $20 per PC a month, and said more software services are coming in the areas of data security and IT management. All software services will be delivered through a new platform called EMC Fortress.

In October, HP announced it was expanding its portfolio of on-demand software services, which now include such things as application performance management and software quality testing, to include new types of offerings, such as a SaaS for managing IT services.

The move to on-demand, software-based services represents a natural evolution for PC, server, and storage companies, which are constantly looking for ways to grow revenues beyond the commodity hardware business. Increasingly, they're using the SaaS model to help businesses deal with the issues of regulatory compliance, data management, disaster recovery, and limited IT resources.

Dell describes MessageOne as a service that helps businesses eliminate the downtime and complexity associated with managing, archiving, e-discovery, and long-term storage of e-mail. MessageOne will be available direct from Dell and through channel partners.

Dell also stressed that its board of directors took "additional steps," since the acquisition involved its CEO's brother, parents and children. Michael Dell was excluded from all negotiations and decisions related to the acquisition, according to Dell, and the company disclosed Adam Dell will personally receive about $970,000 from the sale. MessageOne is owned in part by two investment funds in which both Michael Dell and his parents are investors, and Adam Dell manages.

Michael Dell and his family will get about $12 million from the sale, which they plan to donate to charity, and the brothers' parents will receive about $450,000.

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