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Dell Buys Brother's Company MessageOne For $155 Million

Dell coughed up $155,000,000 for e-mail continuity specialist MessageOne, a company that just happened to be founded by Michael Dell's little brother, Adam. The official press release describes all the hoops Dell jumped through, including throwing a small pile of money at Morgan Stanley to bless the price, to make this look like an arm's length transaction. After all, various Dell family investment vehicles owned almost 10% of MessageOne. While I suspect no one at Dell would have gone looking fo
Dell coughed up $155,000,000 for e-mail continuity specialist MessageOne, a company that just happened to be founded by Michael Dell's little brother, Adam. The official press release describes all the hoops Dell jumped through, including throwing a small pile of money at Morgan Stanley to bless the price, to make this look like an arm's length transaction. After all, various Dell family investment vehicles owned almost 10% of MessageOne. While I suspect no one at Dell would have gone looking for MessageOne just because they had money to spend, after all there must be an online backup provider still available. With Michael giving his share of the money to charity, the real question is was it a good deal?Market researcher Ferris Research estimated that MessageOne, who claims to protect over a million mailboxes, did about $40 million of business last year and had about $10 million cash on hand. It also had OEM deals with IBM, SunGard, and Iron Mountain (the Tinker to Evers to Chance of the disaster recovery industry). Add in Dell's not insignificant marketing power and $155,000,000 doesn't look like much at all. Especially if you consider that Google spent over $600 million just last year to buy Postini and its e-mail filtering (anti-spam, antivirus) services.

Software as a service (no, I won't use SaaS), also makes sense for many of Dell's direct customers. They've grown from SMBs to SMEs without the parade of consultants and VARs that would install e-mail archiving or server failover solutions in organizations that bought servers through the channel. Using an online service simplifies installation and may eliminate the need for Chuck to come do the work.

To see the press release, just read anyone else's blog on this event or see here.

But are MessageOne's services any good? Stay tuned.

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Brian T. Horowitz, Contributing Reporter
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Nathan Eddy, Freelance Writer
Brandon Taylor, Digital Editorial Program Manager
Jessica Davis, Senior Editor
Cynthia Harvey, Freelance Journalist, InformationWeek
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing