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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

February 6, 2013 at 6:00 AM

What could Microsoft gain from its $2 billion investment in Dell?

[This story is running in the print edition of The Seattle Times Feb. 6, 2013.]

When Dell announced Tuesday that it’s going private with a $24.4 billion buyout deal, one of the highest-profile names confirmed to be taking part in it was Microsoft, which is lending $2 billion to the buyers.

What’s in it for Microsoft?

The company isn’t saying much beyond a statement that it’s “committed to the long-term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future.

“We’re in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform.”

Although Microsoft itself referred to PCs in its statement, and most people think first of personal computers when they think of Dell, the combining of the two companies’ resources will likely yield the most benefits not with PCs, but with cloud and corporations, analysts say.

“The device business is a low-margin business,” said Mikako Kitagawa, an analyst at research firm Gartner. “You have to sell a lot.”

Selling to corporations, though, has a higher margin and, like Microsoft, “Dell has a huge customer base in the enterprise [large business] market,” said Kitagawa.

It is this combination of Dell server and storage hardware with Microsoft software and services such as SQL Server and Dynamics CRM that analysts say could prove to be the most lucrative result of Microsoft’s investment in Dell.

The ability for each of those companies to continue to sell their products competitively depends on their being able to create tightly integrated hardware-software systems that are more efficient and easier to manage, said David Johnson, an analyst with research firm Forrester.

[Continue reading the story here.]

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