Dell acquires Quest, offers VDI shops 'one throat to choke'

Dell will pay $2.4 billion for Quest Software and get much more than desktop virtualization software. Long-term, it could lower the cost of VDI.

One big problem that IT pros have with VDI is that it requires many different components from various vendors....

Dell's acquisition of Quest Software this week gives the hardware giant a way to deliver nearly all the components of a virtual desktop infrastructure.

If anyone can bring down the cost of VDI, it's Dell.

Gunnar Berger,
desktop virtualization analyst, Gartner Inc.

Dell ended the bidding war for Quest Software Inc. that began in March with its offer to pay $2.4 billion for the software company on Monday, following an earlier bid against Insight Venture Partners in early June. The transaction is expected to close in Q3.

This marks Dell's second strategic acquisition this year in an attempt to be a one-stop shop for virtual desktop infrastructure (VDI). Some analysts said it could have an industry-wide impact.

Dell can now offer the client-side products it recently acquired from Wyse Technology Inc. along with Quest's host-side virtual desktop software, vWorkspace.

"Putting those two things together, along with what Dell already has, and they really can create a full-packaged solution," said Gunnar Berger, a desktop virtualization analyst for Gartner Inc., a research firm based in Stamford, Conn.

That is Dell's plan. The company said during an interview last week that it now offers everything a virtual desktop customer would need -- PowerEdge servers, EquaLogic storage, PowerConnect networking, Wyse thin clients, and now Quest vWorkspace software.

"Customers can look to us as one throat to choke," said Jeff McNaught, Dell Wyse's chief strategy officer.

Some said the Quest acquisition could have a positive impact for IT shops interested in desktop virtualization.

"If anyone can bring down the cost of VDI, it's Dell," Berger said.

One way Dell might bring the cost of VDI down is by offering the pieces of a virtual desktop environment with Quest software in low-priced bundles, according to one source.

Dell is a VMware Inc. and Citrix Systems Inc. partner and resells those companies' VDI products on its hardware stack. Dell could bypass its partners' by offering Quest Software as an alternative, said one IT expert who has experienced Dell's sales tactics.

"Now Dell can say, 'Hey, instead of buying VMware View, we offer kind of the same thing for less,'" said the expert who requested anonymity.

More on enterprise acquisitions:

Dell acquires Wyse for thin client, desktop virtualization

Dell's Wyse acquisition transforms VDI thin client market

Citrix acquires XenClient competitor Virtual Computer

VMware's Wanova acquisition extends VDI to physical desktops

Acquisition explosion: VDI vendors beef up virtual desktop management

"I predict there will be stressed Citrix and VMware relationships in about a year," he added.

Others predict that Quest Desktop Virtualization software won't be a priority for Dell given its partnerships with VMware and Citrix.

"My concern is that Dell won't see vWorkspace as a part of their vision and the product fizzles away," said Dan Bolton, system architect for Kingston University in the U.K., and Quest customer.

If that is the case, the Quest acquisition still makes strategic sense for Dell because it gives the company the type of "software management story" that competitor Hewlett-Packard has, said one source close to Quest.

Quest's software portfolio includes tools for Windows Server management, performance monitoring, security, database management, workspace management and more. Many of Quest's software tools were gained through acquisitions.

Those other offerings may be far more valuable to Dell than vWorkspace, Bolton said.

"Quest has a lot of products under their belt and it's too early to tell what Dell's interest is, but my feeling is vWorkspace isn't the priority," said Bolton. "With the other tools from Quest, including vWorkspace, Dell would have one hell of a services arsenal to compete with."

Dell's virtual desktop push may undermine its PC and laptop sales, though the company said that won't happen because many VDI shops have both thin clients and PCs in their virtual desktop environment.

Meanwhile, Dell is in the process of phasing out its Dell brand thin clients and has rebranded Wyse clients as "Dell Wyse," McNaught said.

Dell has other remote desktop offerings as well. Last year, it launched  Desktop Virtualization Solutions, a virtual desktop hosting service operated and maintained in one of Dell's data centers.

In addition, Dell will soon offer a cloud-based client device management software via Wyse's Project Stratus. In beta now, the cloud-based client management software allows IT pros to manage smartphones and client devices.

Let us know what you think about the story; email Bridget Botelho or follow @BridgetBotelho on Twitter.

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