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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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Do you think Dell's acquisition of Quest will decrease the cost of VDI?
The article implies that people actually want vWorkspace, which isn't actually occurring in the market. One throat to choke is far less important than having a compelling product.
Quest's VDI solution is doing so much and competing so hard right now without putting nearly as many resources as their greatest competitor, if Dell adds more resources to the Quest's VDI development there is no telling what new heights to quality and what new lows to cost could be established.
Dell services are overpriced and under delivered solutions. In no situation have I ever seen Dell provide a better ROI for their clients than that offered by other VARs or hardware vendors.
Virtual Bridges offers the best virtual desktop,they have a purpose built product and is not as complex as the other competitors
Dell has chance and is capable to industrialize the delivery of VDI solutions - on premise within customer data centre or out of the box as a Demm managed Service.
Cause now Dell will flog it with their hardware!
Products from Citrix and VMWare are too expensive, ESPECIALLY the service contracts. Dell will be able to pull together a complete solution with HW and software. Even if they throw in the SW for free, Dell has other things to sell, so it can work for them. Meanwhile Citrix and VMWare only have SW to sell so they are tied to that model
Actually they also need to pick up Unidesk because the costs of managing users is where the real savings are.
Big market, big vendors, big prices. Consumers and small businesses want to get on-board, tablet purchasers want full desktop capabilities, and a lot of mid-sized companies are trying to figure out how to afford to do VDI. A stable and inexpensive offering from a respected vendor could kick the technology from buzz and interest into full bloom in the SMB, NfP and consumer markets.
Dell has a history of taking existing technology and lowering the price due to its supply-chain model. I expect that to happen with VDI, as well.
I think VDI prices will begin to fall only when its market will be mature.
costs are not only defined by the stack elements, but also by integration cost, change cost and licensing cost. Many of those things are not controlled by Dell
I don't think Dell's acquisition of Quest see the cost of VDI go down. The cost of VDI aren't in the brokering layer. They are else where. There in the cost of the underlying infrastructure typically storage - either in terms of space (early VDI) but now more increasingly in the IOPS.

The trouble with Quest is that doesn't "own" half-decent protocol. It merely improves upon Microsoft RDP, which everyone knows is skank. The real big daddies of the protcols is Citrix ICA (aka HDX) and VMware's PCoIP (aka Teradici). Without these propriety protocols the acquisition is hobbled from the start.

Dell aren't daft, and I suspect they know this. So they will promote their own stuff where it fits, but they won't want to be seen as merely pushing their own drugs. If they are smart they will ask the customer - what do you want to do?

What the acquistion does allow is for Dell to couple their own VDI solution to stuff like vStart and new converged range of server/storage blades. Offering a VDI-in-the-box which is currently limited to tier2/3 suppliers...
Regardless if it truly comparable to VMware it will increase competition
Because VDI is the wrong type of Virtual desktop for 90% of users in any organization. Plus Dell sales simply lacks the skill set to sell it and their services can't deploy it.
Yes, they bring down the prices of the hardware components, but I'm not sure if the software licenses and applications will go in the same way. May be a balance price could be reached in a few years, depends on the market.
Quest vWorkSpace costs less than XenDesktop or View.
as Dell will offering the DVS in one basket as onone else could do that on the market.
History is with them
If Dell choose to release the product for sale, I am sure Dell will sell it individually or bundle it with VDI hardware and if purchased along with Server technology discounts will be given.

To win the war with VMWare and Citrix, Dell would have to sell it cheaper to flight the mindset of his customers, this in turn could drive the price lower.
b/c every company is about making money, with profit margins being thin, why make it cheaper when you can charge the same, but use you own inhouse solution, costing mennies, since others have done the development of the product.
Dell is known to simplify and package solutions to make it easier to market them
VDI is the next big thing. This is the right time to start spreading footprints in VDI arena.
Dell can increase sale of its Servers and Storage if they give VDI cheap thereby adjusting for the lost margins.
Dell has to compete with lights of Citrix and VMware. They should have two strong points over cometition
1) One shop stop for VDI
2) Same features as Citrix and VDI with lesser cost.