Just some quick commentary on Dell going private and Microsoft’s participation in that process.
Let me start with something that should be obvious even if it isn’t. There are personal relationships here that exist just about nowhere else in the PC ecosystem. Where else are the leaders who created the PC industry still involved with the companies they created? Michael Dell and Bill Gates (and Steve Ballmer) are the only ones left standing. Pick your favorite company or individual and you quickly discover that they are gone, often quite literally. Are any of IBM’s leaders from the era still around? How about Compaq? Intel?But Michael Dell is still head of Dell, and Bill Gates is still Chairman of Microsoft, and Steve Ballmer (who was there almost from the beginning as well) is Microsoft’s CEO.
I don’t know Michael Dell is friends with either Gates or Ballmer, but they sure are more than typical business acquaintances. And while Dell has always been one of the PC CEOs to (privately) give Microsoft the most critical feedback, he’s also been one of the most active in supporting new Microsoft initiatives. And when he hasn’t it has largely been because they were the antithesis of Dell’s (then) business model. It isn’t that Dell hasn’t ventured “off the reservation” from time to time, but in the end of all the OEMs it remains the one most aligned with Microsoft from top to bottom.
If Michael Dell wanted to take Dell private, presumably to finish its transformation to something more aligned with the PC business of the 2010s than of the 1990s and 2000s, he would find a sympathetic ear with Bill, Steve, and Microsoft’s board. I think there is a trust level that exists here that can’t be duplicated. It isn’t that Microsoft really expects to have influence over Dell as part of its investment (not that it wouldn’t have tried to get some commitments out of it), it is that it sees Michael Dell with freedom of action as the last best shot for a revitalization and redefinition of what constitutes a successful OEM. If he succeeds it will become the model for others to follow. If he fails, well at least the OEM model won’t have gone down without a fight.
Microsoft has done things like this before. Today’s high-speed Internet, particularly cable broadband, was made possible by Microsoft investments in the late 90s. The cable industry had a plan, but not the capital for building out their broadband networks. Microsoft provided that capital. It was somewhat driven by hopes they could sell set-top box and other software to the industry, but as Bill Gates said back in August of 2001, “If I had a wand and I could ask for one more hardware technology miracle, it’d be some way of having $20-a-month broadband to homes and small businesses.” Microsoft needed ubiquitous broadband to realize its vision, and wasn’t afraid to invest to make it happen.
Today’s Internet infrastructure owes much of its existence to those investments that Microsoft made (and ultimately had to write down) in the 90s. With the investment in Dell, Microsoft must be hoping it can give another industry important to its future a chance to evolve and thrive.