Soon they should be able to buy into all of Dell directly. Shareholders will gather on December 11th in
Round Rock, Texas, at Dells unpretentious headquarters, to vote on a complex proposal that would allow the firm to pull off something resembling a reverse merger (the acquisition of a listed firm by a privately held one that is keen to go
public without the hassle of a conventional initial public offering).
This plan, announced in July, involves converting DVMT shares into new Dell shares
to be publicly traded. DVMT investors could accept the new Dell shares at a given conversion ratio or cash out (though a cap on cash available means those choosing the latter may have to receive a mix). VMware said then that it would pay out a
special one-time dividend of $11bn, with Dell to use its share of the dividend (about $9bn) to help fund the transaction. In an initial proposal, Mr Dell and Silver Lake offered a deal that implied a value for DVMT of about $22bn, including $9bn in
cash.
After noisy objections from Carl Icahn, an activist investor (who also made trouble back in 2013 about the price at which Dell went private), they
revised the terms last month to reflect a value of some $24bn for DVMT, some $14bn of it in cash. If the resolution passes, as expected, Dell will soon trade on the New York Stock Exchange.
The real challenge begins after the vote. Mr Dells plan to emphasise software in future contains three bets. The first is to be the best all-in-one
provider of bundled IT. That may not be easy. Norman White of the NYU Stern School of Business observes that combining a commoditised hardware business with an innovative software business is particularly hard to do. And IBMs $34bn acquisition
in October of Red Hat, a provider of open-source software, which it plans to sell alongside hardware, could make Big Blue a potent rival.
Still,
Dells transformation is welcomed by many beleaguered IT managers. The chief information officer of a big British bank that spends over $50m a year on Dell kit says he values its ability to provide converged infrastructure that
bundles multiple IT components such as servers, data-storage units, networking switches and the software to make all this gear work together, into a single package. Cheekily, Mr Dell promises customers to be the one throat to choke in
case things go awry.
Mr Dells second big bet is on the rise of a hybrid cloud which allows customers to blend their out-of-house and
in-house IT. Companies are growing nervous about putting all of their sensitive customer and business data on third-party clouds. Lonne Jaffe, a former IBM man now at Insight, a venture-capital company, insists that hybrid clouds are the future.
The public cloud promoted by Amazon and Microsoft will remain a force to reckon with. Dell cannot invest as much in innovation, and is sure to face
ruthless price competition from Amazon. Still, Dell may be catching a wave big enough to carry several firms. Last year Gartner, a consultancy, predicted a massive shift toward hybrid infrastructure, with 90% of companies using hybrid
clouds by 2020.
A third bet is on edge computing. As countries roll out 5G networks and firms put smart sensors into everything, the IoT
should arrive. Mr Dell says it will make demands that the public cloud cannot satisfy. If an autonomous vehicle (AV) senses it is about to hit a deer on a country road, he asks, must it wait for software housed in a distant public cloud to give it
permission to stop? It is an unlikely scenario but one Dell is using to promote its IoT division.
One of Dells big customers says the answer is
obvious. Decisions must be taken absolutely in real time, a car is a data centre on wheels, says Simon Bolton, chief information officer of Jaguar Land Rover (JLR), an Indian-owned carmaker. The answer is edge computing, which allows the
car to have a lot of computing power in the boot. JLR has long used Dell desktop computers, EMC storage devices and VM ware software. Now it is using other bits of the firms kit (cyber-security software, for example) as it develops
edge-computing systems.
Last year, Dell created a new division devoted to the IoT. It has promised to invest $1bn in research and development over three
years. Its venture-capital arm has invested in Graphcore, a British startup developing AI process super-fast chip, which enjoys very low latency (the time it takes for data to get to their destination), is ideal for use in AVs. Graphcore is bringing
these AI chips to market by putting them into Dell hardware, which the latters legions of salesmen will promote to big corporate customers normally out of a startups reach.
In the end, the success of Dells new strategies depends greatly on the person at the top. Sceptics wonder if he is yesterdays man. Others worry
that his firms recent growth spurt may be unsustainable, and question how long it will take for him to return the firm to profitability. It remains to be seen if he can blend the aggressive sales culture at Round Rock with a softer,
innovation-focused ethos in Palo Alto.
Mr Dell is confident that his bets will pay off. He notes that a public listing would absolutely give us an
acquisition currency, one that he intends to put to use as Dell shoots toward $100bn in annual revenues. He has managed to defy naysayers in the past. In 2015, Meg Whitman, then the boss of HP Enterprise, a rival IT firm, predicted that the
takeover of EMC would prove an enormous distraction to Dell. In a headline the same year,
Wired
, a magazine, said the PC was dead and not coming backDells PC sales have been rising. Accepting the scrutiny of Wall
Street again will doubtless mean plenty more such provocations. Over to you, Mr Dell.