Microsoft may be seeking protection from Linux with Dell loan

Microsoft also may be trying to influence more hardware designs in the post-PC world with a $2 billion loan to Dell

By , IDG News Service |  

Microsoft's Windows 8, which shipped in October, so far has failed to lift PC shipments, which fell by 6.4 percent in fourth quarter of 2012 compared to the same quarter in 2011, according to research by IDC. Dell's PC shipments fell by 20.8 percent during the same quarter. Few touch PC models were available in the fourth quarter, and PC makers failed to effectively communicate the benefits of Windows 8, which was partly responsible for the drop in PC shipments, according to IDC.

Dell's PC offerings are mainly based on Windows, but the company has been adding Linux to its server offerings. The company has also been increasing its profile in the open-source community with contributions to the OpenStack cloud OS and efforts like Crowbar, which is a software framework for systems management on Linux servers.

With the loan, Microsoft and Dell can build an even tighter alliance around data-center transformation, said Matt Eastwood, group vice president and general manager of IDC's Enterprise Platform Group

"This includes converged infrastructures which power the virtual data center where systems management are critically important, but also integrated systems targeting specific workloads such as data warehousing, analytics and collaboration. These are systems which increasingly require deep joint engineering effort," Eastwood said.

The goal may be to jointly develop high-performing infrastructure that is easy to deploy and manage, but which also delivers faster time to revenue, Eastwood said. There is more focus on applications in such implementations, Eastwood said.

Analysts said privatization will provide Dell more time to build up a cohesive enterprise product stack while freeing the company from the pressure of delivering quarterly profits and answering investors. Dell for years has been trying to transition from a commodity PC supplier into an enterprise IT vendor, but has had its struggles. Analysts agreed that the company will continue to develop PCs as it may assist in selling more enterprise products.

While Microsoft's loan isn't a major part of the deal, it is large enough to ensure Dell's commitment to Microsoft's products and keep its struggling PC business alive, said Charles King, principal analyst at Pund-IT.

There could also be more touch-based laptops, tablets and even smartphones based on Microsoft's Windows operating systems in the future, King said.

However, a Microsoft-imposed limit on Linux-based product development would not necessarily be in Dell's best interests, King said. Despite Microsoft's loan, Dell will likely remain committed to Linux as it remains important to the company's enterprise offerings.

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