Dell Munches MessageOne for $155M

Dell bulks up its SaaS strategy on a busy day for email-related M&A

February 13, 2008

4 Min Read
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By James Rogers, February 12, 2008 5:40 PM

A flurry of announcements this week showcase the popularity of software-as-a-service (SaaS) -- and the eagerness of many players to join the emerging market as quickly as possible by buying their way in.

Dell & MessageOne

Dell cranked up its email management story today, throwing down $155 million to buy SaaS specialist MessageOne.

MessageOne, which recently overhauled its flagship EMS system, claims around 1,000 customers, as well as reseller deals with IBM, Iron Mountain, and SunGard.

Dell is keen to boost its SaaS presence, as demonstrated by its recent acquisition of Everdream for an undisclosed fee, and the company already had strong links with MessageOne.There are other connections between the firms. MessageOne was founded by Michael Dell's brother, Adam Dell, and it is partly owned by Impact Venture Partners and Impact Entrepreneurs Fund, which are also managed by Adam Dell. Michael Dell, his wife Susan Dell, and his parents are also investors in the Impact VC firms.

In an SEC filing today, the Dell CEO and his wife indicated that they will give their estimated $12 million proceeds from the MessageOne acquisition to charity. The filing also says that Dell was not involved in the discussions to buy his brother's company.

MessageOne is one of a number of firms, including Fortiva and Zantaz (sold to Autonomy for $375 million last year) that are looking to tap into the increasingly popular email outsourcing arena.

Dell has not yet revealed its specific plans for MessageOne, although it has confirmed that the startup's technology will eventually be built into its ProSupport services offerings.

MessageOne's executive vice president, Mike Rosenfelt, tells Byte and Switch that the startup will eventually become part of Dell's services division, reporting to Steve Schuckenbrock, president of Dell Global Services.The MessageOne exec also confirmed that the startup's 150-strong workforce, including CEO Satin Mirchandani and his management team, will be joining Dell. This could be a shrewd move, at least for the MessageOne leadership: Today's SEC filing reveals that Dell has allocated $10 million to "management retention," on top of the $155 million acquisition fee.

Dell has not yet revealed when the MessageOne acquisition is likely to close, although the deal is likely to pit the vendor against EMC and Google, which have recently ramped up their own SaaS efforts.

Atempo & Lighthouse Global

Dell was not the only vendor busy with email-related M&A today. CDP specialist Atempo bought email archiving specialist Lighthouse Global for an undisclosed fee.

Atempo's CEO Neal Ater says that the Lighthouse acquisition is somewhat smaller than Dell's MessageOne deal.

"It's [worth] less than $10 million, but part of the deal is in Atempo stock, so the value could rise to more than $10 million," he says. "[Lighthouse Global] are a small company -- they have under a dozen people."The CEO says that he is keen to get his hands on Lighthouse's E-Trail email archiving software, explaining that this is complementary to the Atempo Archive Server (AAS).

"Our goal is to have a common archiving platform that could [handle] files, emails, or messages such as IM," he explains. "We will have a common storage manager, a common policy manager, and a common user interface."

The exec added that a product combining both AAS and E-Trail will be available later this year.

TeraCloud & Estorian
Another vendor re-positioning itself is storage resource management vendor TeraCloud, which today bought email archiving startup Estorian for an undisclosed fee.

TeraCloud will now change its name to Estorian and shift its focus onto email, according to its CEO, Gary Tidd. "SRM is pretty much a flat market," he says. "What this deal does is put us into the very hot markets for email archiving and e-discovery."Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.

  • Atempo Inc.

  • Autonomy Corp.

  • Dell Inc. (Nasdaq: DELL)

  • Fortiva Inc.

  • Google (Nasdaq: GOOG)

  • IBM Corp. (NYSE: IBM)

  • Iron Mountain Inc. (NYSE: IRM)

  • Lighthouse Global Technologies

  • MessageOne

  • Securities and Exchange Commission (SEC)

  • SunGard (NYSE: SDS)

  • TeraCloud Corp.

  • Zantaz Inc.

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