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Dell Looks to Boost Software Business With Quest Acquisition

Dell announced today it's buying enterprise management software firm Quest Software. The company said the $2.4 billion move will expand its software portfolio and better position it to meet the end-to-end IT infrastructure needs of enterprises of all sizes.

Aliso Viejo, Calif.-based Quest was started in 1987 and serves more than 100,000 customers worldwide, including 87% of the Fortune 500. The company has about 3,850 employees and operates 60 offices in 23 countries.

Dave Johnson, senior VP, corporate strategy, at Dell, said the Quest acquisition continues the company's strategy to provide customers with "open, scalable and efficient" products and help them manage, network and secure the heterogeneous devices brought into organizations by employees. "Quest has leading application management software, a critical component for converged infrastructures," he says, and its Microsoft migration portfolio enables Dell to offer a comprehensive suite of tools to assist customers to migrate to an open, industry-standard and flexible infrastructure.

"Application consolidation and migration from legacy systems and platforms to x86 standard systems and platforms is a key trend we're seeing throughout the industry," says John Swainson, president of Dell's recently formed software group. The addition of Quest will enable Dell to deliver more competitive server, storage, networking and end-user computing tools and services to customers. "Quest brings Dell a portfolio of software products that will be the foundation of our software solutions business going forward."

Raymond Boggs, VP of IDC's small/medium business and home office research, says Dell is really doubling down on infrastructure enhancement and how it can empower midsized companies to leverage and coordinate their diverse existing IT investments, regardless of how they want to organize their infrastructure--be it on-premises, virtual or in the cloud. "Certainly, as you get smaller, that kind of coordination and execution becomes more of an enormous chore," he says.

Dell's strategy to address the midmarket and help smaller companies manage a diverse IT infrastructure follows similar announcements from other vendors. HP recently announced a suite of services under its Converged Infrastructure umbrella aimed at helping small and midsize businesses prepare their technology infrastructures for a growing mobile workforce.

Boggs says smaller enterprises don't have the resources to get their arms around the many challenges posed by new technologies, but they're still compelled to find the efficiencies. "People are getting smart enough to know what they don't know," he says, and they're looking to companies such as Dell to help them anticipate problems they need to solve.

The bring-your-own-device (BYOD) trend is one of those challenges, says Boggs: "Typically, folks don't have policies and practices in place."

Boggs says Dell has redefined itself through acquisitions and the growth of its software group under the guidance of Swainson--not unlike IBM, which transformed itself from a hardware vendor into a software and services company. "It's clear that Dell has the will, which is pretty important, to continue to move forward to make these kinds of investments," he says.

The Quest acquisition is the second-largest by the company since it scooped up Perot Systems in September 2009. Perot was an IT services firm focused applications, technology, infrastructure, business processes and consulting for clients in healthcare, government and other commercial segments.

A year ago, Dell acquired Force10, a high-performance computing vendor that could support its services in cloud computing. Force10's technology includes high-capacity, low-latency switching and Force10's Open Automation features, as well as the company virtualization framework. In March, Dell bought security specialist SonicWall, which specialized in unified threat management platforms.

Bob Laliberte, a senior analyst at Enterprise Strategy Group (ESG), says Quest makes a strong addition to the Dell portfolio. "Quest has been very active in virtualization and cloud management tools, and they should fit nicely with the open and flexible concept that Dell embraces," he says.

Laliberte says Quest should work well with the capabilities it has gained with the Force10, Perot Systems and SonicWall acquisitions, as it will "help them build out more enterprise-class solutions. It also adds to the security portfolio, which is why Dell brought John Swainson in."

Swainson was appointed president to Dell's then newly created software group in March, which was set up to leverage the company's software capabilities and deliver end-to-end IT products. Swainson was at IBM for 26 years, and served as CEO and director of CA from early 2005 through 2009.

It has yet to be decided if the Quest name will be retained in any way. Dell said it expects the deal to close in the third quarter.