Dell acquisition of Perot Systems spurs channel conflict fears

The Dell acquisition of IT services company Perot Systems has some Dell partners worried they could miss out on potentially lucrative business.

The Dell's proposed acquisition of Perot Systems has Dell partners worried about channel conflict in the IT services market.

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Dell today announced an agreement to acquire Perot Systems, a Plano-Texas based IT services provider, for $3.9 billion. When competitor Hewlett-Packard made a similar move, buying EDS, Dell told current and prospective VARs that HP would funnel all of its IT services business to EDS, cutting them out of the potentially lucrative IT services business.

"What's Dell going to tell us now?" asked David Hiechel, CEO of Eagle Software, a Salina, Kan.-based Dell partner.

Several other VARs -- both those that work with Dell and those that do not -- said the Dell acquisition of Perot is a "me too" move. HP bought EDS for $12.9 billion in May 2008, and IBM purchased Price Waterhouse Consulting in 2002.

Dell built its huge PC business by selling direct and mostly to consumers. But in recent years the company has focused more on business users, and some 80% of its revenue now comes from business accounts. To better support those accounts, Dell has tried to mend its bare-knuckles, direct-sales-only reputation by developing a channel partner program.

The 2007 Dell acquisition of EqualLogic, a channel-centric storage vendor, raised hopes that the company would develop a channel-friendly model. But other moves, like Dell's acquisitions of platform provider SilverBack Technologies and Software as a Service player MessageOne, prompted concerns that Dell would compete with its managed service provider (MSP) partners.

Some Dell partners remain nonplussed by Dell's buyout of SilverBack and Everdream, which gave the vendor the ability to compete with them on managed services, but are realistic about deaing with a hardware vendor trying to break into services.

Dell has been clear that it intends to be a force in services, said Peter Hirschfeld, president of PC Resources, a Braintree, Mass.-based VAR that has done work with Dell. SilverBack and Everdream gave the company network management infrastructure with which to compete. "Now with Perot Systems, they are a force to be reckoned with, particularly in large scale integration projects and data center outsourcing," he said.

For VARs concentrating on small and medium businesses, (SMBs), the Perot Systems acquisition is not as disconcerting, said Hal Brumfield, president of Houston-based Dell partner B Resource. His company fields an MSP business using its own software as well as technology from ConnectWise and Kaseya.

"At first thought, I thought they would be competing with us, but now I don't look at this as a competition," Brumfield said. "I was more concerned about them buying SilverBack."

Under Dell's ownership, Perot will be a factor in Fortune 50 accounts -- huge companies needing help with global SharePoint rollouts, for example -- but not smaller companies, he said.

Perot Systems will become Dell's services unit and be led by current Perot CEO Peter Altabef.

This story was updated Monday night with additional Dell partner comments.

Associate editor Elaine Hom contributed to this report.

Let us know what you think about the story; email: Barbara Darrow, Senior News Director, SearchITChannel.com, SearchDataCenter.com and SearchServerVirtualization.com

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