Blog: Dell makes a Wyse move

Dell Wyse 5070

The news that Dell (NASDAQ:DELL) is to acquire thin computing leader Wyse was a bit of a shock. According to rumours, Wyse has been approached as an acquisition target by some heavy hitters over the last few years and always said “no, thank you”. The fact that the privately-held firm is finally going into the hands of a big four vendor is testimony to the job it has done recently in carving out a unique position among the IT top table.

Wyse actually led the industry until HP secured the top spot with its acquisition of Wyse rival Neoware in 2007. But HP’s troubles last year, combined with under investment in advancing its thin computing technology, led to much lower growth. In comparison, Wyse launched a plethora of innovative products and advanced its alliances to out-manoeuvre and finally surpass its old foe.

Wyse is pure channel with 100 percent of its business going through 3000 partners, and it has some great customer within its installed base. The firm is close to Microsoft, Citrix and VMware, which it has nurtured for many years, as well as an OEM agreement with Cisco and on-going strategic agreements with IBM to promote thin computing.

Long serving chief marketing officer, Jeff McNaught jokes that, “We love all our children equally,” but the subtext should be, “as long as they are not HP…”

But with the deal, a potential danger arises in that Dell might be tempted to start pushing Wyse thin clients direct to the detriment of the channel. Worse still, it might decide to shut down the relationships Wyse has forged with the “rivals of HP” club such as Cisco and IBM.

In this correspondent’s view, Dell needs to allow Wyse to keep its innovation and infrastructure neutrality. Wyse’s unwritten appeal to a number of vendors is its independence and fantastic product portfolio. It is a formula that has allowed it to regain its top spot without the help of Dell and the new owner now needs to articulate how it will improve what is already a great position.

The channel should not be immediately concerned. Dell has been showing a lot of love to partners and last year’s Secureworks and Compellent deals, and the recent Sonicwall buy, have been accompanied pro-channel statements and actions.

Between them Wyse and HP currently own around 60 percent of the thin computing market and you can expect the Dell channel to ratchet these numbers up. The nearest rival is probably nComputing, another privately held but VC-backed thin client vendor. It has neat technology but a small channel and relatively immature strategic relationships. Runners up like igel and Pano Logic limp along with limited market share. However, all three are likely to be sniffing around to see if the influx of the Dell channel might help then snare a few of the disaffected Wyse partners. Based purely on technology, there is unlikely to be any mass defections.

Dell’s next move will be critical. It needs to spell out its intentions for Wyse and hopefully it will embrace the technology as another product that will foster it’s growing channel credentials.