Dell acquires Quest: $2.4 billion to be a software player

Dell wins a bidding war for Quest and now builds out its software unit with an eye on everything from identity management to data center tools to database administration.
Written by Larry Dignan, Contributor

In a push to become a software player, Dell won a bidding war for Quest Software as it aims to bolster its data center software. The final price tag: $28 a share, or $2.4 billion.

Dell had been rumored as a buyer for Quest software for months. Quest received a $23 a share bid from Insight Venture Management and Vector Capital in March and then a "strategic buyer" pushed the price up to $27.50. Dell ultimately sealed the deal for $28 a share.

With the Quest purchase, Dell said its software business will have about $1.2 billion in annual revenue. 


Quest's software manages databases and backs up data. Dell has been focused on building out its software business to offset its reliance on commodity PCs. Quest's portfolio revolves around development and management tools on Windows and VMware.


In other words, Dell builds out its relatively new software unit with a host of software for use in the data center.

On a conference call with analysts, Dell software chief John Swainson said:

Our software strategy is focused on addressing these customer needs with three key tenets The first aspect of which is to leverage and build upon our existing software portfolio. After going through the process of assessing Dell's software assets after I joined the business, it was clear to me that we had a good base of software IP from which to build, both standalone and embedded within our hardware solutions. Second, we are in the fortunate position of not having a large legacy hardware or software base. So we can look forward to emerging technologies that will potentially cannibalize some of those opportunities, rather than look backwards at supporting legacy that might constrain our thinking or offerings. Our solutions will focus on the current problems with a particular focus on simplification and automation in solving our customers' needs. Finally, we will be focused on key areas of software where we think there's good long-term potential that will integrate well with Dell's existing hardware and services businesses. Quest brings us an unbelievable portfolio of software assets that we're going to use as the foundation of our software solutions business.

According to Dell, Quest will add to the company’s enterprise services. Among the key items:

  • Quest brings identity management software that can complement Dell's SonicWall and Secureworks units.
  • Quest's performance monitoring tools will work with Dell's data center automation push.
  • Windows server software from Quest will complement Dell's Clerity and Make Technologies purchases.

For fiscal 2011, Quest had $857 million in revenue. Quest also has 1,500 sales people and 1,300 developers.



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