Michael Dell remains one of the wealthiest people in the U.S. Last year, he ranked 22nd in the Forbes 400 list with an estimated wealth of $14.6 billion. That was down from 2005, when Forbes ranked him fourth on the list with an estimated wealth of $18 billion.
Analysts and other observers say that taking the company private will give Michael Dell the freedom of action and movement that he sometimes lacked as head of a publicly traded company with a declining stock price.
"It is hard being a public company, and it is getting harder," said Bob Metcalfe, a computer networking legend who teaches entrepreneurship at the University of Texas. "Michael is confronting major dislocations in his market, and he needs to maneuver. And it is risky and dangerous, and it takes time. It is understandable, when the stock price has fallen so much, that he would take the opportunity to go private.
"He doesn't have to do this. He is not quitting. He is re-upping and doubling down."
A New Dell Inc.
The legacy that Michael Dell is preserving has to do with spotting compelling business opportunities by reconfiguring how the computer industry does business.
In the 1990s, he helped cut deeply into the fat profit margins of IBM and others by making and delivering PCs in a way that created more customer choice, cost savings and convenience. That added up to a value proposition that particularly appealed to business customers.
The early Dell Inc. didn't spend much on technology development, leaving that task to its suppliers. Its business process was its innovation.
The new Dell must do things a little differently. It has spent more than $13 billion over the past five years buying more than two dozen companies that have a broad range of technical prowess in such areas as storage, networking, software, security and services.
The CEO told employees and customers last week that he intends to pursue the same basic strategy of the past five years -- making the company a stronger one-stop shop for a range of information technologies. But he expects to drive change faster without the encumbrances of running a public company.
The old Dell focused on personal computers, but the new company will compete across a broader landscape -- the $3.7 trillion global information technology market, which includes business systems hardware, software, services and communications.
Analysts expect the new Dell will go after a wide swath of business customers worldwide that want to modernize their information technology investments and save money doing it.
The new Dell will push to sell more servers, data storage systems, security, software and services, such as "cloud computing," where businesses move more of their vital software and data into remote data centers that are shared with other companies.
The plan calls for appealing to cost-conscious business customers that want productivity from information technology advances but don't want to be locked into any one company's proprietary solutions, such as those offered by IBM Corp. and Oracle Corp.
While some industry analysts are optimistic about Dell's chances, others are more skeptical.
"We are not sure that going private improves the company's fundamental position," wrote Shaw Wu with Sterne Agee. "The reality is ever-growing competition ... isn't going to go away."
Can it work?
Some people who have worked with Michael Dell believe he still has the tools and the drive to reinvent his company and win with it in a new environment where the personal computer isn't the answer to every problem.
One of them is Jay Bell, a former Dell senior fellow, who says Michael Dell's strength is having the business savvy and the technical knowledge to match emerging technologies with evolving customer needs.
Now, Bell said, the Round Rock company owns more technological capabilities to apply to fixing customer problems.
Once the buyout is completed, he said, "they have an excellent shot at success."
Michael Dell has always had a strong faith in his ability to spot a business opening and then run hard to take advantage of it.
In the fall of 2011 he told a gathering of University of Texas students about his drive to start a computer company while still a freshman in college.
"My motivation was that I saw an incredible opportunity, and I just had to do it," he said. "When I was 19 years old, the risk-reward was overwhelmingly in favor of taking the risk."
It's now 29 years later, but it's likely Michael Dell sees his latest deal in much the same way.
Distributed by MCT Information Services
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