Arik Hesseldahl

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Dell to Acquire Virtual Desktop Player Wyse Technology

Computer and IT giant Dell said today it will acquire privately held Wyse Technology, a company that specializes in what it calls “cloud client computing.”

Wyse used to pop up on my radar screen back in the late 1990s when there was a sudden craze in what was then called “thin clients.” The basic idea behind a thin client is to put a keyboard and a display on an employee’s desk, and have all the computing horsepower for that individual workstation — all the data and software that it uses — reside on a remote server. The advantage is that thin clients are cheaper to operate, easier to maintain and upgrade, and also easier to secure and control.

With cloud computing being very fashionable right now, it’s no surprise to me that Wyse has adapted how it describes its mainline specialty. Another phrase that gets passed around quite a bit is “virtual desktops.”

For its part, Dell is on a long-term campaign to diversify its business away from the personal computer business it revolutionized in the 1990s, and to move into more profitable areas of enterprise IT sales and services. It’s also embracing cloud computing in a big way.

Since Wyse is private and apparently not huge, Dell isn’t disclosing how much it is paying. Wyse is big enough to have sold more than 20 million thin-client systems worldwide; it claims that 200 million people touch its products every day. It sold a million units last year, and has a strong presence in the health care and financial services sectors, both of which have a lot of appeal for Dell generally.

Update:
So here’s an informed estimate concerning how much Dell paid. Brian Marshall of ISI just issued a note to clients pegging the price at between $350 million and $400 million. He reckons that’s about level with Wyse’s sales of about $375 million over the prior year. Hewlett-Packard paid about $220 million for Wyse rival Neoware in 2007 at a time when its annual sales were in the $75 million range, he says.

Here’s Dell’s announcement:

Dell Announces Intent to Acquire Wyse Technology
-Extends Dell’s desktop virtualization capabilities and drives attachment of enterprise solutions, including servers, networking, storage and services
-Strengthens Dell’s strategy to offer customers innovative, end-to-end IT solutions from the edge to the core to the cloud

Dell today announced it has signed a definitive agreement to acquire Wyse Technology, the global leader in cloud client computing, to significantly extend its desktop virtualization offerings. The addition of Wyse will expand Dell’s desktop virtualization capabilities and provide new solutions and services opportunities for the full range of Dell’s enterprise offerings.

In some environments, a virtual desktop allows enterprises to more efficiently and securely manage their users and end point devices. With this acquisition, Dell expands its enterprise solutions portfolio and offers customers an ever broadening array of tailored solutions to meet their needs.

“The total market for desktop virtualization solutions should continue to see strong growth globally, with the larger revenue and margin opportunities coming from the datacenter infrastructure, cloud and services offerings that are tied to thin client and desktop virtualization technology sales,” said Matt Eastwood, Group Vice President, Enterprise Platform Research, IDC. “Thin client and desktop virtualization solutions typically drive high attach rates to data center solutions, including servers, networking, storage and services. The end-to-end datacenter infrastructure stack for these solutions is expected to exceed $15 billion by 2015.”

Wyse Technology Leadership
Wyse, ranked No.1 in thin client unit shipment volume on 4Q 2011[1], has shipped more than 20 million units worldwide and has over 200 million people interacting with its products each day. The company has more than 180 patents, both issued and pending, covering its solutions, software and differentiated intellectual property.

The Wyse solutions portfolio includes industry-leading thin client solutions with advanced management, desktop virtualization and cloud software.

Cloud clients: Wyse offers a wide selection of secure, reliable, cost-effective thin and zero clients designed to easily integrate into any virtualized or web-based infrastructure, while meeting the budget and performance requirements for any application.
Cloud software: Technology powering a new world of cloud connected smart devices.
Management software – Secure, easy and scalable remote device management for the extended enterprise.
Virtualization software – The best user experience with Microsoft, Citrix and VMware virtual desktop infrastructures.
Mobility software – Secure mobile connectivity to your personal, private or public cloud for mobile devices.
Services: Wyse offers a wide range of cloud computing services to complement its cloud clients and software solutions. Services are available for specific or on-going engagements.

Wyse Technology, founded in 1981, is headquartered in San Jose, Calif. and serves customers in more than 50 countries around the world. Wyse has more than 3,000 resellers and shipped more than 1 million units in 2011.

The transaction was approved by the board of directors of each company and is expected to be accretive to Dell non-GAAP earnings in the second half of its Fiscal Year 2013. Additional terms of the transaction were not disclosed. The transaction remains subject to customary conditions and is expected to close in the second quarter of Dell’s FY13.

Quotes
“Desktop virtualization can help organizations streamline IT management, improve productivity and security, and increase cost efficiency for discrete workloads or usage scenarios,” said Jeff Clarke, president, End User Computing Solutions at Dell. “The Wyse Technology desktop virtualization capability complements Dell’s strongest-ever device and computing solutions portfolio, and strengthens our position in offering customers among the broadest set of computing choices from the edge to the core to the cloud.”

“The combination of Wyse and Dell provides us with tremendous growth opportunities for our core desktop virtualization business, helps us expand into new and fast-growing market segments including mobility and cloud computing, and provides us with reach and scale we did not previously have,” said Tarkan Maner, president and CEO, Wyse Technology. “We believe that taking this step with Dell is a very natural progression for our business and offers our customers many great advantages not available to them today.”

An analyst call with Jeff Clarke, president, Dell End User Computing; Dave Johnson, senior vice president, Dell Corporate Strategy; and Tarkan Maner, president and CEO, Wyse Technology; will be webcast live today at 8:45 a.m. Central Time and archived at www.dell.com/investor.

About Wyse Technology
Wyse Technology is the global leader in Cloud Client Computing. The Wyse portfolio includes industry-leading thin, zero and cloud PC client solutions with advanced management, desktop virtualization and cloud software supporting desktops, laptops and next generation mobile devices. Wyse has shipped more than 20 million units and has over 200 million people interacting with their products each day, enabling the leading private, public, hybrid and government cloud implementations worldwide. Wyse works with industry-leading IT vendors, including Cisco®, Citrix®, IBM®, Microsoft, and VMware® as well as globally-recognized distribution and service providers. Wyse is headquartered in San Jose, California, U.S.A., with offices worldwide.

About Dell
Dell Inc. (NASDAQ: DELL) listens to customers and delivers worldwide innovative technology, business solutions and services they trust and value. For more information, visit www.dell.com.


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