What do you do when you're known for being a PC company, and PCs just aren't chic anymore? Diversity, diversify, diversify, of course.
Dell (News - Alert) hopes to do just that with its purchase of Quest Software for $2.4 billion. Quest, a software manufacturer headquartered in Aliso Viejo, California, manufactures Windows management tools, database tools and its flagship product, Toad (Tool for Oracle (News - Alert) Application Developers).
The deal ends a bidding war that began last month when Quest hinted that a mystery buyer had made an offer that topped a $2 billion sale that had been worked out with Insight Venture Partners in March. The secret bidder turned out to be Dell, the second largest PC maker in the U.S. behind Hewlett-Packard Co., reported the Associated Press (News - Alert) this week.
According to the AP, the primary attraction of Quest for Dell is its nearly 1,300 engineers and its portfolio of software designed for businesses and government agencies. In particular, Dell hopes the acquisition will help sell more servers, networking and storage products and computing services — all of which have larger profit margins than the PC industry today. As more and more consumers use portable Internet-connected devices such as smartphones and tablet computers, sales of PCs have slumped.
Quest is Dell's biggest acquisition since it bought technology consulting firm Perot Systems for $3.9 billion in 2009.