Oracle's Sun Acquisition vs Dell's acquisition of Perot

Oracle acquired Sun Microsystems after a long battle while DELL did not have much difficulty in making the Perot acquisition. While both the acquisitions seem to fit well with the long-term strategies of the two companies, i.e Oracle & DELL, depending on how they go about integrating these acquisitions will decide if they will be able to derive any value from these transactions.

Oracle is a software product company which also offers services around its products, which are essentially solutions involving its products. DELL is a computer manufacturer which has done extremely well in computer hardware including desktops, servers & storage. So, the DNA of both these companies is different. One is a whole & soul software company while the other a hardware giant.

Oracle gets a good hardware portfolio from the acquisition of Sun. Sun's strength is servers and that is what Oracle's software runs on. This would help Oracle offer complete solutions (hardware & software) which otherwise it could not. But the key here is the role of hardware. Most of the money will still come from software & services while the hardware will make the solutions complete (one-stop-shop).

DELL gets a services portfolio from the Perot acquisition. Perot's strength is in the healthcare, government & data center business verticals. Hence the services portfolio is still not complete. Key verticals like BFSI, Retail, Automotive & Telecom are missing. DELL may be trying to take the IBM route to grow to the next level, but IBM has a very strong software portfolio in addition to a very good hardware (mainframe & servers) business. But most of DELL's revenue still comes from Laptops & desktops.

In my view, if Oracle uses Sun as a supporting aid in its software & services offering, it can derive maximum value from Sun acquisition. In all likelihood this is where it is headed. In the case of DELL, it should use its servers & storage business to support its services business. This seems to be very unlikely, given its DNA. Hence DELL may not be able to derive much value from Perot acquisition in the near future unless it manages to transform itself into a services-centric company from being manufacturing-centric.