Our full analysis of Dell's impending acquisition of Quest Software

Mid-summer tends to be slow in terms of major announcements, so it stands to reason that you've already read your fair share of articles that talk about Dell's acquisition of Quest Software. Brian re-posted an article discussing the prospect of such a move back when the rumor first surfaced, and in the meantime Quest found itself in quite the bidding war.

Mid-summer tends to be slow in terms of major announcements, so it stands to reason that you've already read your fair share of articles that talk about Dell's acquisition of Quest Software. Brian re-posted an article discussing the prospect of such a move back when the rumor first surfaced, and in the meantime Quest found itself in quite the bidding war. What I want to do today is take a look at the fallout from a desktop virtualization perspective.

Initially, when people in our space hear "Dell bought Quest," we think, "So now it will be Dell vWorkspace. Duly noted." What's interesting to note, though, is that I could find exactly zero references to desktop virtualization or vWorkspace in any of the literature I read or phone calls that I attended, and that questions sent to Quest contacts were forwarded to PR and politely deferred. With that lack of information, we're only able to speculate on what's going to happen in the next few months while the deal closes.

What we know

We know that Dell has created a software group in recent months, and has been looking to acquire technology to fill it out. The goal of the software group is to build out Dell's offering to make than an even more viable end-to-end option for organizations. They have professional services, they have hardware, storage, thin clients, and managed services, but they need things to plug the gaps between those systems. It's a monumental challenge, frankly, and it's probably as overwhelming as it is exciting.

Then, shortly after the group was announced, Quest announced that it intended to buy back its shares and go private. Dell was almost immediately discussed as a contender, and you can see why. Rather than purchasing tools one at a time, why not acquire a company that has a massive amount of breadth, products, and technology (that has done all the one-at-a-time acquisitions for you). There was a bidding war, but eventually a deal was inked with Quest to bring all 228 different Quest products under the Dell umbrella.

The announcement yesterday was only a message that Dell intends to acquire Quest, and the phase between announcement and acquisition will be a busy on as Dell tries to figure out exactly what of Quest they want. From the press releases, letters, and phone calls, we know that they're interested in:

  • One Identity and Access Management  Will pair well with the SonicWALL stuff and could lead to a competitor with Access Gateway or even Cloud Gateway/Horizon down the road)
  • Foglight for performance monitoring apps, databases, virtual machines, etc...  Could remain standalone or become part of the KACE appliances
  • Windows Server Management solutions  These come up a lot in the communications, and it appears the technology will be used to manage Windows servers in any environment, local, cloud, managed services, etc... as part of a datacenter modernization campaign
  • Database management solutions  This has been Quest's biggest attraction over the years, so it stands to reason it would make the short list of technologies that Dell wants to leverage.
  • NetVault When combined with AppAssure (the first company Dell bought for the software group, which does backups), NetVault is high in Dell's mind as a data protection and management solution. In the long term, maybe combined with Wyse's MDM technology, perhaps there's a mobile data management play, too.
  • User Workspace Management  This one is surprising to me, since there was no mention of vWorkspace, but Dell mentioned the User Workspace Management product specifically in an analyst call. To me, they wouldn't have done that unless they specifically intended to enter that space, so we'll see what happens there. Wyse has a lot going on, too, so maybe this is just the tip of the iceberg. UEM companies: keep your eyes open.

    [Note: As Michel Roth points out in the comments, the User Workspace Management group at Quest was formed this past March and contains vWorkspace as well as the RemoteScan, ChangeBASE, and Scriptlogic technologies. It also contains something called Quest Workspace Desktop Authority, which is kind of confusing. Still–this is a good sign, although it was only barely mentioned in the analyst briefing.] 
It's also interesting to note that Quest CEO Vinny Smith will only be retained in an advisory role, as opposed to taking on an official position within Dell. Ostensibly, this is because Smith wanted to take the company private rather than sell to Dell, which kept making offers until the board couldn't refuse. Still, maybe this is common with larger acquisitions (I'm used to smaller ones where the CEO comes on in a product manager or director role), but it struck me as odd.

What we don't know (but are willing to speculate on)

The biggest thing that I want to know at this point is what will happen with vWorkspace, or Quest Workspace Desktop Virtualization as it's called now (a name change at the same time as the acquisition is not exactly good timing). There was mention of the User Workspace Management solution, but that was all. In the article reposted yesterday, the commenters (myself included) speculated on what Dell actually wanted out of the acquisition and whether or not vWorkspace was a part of their plan. Today, I want to look at three directions Dell could go.

Direction 1: Keep vWorkspace and compete with Citrix and VMware

Dell would never have chosen to do this on their own given their relationships with Citrix and VMware, but now that they are sitting on a mature product, they could very easily maintain business as usual for vWorkspace. But, they could also use vWorkspace to complete the vision of having a true end-to-end offering. We've talked in the past during the occasional "Should Cisco buy Citrix" rumor flareups that such a solution would be interesting, and I have to admit that Dell is in a better position than Cisco ever was. Dell has:

  • Secure remote access (SonicWALL firewalls combined with the Identity and Access Management pieces that Quest brings)
  • Networking (Dell Force10 networking is virtualization-aware, more advanced than Dell has ever been)
  • Backup and data management (AppAssure, NetVault)
  • Servers
  • Desktops
  • Storage
  • Thin Clients (Wyse)
  • Desktop provisioning (Wyse WSM)
  • Device management (Wyse Stratus)
  • User Workspace Management (Quest) 
  • Migration analysis and automation (Quest via ChangeBASE)
  • Foglight and vFoglight for performance monitoring
  • vWorkspace, of course, for VDI desktops, Session Host desktops, and Application delivery
  • ...not to mention all of the other things that Quest has that organizations use on a one-off level

Dell has a product now that can do every one of those things, and it stands to reason that they could come up with some sort of all-encompassing solution that leverages all of it. Picture the following conversation between a customer and Dell:

Customer: "Nice to see you again. Can you do..."

Dell Rep, interrupting: "Yes." [unravels scroll with VERY long list of things that Dell can now do.]

There are challenges to doing this, though. For instance, do customers really want to buy the entire system from top to bottom from one vendor? I'm not programmed that way, but companies that have been IBM or HP shops for all these years may be ok with that. To me, it's a tough sell to get someone to put all their eggs in a single basket. They may not see it that way, though.

The other challenge I can think of, and it's something Quest has been wrestling with since the dawn of time, is that for all of this stuff to work well with each other and be an amazing end-to-end offering, it all has to kind of work together. Right now there are 35 separate technologies (and countless constituent parts) that have to come together. They don't all have to be aware of each other, but there has to be some homogeneity in order for a complete solution to be effective. If I have to manage it all like they're separate products, why did I buy them all from Dell in the first place instead of chasing down the best-of-breed in all the categories?

Direction 2: Kill off vWorkspace

Something else to consider is that Dell already has a relationship with Citrix for VDI-in-a-Box, XenServer, and XenClient (and VMware, for that matter, but I believe that partnership is more broad). It's possible that they could value that higher than vWorkspace, and therefore decide to kill it off. Quest themselves were poised to trim the fat, so to speak, even if Dell hadn't come along. I'm not saying that Quest would have killed off vWorkspace–they certainly are very proud of it (and they should be)–but Dell may see differently. They may decide that they don't want anything to do with competing in the space and that vWorkspace is a sunk cost. Odds are, though, that killing off vWorkspace won't happen by Dell's hand. If they killed it off, they'd still have to honor existing support agreements for the near future, so there would still be liability on their end to support the product.

Perhaps it's just an oversight that vWorkspace wasn't talked about, and there is a lot of time between now and the finalization of the acquisition for more information to come out.

Direction 3: Sell vWorkspace

It's hard to draw the line at what technologies are specifically for vWorkspace, but let's assume that Dell doesn't want to compete in the desktop virtualization space and doesn't want to just kill the product off altogether (it's got to have a decent value, right?). In that case, they'd want to sell. There is a lot of great technology in there, from the protocol to the System Center extensions to the broker itself, but who has the money to buy it?

Quest has a great relationship with Microsoft, perhaps even better than Citrix's. You could say that Citrix hitched their wagon to Microsoft's star, but if that's the case, Quest skipped the hitch and welded their wagon to the frame. Quest has been extending Microsoft technology in an inoffensive way for many years, and has done a very good job at it. With Microsoft restructuring the entire virtual desktop delivery system in Server 2008, perhaps they'd be interested in buying the Quest technology outright. Frankly, though, if Microsoft wanted that technology, they'd have bought or built it years ago.

The same goes for VMware, who has said in the past that they had no interest in creating a product that leverages session hosted (TS) desktops. They've had a change of heart lately when it comes to physical devices with the Wanova acquisition, so perhaps they're not as closed off as they once were. vWorkspace may be the number three VDI solution on the market, but in the TS world, they are number two. If Dell doesn't want it, maybe VMware does.

It could be that VMware or someone else buys the vWorkspace product just to kill it off, too. It would have to come cheap enough, but it's hard to ignore a chance at eliminating a competitor.

Some other party could also come in, like Ericom, although they may not be interested. A group of investors could come together and try to take the product on, too, much like how ProPalms acquired the Secure Global Desktop product that was part of Tarantella after they bought New Moon (it's a long, old story). That product, as best I can tell, lives in some product purgatory where the software isn't really dead, but it's not really alive, either (the last post on their site is from October, 2011). I hope the same does not happen to vWorkspace. If the technology is sold, I hope it winds up in the hands of someone who can continue growing the product.

Wrap up

At the end of the day, we have an idea of what Dell wants to do (end-to-end solution), but we're left with more questions than answers (one late addition is what happens with the Mokafive partnership?). The only real news regarding desktop virtualization is that Dell intends to acquire Quest, and they expect that to take place in Dell's fiscal Q3, which I believe starts at the end of July / early August. Until then, we may be in the dark on exactly how things will shape up. Rest assured, we'll keep our ears to the rails and let you know what we learn. One thing is for sure—Dell has a lot of decisions to make.



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