Devrait acheter Microsoft Dell ?

23 January 2013 by: George Kesarios |  about us: MSFT, DELL

Yesterday, I said that I was expecting someone else to join in the bidding for Dell (DELL), alongside Michael Dell and Silver Lake Management. While we still see official LBO interest for other financial firms Dell, Microsoft (MSFT) interest suddenly to the finance agreement was not really what I had in mind and brings a different twist on this issue.

There is a conflict of interest to inherit if Microsoft buys a piece of Dell that could do more harm to Microsoft than good, unless Microsoft goes all the way. Let me explain.

For the sake of argument, let's say that Microsoft decides to buy Dell in total. Immediately if it wants that it could create a monopoly in the world. How do you ask? Microsoft may - if it chooses - stop licensing its operating system to PC makers and be the only child on the block of PCs. Even if she choose to do so, it can increase the license fees it charges OEM manufactures by a draw and have one competitive advantage over others.

If Microsoft reach this road then it will put other PC manufacturers at a great disadvantage. Imagine, for example, if Microsoft increases the rights of licence for Windows 8 for Hewlett - Packard (HPQ) and Lenovo (LNVGY.PK) by 300%. How the two companies will compete with Dell and Microsoft?

But for Microsoft to do this, Dell must be able to build a personal computer on a monumental scale. Dell does not have this capacity. Of course, Dell can outsource a large part of this production, but I do not know how it will work when most of this outsourcing is sent to those who were simply destroyed by Microsoft.

That said however, assuming that Microsoft should buy Dell, then Microsoft will command similar to Apple, no competition-free hardware margins in the PC hardware space.

Easier said than done

If Microsoft has decided to take such a route other operating systems such as Linux could gain popularity. Because PC manufacturers would be not able to license Windows, Linux would be the alternative of choice. Thus, all PC manufacturers who sell Windows machines now sell Linux machines. Thus on the benefits of Microsoft a hand would be in the short term, but on the other hand, it is possible that it is cannibalizing its operating system in the long term.

In addition, it is doubtful if antitrust regulators will allow Microsoft to this approach. Even if US Lawmakers allowed him, I'm sure that regulators antitrust European and many other counties would prevent Microsoft to this approach.

Microsoft has already made the first step

That said, Microsoft is already openly competing with its partners in licenses with the introduction of Microsoft Surface RT.

If you have not noticed, this is the first time, Microsoft puts his name on a piece of hardware that is running its own software. Never in the past Microsoft has done this. And even if it is someone not threaten again, the mere fact that it is competing with other partners of Windows licenses is a gap compared to its longstanding practice. And if I were a PC OEM manufacturing, I'd be a little nervous.

So the fact that Microsoft wants to provide some sort of financing the operation of LBO Dell leads me to believe that Microsoft is trying to actually enter the door hardware company from behind.

Assuming U.S. antitrust authorities to leave finance agreement Microsoft Framework, this means that Microsoft will be able to make all kinds of operations with Dell, especially on the side of the business. Let me remind you that Dell and Microsoft already have a business relationship long. This partnership will add more tension to the competition of Dell's business, even though Microsoft don't buy a Dell in the future. It can also open doors to opportunities to both companies in a way we can't imagine right now.

If everything works well, and nobody brings antitrust issues against Microsoft, Microsoft can probably buy a bigger piece of Dell in the future - or buy all Dell pure and simple - and as a manufacture of equipment also.

Bottom line

I do not know if it is what Microsoft has in mind, but if it is, assuming that antitrust authorities let go forward, going into the hardware business could be the best move in the long run, Microsoft can bring.

Disclosure: I did not post in the target stocks and not intend to open positions in the next 72 hours. I wrote this article, and he expressed my own views. I do not receive compensation for him (other than to seeking Alpha). I have no relationship with any company whose stock is mentioned in this article. (More...)

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