The interesting facet of the latest megadeal announced in the global IT industry is not the rationale for what is clearly an attempt by the last pure play hardware provider to become a true solutions provider, but the strategy that will be deployed to ensure that this acquisition justifies the high ticket price that has been paid to do the deal. In a slow demand environment where company valuations have declined steeply since the onset of the recession, a price of $30 per share for Perot is many notches higher than the $25 per share that Dell?s rival HP paid for EDS in the pre downturn era. Will a resurgent Dell be able to justify this to its shareholders and customer segments?

With IBM having repositioned itself as a total solutions provider many years ago and HP following suit, the historically acquisition shy Dell would have seen Perot as one of the few options available to it to become a truly significant competitor. Apart from Perot?s significant size of $3 billion dollars in services which will give Dell the much needed hedge against hardware demand slowdowns that has made HP look better in recent times than it may have done without EDS, the significant strengths of Perot in the recession-proof government and healthcare segments can transform the fortunes of Dell if it plays its cards well in the coming months. In an environment where both desktop and laptop sales of Dell have shown significant declines, a growing services business would be a welcome shot in the arm.

Contributing 27% of Perot?s revenues, the government services business in which Dell has been a significant though niche player, could be the immediate target of the duo in the US as well as other key markets with most governments balancing their spend on products and services in recent times. For example, the agencies under the General Services Adminstration in the US have already spent close to $11 billion on services in the first 10 months of fiscal 2009. Large opportunities are available to US providers like the plan to convert medical paper files to electronic records which has received a $20 billion allocation in the US stimulus plan, a figure expected to double soon !

While both these target segments have most of the global players like IBM, HP and CSC and niche providers like Cerner and McKesson locking horns for business, it is curious that most of the Indian services majors with the exception of Cognizant have miniscule market share. Hence it is unlikely that this development will impact the fortunes of India?s outsourcing industry in any significant manner though it will see a significant competitor emerge for domestic government business. Dell in India has already made strides in key government focus areas and can expect to make a major pitch for solutions business in this and the burgeoning healthcare market.

The deal which the companies have called ?a compelling combination of two iconic information technology brands? will create its own share of ripples in India, not just in the emerging markets but also in the alliances which Dell had crafted with solutions providers in this country. While the company?s channel chief has reassured the company?s partners on this score, it will be interesting to watch the contours that the solutions partnership alliances will take as the merger happens. Cultural integration of two very dissimilar organisations, building new solutions portfolios for present and new customers, keeping partners and employees engaged?there is a lot on the plate for Michael Dell and Ross Perot Junior in the months to come !

?The author is vice-chairman & CEO of Zensar Technologies and chairman of CII?s National Committee on IT, ITeS and eCommerce