Dell pays $155M for hosted e-mail company

Dell pays $155M for hosted e-mail company

Extending its business services abilities, Dell announced it is buying Messageone for about US$155 million in cash.

MessageOne hosts software to help companies manage, store and recover enterprise-level e-mail. The business was co-founded by Adam Dell, brother of Michael Dell, the founder and CEO of the PC maker.

"[Monday's] BlackBerry outage is a pretty good example of [the risks] Dell and other customers face for email archiving and continuity," said Dell spokeswoman Lynn Cranford, who noted that the deal is expected to close in 30 to 45 days. "We think email is one of the killer applications and Messageone is a perfect fit for our suite of software services."

Dan Olds, an analyst at Gabriel Consulting Group , agreed that Messageone's offerings are a good fit for a company looking to extend its range of business services.

"Dell's purchase may signal that they now realize that they can't rely on inexpensive hardware alone to become a player in the enterprise data centre," said Olds. "Customers are looking for cost-effective solutions. They are less and less interested in buying servers from one vendor, storage from another, software from another and then integrating it themselves. They're looking for vendors that can provide preintegrated solutions that can be installed quickly and with little disruption."

He added that customers are also looking for products that minimize labor requirements. "Dell needs these type of offerings to be competitive with the IBMs and HPs of the world," Olds said.

Cranford noted that once the deal closes, Messageone "will be absorbed" into Dell Global Services. The Messageone hosted services also will be available to Dell's partner channels.

Existing Messageone customers should not be affected, she added. The same goes for existing Messageone partners, many of whom provide Messageone's hosted offerings as resellers.

Cranford said it was "premature" to talk about potential layoffs of MessageOne's 145 employees.

Stephanie Balaouras, an analyst at Cambridge, Massachusetts based Forrester Research called Messageone a "good cornerstone" to support Dell's software-as-a-service strategy. She said the hosted offerings from large systems and storage vendors, such as Dell, EMC, IBM, Seagate Technology LLC and Iron Mountain, may cause corporate customers to re-evaluate their existing physical storage infrastructure investments.

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