Microsoft Eyeing Dell Investment in Private Buyout?

If Dell (NASDAQ: DELL) pulls off its $15 billion private equity deal, can you imagine Microsoft (NASDAQ: MSFT) with a significant say-so in the PC maker’s affairs? Microsoft with some measure of control over a hardware supply chain–why, it’s nearly an Apple (NASDAQ: AAPL)-esque blueprint to control both ends of the IT spectrum.

And, an idea apparently not so far-fetched as the software-turned-hardware colossus reportedly is in talks with Silver Lake Partners mulling an investment of up to $3 billion in the Dell buyout. Based on Dell’s current $22.8 billion market cap, a $3 billion stake would give Microsoft about a 13 percent interest in the company, approximating Dell chief executive Michael Dell’s 16 percent interest worth some $3.6 billion.

Would such a move make sense for Microsoft? And, would Dell welcome it? Microsoft, with its hands in the software and hardware ends of the IT supply chain, could influence–if not fashion–hardware assembly lines that cater more closely to its interests (as in future Microsoft-branded hardware), enabling it to exert even greater control over the industry. The downside of pursuing such a tactic, of course, is that Microsoft would have to drop the notion that it is hardware-agnostic in not preferring one maker over another.

As for Dell, keep in mind that nearly all the vendor’s moves in the past three years have been oriented toward crafting an integrated solutions strategy and culture that embraces services, storage and software in addition to hardware. In that regard, the vendor still has some roads to travel as some 70 percent of its revenue still comes from PCs and maintenance.

How kindly would Dell take to Microsoft’s involvement in its evolving business model, one now based on big acquisitions that extend the company’s vision well beyond its PC roots? It’s hard to imagine too many in Dell’s corner rooting for Microsoft’s participation in the buyout. The best reason for taking the company private is it brings the promise of more financial flexibility, the room to eye the long game somewhat apart from the short-term profits associated with publicly held businesses. With Microsoft at the table, you’ve got to figure Dell risks giving up at least a portion of that meal.