What If Dell Owned PacketTrap MSP, PacketTrap PSA?
Is Dell targeting Quest Software, owner of PacketTrap MSP and PacketTrap PSA, for a potential buyout? A potential Dell-Quest Software deal remained in negotiations over the holiday weekend, sources told Reuters. If Dell acquires Quest Software, what does that mean for the PacketTrap MSP and PacketTrap PSA software platforms? Here are some thoughts for managed services providers (MSPs).
First, some caveats. The Dell-Quest Software deal may not occur. Sources tell MSPmentor the on-again/off-again discussions have run hot and cold over the past few days, with Dell’s weak quarterly results triggering distractions a few days ago.
It sounds like Quest Software has been soliciting bids from multiple potential suitors, so there’s a chance additional tech companies could be interested in buying Quest Software. I don’t know if Dell and Quest Software have signed an M&A binder that essentially prevents Quest Software from negotiating with additional suitors at the moment.
In an email to MSPmentor on May 25, a Quest Software spokeswoman said the company had no comment about the M&A speculation.
Potential Implications for MSPs
If Dell acquires Quest Software, it will certainly trigger questions from MSPs running PacketTrap MSP and PacketTrap PSA, two MSP-oriented platforms within Quest Software’s portfolio.
Compared to the overall Quest Software business ($767 million in revenues for 2010), I believe the PacketTrap MSP and PSA revenue streams are relatively small. I think Dell is more interested in Quest Software’s larger IT management, data management, virtualization and systems management software businesses.
Still, the PacketTrap business has been expanding at a nice pace. The software platform originally focused on RMM (remote monitoring and management) capabilities. But more recently, Quest Software and PacketTrap in February 2012 acquired their way into the PSA (professional services automation) market, purchasing BlueFolder.
If Dell acquires Quest Software (and by association PacketTrap), some angst could emerge among PacketTrap’s MSPs. Dell does not have a good track record in the MSP software market, where purchases like Silverback Technologies never really clicked with MSPs post-acquisition.
Also, some MSPs have expressed concern about Dell’s recent SonicWall acquisition. SonicWall’s partner program includes recurring revenue opportunities for MSPs. And Dell has vowed to continue rewarding SonicWall partners.
Nevertheless, some SonicWall MSPs fear Dell’s direct sales heritage, and some of those partners are now seeking SonicWall market alternatives. I wonder if that trend would repeat itself within a portion of the PacketTrap partner base if Dell acquires Quest Software and PacketTrap.
My advice: Avoid the fear, uncertainty and doubt (FUD). Sit tight and wait for the facts to unfold. If a Dell-Quest Software deal is going to happen I suspect the facts will surface this week. And if a potential deal surfaces, PacketTrap’s management team will certainly be in touch with its MSP partners with updates and perspectives.
HI Joe,
My question is if Dell does buy Quest and I am sure that PacketTrap MSP will fall into that as well, will we see the same failure as we did when Dell bought Silverback? Another question that looms in my mind as I think about this is, what will happen to the MSPs who use PacketTrap MSP as their RMM tool? Will Dell cut them out of the picture and try to go direct to their customer?
With this potential merger, buy out or whatever you want to call it, I have a lot of questions. Joe, I am sure that you will get all of the tough questions answered.
All the best,
Stu Selbst
Hey Stu,
If Dell buys Quest Software (still speculation…), I don’t think Dell would take PacketTrap MSP “direct” to customers since MSPs are the customer.
Another interesting hook, though: MSPs running PacketTrap certainly know which customer infrastructure requires upgrading. What if Dell came up with special programs to ensure those MSPs sold Dell equipment into those end-customer upgrade opportunities?
Again, speculation. Let’s see where the MA discussions go and we’ll be sure to update our coverage accordingly.
-jp
Hey Joe, I know this is a blog for MSPs so therefore I totally get that the MSP market will be concerned. However, here is what I see…DELL needs something to work with internal IT departments and potentially this would be something they can blend into a enterprise type of offering, but who knows. The end decision is for the MSP to decide who to partner with. I do have one comment for Mr. Selbst comment above, if MSPs focus on building client relationships and stop viewing or thinking about those they transact with as customers…there is no threat. Client relationships run deep and if Canadian Tire called me to solicit me away from Walmart because tires are $5.00 cheaper…then I would go to Canadian Tire because I am just a customer…however, the mechanic down the street costs more but he has an interest in making sure my car runs smoothly…I am his client.
Stuart Crawford
MSP Coachlt;
Toronto, ON
Joe,
I didn’t think about that hook, but it is a good one. Thanks for the positive spin.
As far as Crawford’s comment…we all know how a good percentage of the channel feels about Dell based on past experience. I was only commenting on my initial thoughts.
Stu
Great discussion guys. Here is the only thing that matters. It is what the client thinks that matters the most. Many of Ulistic coaching clients are very strategic clients and partners with DELL globally and they are laughing to the bank. So it is very unfair to think that DELL doesn’t care about the channel overall. I have strong relationships with folks in DELL’s PartnerDirect since my MSP did over a million in DELL annually. They really value what their strategic partners can offer. Really, they don’t focus on the ones that they consider “noise makers”. Their approach is come to me with solutions which their strategic partners do.
Stuart R. Crawford
Toronto, ON
We use Packettrap and monitor about 75 clients with it. We really don’t care if DELL, IBM, or anyone else buys Quest. What we care about is that it doesn’t go away and they continue to support us. If they do, then we would be happy to provide our business to Quest (or whatever the new name is. My rep at Packettrap said they have over 1,000 MSPs running their software. I don’t think the buyer would walk away from that revenue stream as long as it’s growing, however large or small.
MW
Mark,
Thanks for raising some important points. And I realize our blog is speculative since no Dell/Quest Software deal has emerged.
Still, here are two interesting factoids:
– Dell is a top 5 partner at Quest Software
– Quest Software is a top 10 partner at Dell
Hmmm…
-jp