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SaaSy Dell 2.0 buys MessageOne for $155m

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Anyone confused by exactly what Dell 2.0 means should have a look at today's acquisition of MessageOne.

Most of the media reports so far have centered on MessageOne's ties to Michael Dell's brother Adam Dell. The "other" Dell founded MessageOne way back in 1998 and once served as Chairman of the e-mail backup service provider. Dell has agreed to buy MessageOne for $155m in cash, and Adam will take home about $1m, while Dell's parents, also investors in the company, will earn $450,000. Rounding out the all in the family deal, Michael Dell, his wife and their children's trust will earn close to $12m.

Dell corporate defended these gains, saying that Michael was "excluded from negotiating acquisition terms and from all aspects of the decision-making process," which is exactly what you want from a CEO.

(This deal does highlight one often forgotten bit of the Dell family. Michael Dell's college dropout, rags-to-riches story is very light on rags. Dell had the luxury of taking a big risk with a father dentist and mother stockbroker serving as safety nets. Dell also attended Houston's Memorial High School, which is one of the most affluent public schools in the US, and his brother has been a lawyer, VC and professor.)

Ignoring the financial minutiae, we find Dell patting itself on the back for buying another software-as-a-service (SaaS) firm. In the case of MessageOne, the SaaS label seems a bit of a stretch. MessageOne has been a ten-year provider of e-mail archiving, security and disaster recovery services. Were some of these services provided over the wire? Sure, but we're not exactly talking about Salesforce.com here.

MessageOne basically provides an always on e-mail service to customers. You turn to MessageOne as a second site, and the company makes sure that e-mail is available when a flood, database corruption or any other snafu hits a company's core e-mail servers. MessageOne has long claimed to provide this service at a cheaper price than rivals by backing up e-mail in a type of tiered fashion where non-essential messages are ignored.

This type of service falls well outside of the sphere of what Dell 1.0 would offer. In fact, this is something that the old Dell would always deliver through a partner.

Now, however, Dell wants to build out a host of services to complement its enterprise hardware and PC businesses. Like all of the major hardware players, Dell sees services revenue as a growth opportunity.

Last Dec., Dell made a similar acquisition by purchasing remote management player Everdream. Dell again put Everdream into the SaaS category. Dell also closed a deal last year with Google to sell Dell manufactured search appliances directly to customers, opening another possible services opportunity.

And so it now looks like Dell 2.0 will be characterized by more and more software acquisitions that open up a services play for the company.®

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