Did a fear of Linux spark Microsoft's investment in Dell?

One theory about why Microsoft lent $2 billion as part of a deal to take Dell private is that Microsoft plans to use its newfound influence with the company to stop Dell from further building Linux hardware. Is that really the case, or just a conspiracy theory?

Computerworld reports that according to analysts, Microsoft lent the $2 billion in order to:

"...influence hardware designs in a post-PC world while protecting itself from the growing influence of Linux-based operating systems in mobile devices and servers...It may also be an attempt to secure the partnership and to stop the PC maker from looking toward alternative operating systems like Linux."

Al Hilwa, program director at IDC, told Computerworld that the investment will help make sure that Dell doesn't move too heavily towards building Linux-based hardware using operating systems as Chrome or Android.

There's likely some truth to that, although not nearly as much as some people will have you believe. One reason is that it's likely that the new Dell will be moving away from a reliance on selling PCs, and more towards selling services and consulting. Selling PCs is a cut-throat business, with razor-thin margins; selling services and consulting is far more lucrative. That's almost certainly the direction Dell will be heading, although it will likely still build hardware.

That means that Dell won't be putting much emphasis into building notebooks, and so Chrome will be largely irrelevant to the company. Linux on the desktop simply doesn't have a bright future, even though its adherents have been claiming for years that it will eventually pass Windows.

I don't expect Dell to enter the smartphone business big-time either. That's another cut-throat business with plenty of big, dominant players. So Android is largely irrelevant as well.

Where Linux matters is in servers, and that's where Microsoft will try to influence Dell. Microsoft's server and tools group has become a mainstay of the company. Increasingly, Microsoft is an enterprise-focused company, and that's where its growth will be. Last year, for example, the server and tools group had $18.7 billion in income, up from $16.7 billion the year before. That's where Linux is a dangerous competitor.

Dell's server and networking division had $8.3 billion in sales last year, according to Yahoo Finance. Dell sells Windows-based servers as well as Linux-based servers. If Microsoft will use its loan as leverage to try and get Dell to move away from Linux, here's where it will use it.

But if the new Dell is going to thrive, it can't abandon Linux. Being a services and consulting company means offering customers the best solutions possible, regardless of the underlying technology. Microsoft's loan of $2 billion is only a relatively small portion of the entire $24.4 billion Dell buyout, so Dell isn't entirely beholden to Microsoft. And Microsoft didn't even take an equity position as part of the deal.

So yes, I'm sure that a small portion of Microsoft's motivation for investing $2 billion was to try and fend off Linux some. But it was a small portion only, and not the primary motivating factor.

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