Dell has agreed to acquire privately held Wyse Technology to extend its own desktop virtualization offerings. Dell's proposed deal for the San Jose, Calif.-based cloud Relevant Products/Services client computing technology provider has already been approved by the boards of both companies. The financial terms were not disclosed.

With Wyse's technologies under its belt, Dell's ultimate aim is to deliver complete end-to-end desktop virtualization offerings to its customers -- either directly or through Dell's third-party partners. The deal is expected to close in Dell's second business Relevant Products/Services quarter, which ends midsummer.

The Wyse portfolio includes thin, zero and cloud PC clients featuring advanced management, desktop virtualization and cloud software Relevant Products/Services supporting desktops, laptops and next-generation mobile Relevant Products/Services devices. The acquisition of complementary desktop virtualization offerings from Wyse is expected to enable Dell to offer customers a broad set of computing choices -- ranging from the edge to the core, said Jeff Clarke, president of end user computing solutions at Dell.

"Desktop virtualization can help organizations streamline IT management, improve productivity and security Relevant Products/Services, and increase cost efficiency for discrete workloads or usage scenarios," Clarke said Monday.

Analyst Expectations

According to IDC, Wyse led the field with respect to thin client shipments during last year's fourth quarter. The company has shipped more than 20 million units worldwide to date, with more than 200 million users interacting with the privately held company's products on a daily basis.

IDC Vice President Matt Eastwood expects the desktop virtualization market overall to continue to realize strong growth globally -- with the larger revenue and margin opportunities coming from the sales of data Relevant Products/Services-center infrastructure as well as cloud and services offerings tied to thin client and desktop virtualization technology sales.

"Thin client and desktop virtualization solutions typically drive high attach rates to data center solutions -- including servers, networking, storage and services," Eastwood said. The revenue generated by the "end-to-end data-center infrastructure stack for these solutions is expected to exceed $15 billion by 2015."

Consumers and businesses alike are adopting tablets and smartphones as their preferred computing platforms at accelerating rates. The mobility software developed by Wyse -- which delivers secure Relevant Products/Services mobile connections to personal, private and public cloud environments -- gives Dell a potential opening to exploit this trend.

Gartner Relevant Products/Services forecasts that traditional PC sales will grow at only a 4 percent rate this year. So Dell is doubling down on the segments of the company's business that offer better opportunities for realizing double digit growth.

Dell's IT Software Strategy

The Wyse acquisition is merely the latest step in Dell's execution of a comprehensive IT software strategy built on the company's 2010 acquisitions of systems management provider KACE, infrastructure virtualization and orchestration provider Scalent and cloud integration company Boomi. With the addition of Wyse, the goal is to offer large enterprises complete end-to-end software solutions that also help Dell grow its server, networking and storage hardware sales.

The cloud computing technology trend over the past two years has set the stage for the development of a new approach to IT that enables individual users and businesses "to have greater control over how they acquire or deliver IT services," noted Gartner Vice President David Cearley. This new approach also features a "reduced emphasis on the constraints of traditional software and hardware licensing models," Cearley said.

During Dell's latest business quarter conference call, the company reported that its consumer business grew by a mere 2.7 percent for the full fiscal year whereas sales of its large enterprise Relevant Products/Services services rose by 18 percent in just the latest quarter.

"We believe there is significant opportunity for us to build a big business here," CEO Michael Dell told investors in February while praising Dell's KACE, Scalent and Boomi deals. "And I think you'll see [Dell make other [acquisitions] fitting within the very similar framework that we've used in the past."