Computer maker Dell said its Perot Systems acquisition will boost its IT services offering to the public sector, as some of its government customers face a freeze on spending due to the recession.
(The acquisition) was a really good fit for a bunch of reasons, but the domain expertise that Perot brings in government and healthcare is particularly powerful, Paul Bell, president of Dell's global public sector business, said in an interview in London on Wednesday.
About half of Perot's revenue comes from healthcare, and a further roughly 20 percent from government, but Bell said he was not the only one of the group's four divisional heads pushing for the $3.9 billion deal, which closed earlier this month.
It was unanimous, he said. This was a company-wide decision, with the intention of leveraging their capabilities across all of our customer types.
Dell is increasingly offering higher-margin IT services to its public-sector customers, which include schools, hospitals and government departments, as computer hardware prices fall.
Its services revenue of $5.7 billion in its last fiscal year, however, is dwarfed by IBM's $58.9 billion global services revenue and HP's $22.4 billion.
Bell said Dell is typically increasing efficiency through cutting the number of applications for its customers, and making more use of virtualization, even though that can cannibalize its sales of servers, PCs and notebooks.
The range of solutions we can bring to bear is quite broad now, he said.
For example, Dell announced on Wednesday it was stepping up its push into the healthcare services market with a new offering aimed at simplifying life for doctors on the move.
Public-sector budgets are coming under pressure, however, particularly in Europe where government spending has soared in the recession.
Right now, many of our customers have projects ready to go (that) can reduce costs in coming years for their own departments and yet they are faced with a freeze, Bell said. That could be backwards economic logic.
Dell, which recently fell to third position in PC makers behind Taiwan's Acer as demand from its corporate bedrock slowed, reports third-quarter results Thursday.
(Editing by Elaine Hardcastle)