SiliconBeat

Last last year, in my annual prediction column, I included one far-out, wacky suggestion: Cisco Systems would buy Dell.

Though admittedly a long shot, my rationale was that Hewlett-Packard was moving into networking with its purchase of 3Com. That made it a direct competitor with Cisco. Both companies want to fight for big corporate customers, but HP has an advantage by simply being bigger. Though PCs are a dicey business, the best way for Cisco to level the playing field would be to buy Dell.

I’ve put that out of mind until the last few weeks when a series of events got me thinking that it could make sense. And now there’s a twist: Could Oracle be interested in Dell? I posted a short thought about this on Facebook yesterday after Oracle officially announced it was hiring Mark Hurd, the ousted CEO of HP. They now have a co-president with extensive experience running the largest PC maker in the world. Imagine what Hurd could do with Dell? And what delicious revenge it might be for him to take on HP in the PC business?

A year ago, I would have never thought about Oracle buying a PC company. But now that they’ve done the unthinkable and plunged headlong into hardware by buying Sun Microsystems, how much crazier would it be to see them buy Dell? In fact, yesterday, Quentin Hardy of Forbes also mused about the possibility of Oracle buying Dell:

“The last big Oracle buy was Sun Microsystems. At the time, people liked the software Oracle got from that deal, but wondered what to do with the hardware. Sure, it could sell high-performing Sun servers loaded with Oracle database and application software, but at what acquisition cost?

That deal makes more sense if Oracle adds to its hardware offerings with a comprehensive desktop and laptop offering. Dell has that, along with servers, storage, and a little network switching. More important, it has extensive corporate relations in selling to different parts of a corporate base than Oracle now touches.”

The company in the middle now is Dell. Following their loss in the 3PAR bidding, they are a wounded duck. They have a market cap of $24.4 billion, and annual revenue that fell last year to $52.9 billion.

By comparison:

• Cisco has a market cap of $117.4 billion and annual revenue of $36.1 billion.
• HP has  a market cap of $82.9 billion and annual revenue of $114.b5 billion in 2009.
• Oracle has a market cap of $120.4 billion and annual revenue of $26.8 billion.
• Microsoft has a market cap of $206.23 billion and annual revenue of $62.5 billion.
• IBM has a market cap of $158.5 billion and annual revenue of $95.8 billion.

I mention Microsoft only because of something Oracle founder Larry Ellison said a few years ago when he predicted the IT industry would consolidate. Ellison said there would be a handful of giants left at the end of the day, including Microsoft, HP, IBM, and a couple others. (I don’t remember the exact list, but I think there were five).

In any case, he wanted to make sure Oracle was one of the few giants left. And so he said Oracle needed to acquire large numbers of companies to boost its revenues and size to keep pace with companies like Microsoft. Being bigger would allow the company to spread costs such as R&D over a wider base, Ellison said.

That rationale remains as true today as it was then. Dell, first and foremost, needs to get much larger to remain competitive with HP. The fastest way to get there is acquisitions. But we’ve seen that Dell doesn’t have the resources to go toe-to-toe with HP. In fact, HP could simply starve Dell by outbidding them time and time again.

No, the best option for Dell at this point is to be acquired. But by which company?

HP probably couldn’t buy Dell without getting hung up on anti-trust issues. But if Cisco bought Dell, you would have a company with close to $90 billion in annual revenue, a number that significantly closes the gap with HP. And if Oracle bought Dell, you’d have a company with more than $60 billion in annual revenue, still only about half HP’s revenue, but closer.

Over at Silicon Valley Watcher, Tom Foremski wondered whether Oracle might buy HP:

“Yes, it is a big pill to swallow however, it would enable Larry Ellison, CEO and co-founder of Oracle to perform an end run in the massive global IT market and also leave a substantial legacy on his upcoming retirement.

If there is one thing we know about Larry Ellison is that he is motivated by big goals. Is this one too large for him?”

While I see Tom’s logic, I still find this scenario to be unlikely. Oracle has a lot of money, but it would probably need to make a hostile, all-cash bid for HP, which would be way too expensive. It would have to borrow massive amounts and take on big debt. Oracle’s stock wouldn’t be that attractive to HP shareholders, given that until the last couple months, Oracle and HP stock prices have tracked pretty close together:

However this plays out, expect lots of drama over the next few months. There’s no love lost between these companies. And with the economy stagnant, big players have clearly decided that acquisitions are the way to grow.

I spent last Friday night at the Herbst Theater in San Francisco watching the Crunchies. The third annual version of the tech award show was co-hosted by three leading high-tech blogs: GigaOm, VentureBeat, and TechCrunch. According to the official Cruchies description, the show aims to “recognize and celebrate the most compelling startups, internet and technology innovations of the year.” You can read a nice overview of the event and after-party by Jessica Guynn of the Los Angeles Times.

It was an entertaining, if low budget, affair. In fact, the casual nature of the show in such a fancy space was quite charming. There were corporate jugglers providing entertainment and the reliably funny Richter Scales served up a nice glee-club style spoof (see video above).

You can check out the award winners here. But the mix of nominees and winners left a muddy impression of the event. What, exactly, is the point of the Crunchies? Read the rest of this entry »

Back on June 20, 1999, a made-for-TV movie called “Pirates of Silicon Valley” first aired. The movie chronicled the rivalry between Apple’s Steve Jobs and Microsoft’s Bill Gates.

This happened exactly one month before I moved to Silicon Valley from North Carolina. As I recall, the movie got lukewarm reviews, and I never saw it. Or even really thought about it, for that matter.

But recently, it’s popped up on my radar in rather random fashion. One of the keywords I track on Twitter is “silicon valley.” And at least a couple times each day, someone makes a reference to the movie:

Read the rest of this entry »

Shares of VirnetX, the developer of Internet-calling and instant messaging software that sued Microsoft in 2007 claiming the software giant infringed three of its patents, doubled in value today after the Scotts Valley company reported that the federal court hearing the suit had issued a “Markman” order that adopted interpretations of the patent claim language that it Read the rest of this entry »

Yikes!

That’s about all you can think after seeing the latest video game sales numbers from research firm NPD Group. NPD reported earlier today that U.S. retail sales of game merchandise fell 31 percent in June compared with the same month a year earlier.

The industry has posted year-over-year sales declines for every month since April. That fall-off has negated what started off as a fairly strong year, with sizeable growth through March.

Read the rest of this entry »

If history is any guide, investors who are interested in buying shares of Microsoft might want to do that before it actually releases its new Windows 7 operating system upgrade.
That’s the conclusion of a Bloomberg story published today by reporter Dina Bass, who looked at Read the rest of this entry »

I recently bought a 13-inch MacBook. And I’m giddy a like a school girl about it.

But rather than just wax poetic about the joys of Apple, I wanted to share my journey and a few of the things I learned about myself along the way.

Just to get one thing out of the way, I’m not going to indulge in a lot of PC or Microsoft bashing. I’ve used various PCs and Windows-laptops over the past decade, and I have few complaints. But what was interesting, and this was something I didn’t recognize until much later, was how little passion they inspired. I liked these machines, but I certainly never bragged about having one, and never talked them up to friends.

But let me indulge, and go back to the beginning of my journey. Read the rest of this entry »

VirnetX, the Scotts Valley supplier of tools for securing real-time communications over the Internet, has hired a Texas-based law firm with a track record of fighting Microsoft in court to represent it in its current suit against the software giant.

McKool Smith will now lead VirnetX’s litigation effort in a suit brought against Microsoft in February 2007 Read the rest of this entry »

On June 9, I’ll be stopping by the annual Launch: Silicon Valley event  at the Microsoft campus in Mountain View . The gathering is co-sponsored by Microsoft, Garage Technology Ventures, and the Silicon Valley Association of Startup Entrepreneurs (or SVASE).

The gathering is usually a good opportunity to take the pulse of the entrepreneurial community. In advance, I spoke with SVASE President and CEO Chris Gill to get his thoughts about the state of Silicon Valley during the downturn. Read the rest of this entry »

The games industry frequently surprises me … and not in a good way.

One of the most obvious things about the current console cycle has been that the Wii is the dominant platform. To date, Nintendo, has sold 50 million Wiis worldwide. In contrast, Sony and Microsoft have sold about 52 million PlayStation 3s and Xbox 360s — combined.

At least in the United States, the Wii’s lead on the other two consoles has just kept getting bigger. In recent months, the Wii has typically outsold both the PlayStation 3 and the 360 combined — by a wide margin. Read the rest of this entry »